CoffeeHouser ‘Ben G’ had it right in his comment underneath my earlier post: 24 hour news really does struggle in the face of
economic crisis. This morning, all the talk was of a debt-induced apocalypse. Earlier this afternoon, the headlines were about the markets “rallying” after better-than-expected data on
the US labour market. And now the BBC website’s main headline is that “turmoil in the stock market persists,” despite those very
same labour market figures. Oh yes, it’s difficult to present a consistent front as the money merchants sway and buckle in the breeze.
That said, the economic fundamentals remain discouraging. It shouldn’t be forgotten that yesterday’s losses were extraordinary; in many cases, the worst since the early days of the Credit Crunch. And they have generally been compounded today. Despite a small boost from the US jobs news, released around 1330 this afternoon, the FTSE 100 index is still on track for a decline over the trading day:
And what of those US labour market figures? The creation of 117,000 jobs in July may have been better than many analysts expected — but, as the New York Times’s David Leonhardt put it in a right-minded tweet earlier, “better-than-expected” is not necessarily the same as “good”. At 9.1 per cent, the US unemployment rate is still soaring high, and only fractionally lower than the 9.2 per cent achieved in June. And, as Leonhardt goes on to highlight, the share of adults in jobs has dropped to 58.1 per cent, its lowest level since 1983. This is not the sort of news to calm the worried of Wall Street.
At the very least, as Tom Clougherty suggests in a readable post at the Adam Smith Institute blog, the political class now faces a series of stark choices. Among them, choices about spending levels, about tax rates, and about whether to sink more cash into countries like Greece, Italy and Spain. Some hoped that these choices had been made satisfactorily in the US debt deal and the latest round of European summits. This latest turmoil says otherwise.
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