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Surprised Yet Again

02/18/2010

I almost didn’t post anything on this, but the redundancy shows how ridiculous this administration appears as it continues to refer to economic reports as unexpected. The unexpected numbers have appeared so often that one would think they would be expected by now.

WASHINGTON (Reuters) – The number of U.S. workers filing new applications for unemployment insurance unexpectedly surged last week, while producer prices increased sharply in January, raising potential hurdles for the economy’s recovery.

This will continue on as inflation looms large on the horizon. The remaining stimulus money is due to be spent soon and the increased money supply chasing fewer goods on the shelves will result in inflationary pressures. Couple this with the difficulty the feds have selling our debt will likely produce higher interest rates, further putting the squeeze on businesses which will affect hiring and layoff decisions.

JOBS LAG RECOVERY

The hard-hit labor market has lagged the economic recovery that started in the second half of 2009. Gross domestic product grew at a 5.7 percent annual rate in the fourth quarter, but still failed to ignite jobs growth.

“Initial claims have been flat over the last three months. That means the improvement in the labor market is much slower than suggested by the headline GDP figure,” said Harm Bandholz an economist at Unicredit Research in New York.

“That shows GDP growth is artificially inflated by government stimulus and the inventory cycle rather than driven by final demand, which usually goes hand in hand with an improvement in the labor market.”

The economy has lost 8.4 million jobs since recession struck in December 2007.

Read more commentary at Hot Air.

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