the BLS has announced that unemployment was 8.8% in March, slightly lower than the 8.9% of February. More important, over 200,000 jobs were created. For the first time in a while, the numbers actually seem to make sense. the Gallup unemployment number also declined, the first time since October that the two measures have moved in the same direction.
Before anyone gets too excited by the news, there is also the latest rise in the price of oil. It is inching closer to $110 per barrel. This means higher prices for gasoline and a resulting decline in consumer spending on other items. Soon, the Fed will end QE2 so there will be upward pressure on long term interest rates. short term rates may also rise if inflation keeps increasing as it has for the past few months. Indeed, one Fed official yesterday said that an interest rate rise may be needed. since the Fed always seems to dribble out its next move in a series of leaks and comments before actually taking action, this statement is quite a bad sign for those relying on low short term interest rates.
In summary, the economy seems to be moving up but along a path right next to a cliff. One misstep may send us over the edge back into recession. We need very sure footing as we move ahead. That may be a problem when the president has two left feet and Congress have a left and right side which never seem to cooperate.
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