National weekly unemployment claims for the week ending, October 23rd surprised financial analysts today by dropping 21,000 and bringing the total unemployment claims to 434,000. Experts say that anything under 450,000 is a sign that our economy is recovering.
With recent data showing cities like Chicago at a 35% increase in foreclosures and Seattle at 71% increase and 15 million job seekers still unemployed, the news lead to losses in the stock market, as investors continue to struggle with the high unemployment figure, discounting the positive reports from a number companies that showed significant gains.
Both 3M and Starwood Hotels saw a 35% increase in sales in the third quarter. Starwood is poised to continue to increase profits as the room rates are increasing and costs are contained. 3M continues to expand their holdings with interests in fly fishing and tape. Their overseas market is robust.
A major concern for job seeker's is the termination of their unemployment compensation benefits which is now at a max of 22 months; a historic high. Yet, many have still not been able to find jobs. Some will have to go on welfare and food stamps to feed their family while they learn new skills or get further education.
The jobless report showed a 122,000 decrease in the number of workers who continue to receive benefits under regular state unemployment programs with 4,356,000 during the week ending October 16. The 4-week moving average was 4.447.250, a decrease of 38,500 from the preceding week's revised average of 4,485,750.
It appears that there is an increasing gap in income with high-income individuals helped by a strong stock market this year who are buying luxury goods. Purchases of TV's jewelry, recreational vehicles and pet supplies are up. While spending on medical care, day care, and education is down considerably.
This growing divide between the haves and the have-nots has economists and politicians worried about the economic future of our country. 70% of our nation's economy relies on consumer spending. The Bureau of Economic Analysis reports in the first eight months of this year spending rose 1.4% higher than last year in the same time frame; certainly not robust growth.
The bottom-line is that the savvy investor and some money markets vested in equities made money this year. Yet, many struggle to keep their house from going into foreclosure and paying off their debts. People are still worried about losing their job, knowing it's difficult to get another one in this sluggish economy.
Have a look at the pet supply market which tells the story of our current economy. People still own and love their pets, but the affluent consumer is spending more on luxury items for their beloved pet like designer outfits, organic food and food dispensers while the struggling worker is buying cheaper pet food at discount stores.
After looking at these figures, it is no surprise that the investors on Wall Street didn't celebrate the weekly unemployment numbers today. They know we are still in trouble with our economy. And no one seems to have any immediate solutions. When Wall Street seems nervous, it makes me nervous!