US unemployment weighs on European market

One of this week's main headlines is the reaction of European stocks to the release of US job data. An unemployment rate 10.2 % is the highest in more than 26 years and clearly exceeded the expectations of 9.9%. In jobs getting cut this means 190.000 instead of 175.000. And this is the 22th month in a row that jobs get cut and unemployment has been increasing steadily. These incredible numbers gathered only from headlines and subheadings definitely attracted my attention and I kept on reading several articles about this topic.

Different financial media including articles from the NY Times, BBC News, The Guardian and Reuters as well as videos online about the released unemployment figures all give rather detailed data. Numbers and figures as well as forecasts are all very similar and increase the credibility and reliability of the news. However, none of them gives such a general picture of the current situation and the consequences as the article in the Wall Street Journal which is why I choose to have my blog's main focus on the analysis of that article.

The first paragraphs of the Wall Street Journal were able to persuade me to continue reading. A simple language and a different approach to present the fact to the reader were enough for me to classify this article as more interesting than the average. Unlike articles in the Financial Times or on Bloomberg.com, the Wall Street journal is not just throwing numbers in the reader's face with a 'this is the news - now you think about it' attitude, but is describing immediately the 'whats and whys and hows' I am looking for when collecting information. The article does not give the reader the feeling of being reading about numbers that motivated some changes now but it's not actually important since in an hour something else will be influencing the market. It instead describes the news as something bigger and more important by including more general information. For example it describes the event as a reminder for investors that an economy that had been confirmed to have emerged from recession several times over the last weeks, is only recovering very slowly. I personally appreciate when an article gives me more a general idea and overview instead of tons of precise facts and figures which are not really in a context. Only one sentence with detailed percentage changes in the European stock market as a consequence of the job cuts can be found in this article.

For these reasons I felt addressed by this article and felt like one of many readers who are interested in finance without being a professional depending on exact and reliable data. I felt like a person that simply wants to know what is going on in the world without having his family's net worth fluctuating with the market, simply like a person that makes part of the target audience this article is written for.

It is also explained that this is the longest period jobs have been continuously cut in 70 years and talks about how important the US labor market is for the global economy since it accounts for two thirds of the US economic activity which again accounts 20% of the world economy. More interesting news follow in an interview with Paul Ashworth, economist at Capital Economics: he says that even though the recovery in output began already, the U.S. economy would still not be expanding rapidly enough to generate net gains in employment. This is an interesting point of view and explains the current position of the US nicely. This article gives the reader the news, the detailed figures for those interested and a good and objective picture of where the US economy is as a whole now. In my opinion this is financial media at its best.

In my opinion there is a fact related to this current situation that does not get as much attention in financial media as it should get. The average working hours in the US where lower in good times and increased since the beginning of 2008. This means that banks are exploiting the gratefulness of employees who still have a job and make them work even harder which means that less people are needed and costs are saved. It is worrying that tendency is still increasing because this means that the better the results get the less jobs there are. Are we willing to pay for pay for good results with jobs? As long as its my neighbour's job - yes!

Sources:

http://news.bbc.co.uk/1/hi/business/8346936.stm

http://www.reuters.com/article/eurMktRpt/idUSL650179820091106

http://online.wsj.com/article/SB125749164584233339.html

http://www.guardian.co.uk/business/2009/oct/02/us-unemployment-figures-job-losses

http://www.nytimes.com/2009/11/07/business/economy/07jobs.html