Unemployment Hits 7.2%

Tags: wmt, m, sks
9 Jan 10:24pm
Posted by ZacksResearch
0 Comments
Read original blog entry

The U.S lost 524,000 jobs in December, roughly inline with forecasts. November's nonfarm payrolls loss was revised up to 584,000 from 533,000.

The unemployment rate jumped to 7.2% from 6.8% last month. The unemployment rate is at a 15-year high.

What the numbers don't show is the number of people who are underemployed. Many job-seekers are settling for large cuts in pay because of a lack of suitable jobs. And none of this even factors in the likelihood of even more layoffs...

Though stocks have been rallying over the past several weeks, all signs point to weakening consumer spending. Wal-Mart (WMT) warned yesterday, Macy's (M) is shutting down stores and Saks (SKS) -- well, even the wealthy are keeping a tighter grip on their wallets.

And if consumers can't earn enough to support their families, banks will have to significantly adjust mortgages to keep houses out of foreclosures. And even that might not be enough.

The massive stimulus package proposed by President-elect Obama should help. But it will take time for it to both be passed and implemented. In other words, we won't see a recovery until the second-half of this year, at the earliest.

The U.S. has been in worse financial crises and pulled through. This one is no different and things will get better. It is the timing of a recovery that remains uncertain.

In this type of environment, investors should not chase stocks. Rather, be selective and patient. At the same time, understand that things will eventually get better, so have a shopping list ready of stocks that could benefit from a recovery.

Our Top 10 Stocks for 2009, which will be released next week, contains both defensive names and some companies that will rise in price once the markets get a sense of when the recovery will occur.

Read the full analyst report on SKS



Get real-time market insights and profitable stock recommendations from the team of analysts at Zacks Equity Research. See all today’s Analyst Blog entries on Zacks.com.

Comments

Back to top

Post comment

Back to top

Post a comment

Please login to post a comment

About

ZacksResearch

Zacks Investment Research is one of the most highly regarded firms in the investment industry. Our firm has long believed that that quantitative models (like the Zacks Rank) can predict stock prices more accurately than individual analysts. However we also recognize that models are most effective when they are employed by analysts who have deep fundamental knowledge of the company and its industry. Consequently Zacks Equity Research combines Zacks quantitative models with the insight provided by an experienced team of 50 analysts to create superior long term stock recommendations. Discover all their timely insight and recommendations daily on Zacks.com.

Recent Entries