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Stocks Soar Near 12,000 While Unemployment Stays Steady Near 10 Percent

01.25.11

As the Dow Jones Industrial Average nears 12,000, its highest point since June 2008, unemployment still hovers just below 10 percent.

Just showing how much of a gap there is between perceived and actual economic health.

Meanwhile states are slashing everything from police forces to HIV testing, treatment, and counseling to college funding, and many people think that we’re in the middle of a structural shift that doesn’t seem likely to end the current unemployment rate any time soon.

For those people who still own stock, this is good news: their once vanished equity slowly regaining their worth increases their overall financial independence. And for those who had capital to invest in the market when it was at or near its low, they really should be feeling good about the news.

But for those who didn’t own stock or have 401(k)s, or who used up all of their savings to stay afloat while they were looking for work, this doesn’t help them much. Now, it could be the case that the uptick in jobs is related to this rise in the stock market. Either way, it seems that this news is indicative of one industry doing well: the financial district.

Even though, apparently, those companies saw their stocks drop:

Gains were spread across the market. Financial and health care companies were the only two of the 10 company groups that make up the S&P index to fall.

Odd considering the financial district is still giving itself large bonuses (albeit some of it deferred per new rules) and the health care industry is where much of the job growth exists.

McDonald’s Corp. gained 0.5 percent to $75.38 after it said it meet analyst expectations and warned that rising food costs could affect its margins this year.

J.C. Penny Co. jumped 7 percent to $32.52 after the retailer said it would close some stores and its catalog business to reduce costs.

So, a large retailer company shutting stores – and thus, laying off most likely hundreds of people – is good news worthy of its stock going up? And while McDonald’s showing slight improvement means that those entry-level jobs may stay intact, but those aren’t the types of careers that families can live on.

A bright spot perhaps:

Materials companies rose after a report from the National Association for Business Economics showed that economists are more positive about economic growth and the job market than at any time since the start of the Great Recession in December 2007.

Though the stocks went up based on the speculation that jobs will continue to grow, not on actual job growth. Given what we know about the depths of the unemployment rate, it seems like the stock market could be getting a bit ahead of itself.

Photo courtesy of othermore (other)’s Flickr Photostream.

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6 comments

  1. If you haven’t already, you should see The Company Men- it tackles this issue of corporate perception versus reality brilliantly or rather tragically I suppose.


    • I definitely want to see that. Thanks for the recommendation – glad it’s worth seeing.


      • A nod to your political savvy, a movie recommendation… throw in some chocolate and I would be your favorite person.


        • Chocolate makes everything better.


  2. Business analysts could be predicting job growth because they expect the extra income received by stockholders to become an increase in the money supply and therefore an increase in jobs. The fallacy there is that businesses tend to expand only when signs point to long-term economic growth, which is still dubious in the current market. The very optimism of business economists is likely an attempt to increase confidence in a long-term recovery, and therefore entice businesses to expand jobs. It’s such a mind#&!$.


    • Totally.

      Also even if they add jobs, it doesn’t mean they’re going to be adding them here in America. Tech companies, especially. Manufacturing has gone overseas where labor is cheaper. What’s good for big business doesn’t always mean good for everyday Americans.



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