US unemployment numbers jumped again in March to a 8.5% jobless rate. Despite this negative news, the market was still able to close in positive territory. However, I question the sustainability of the rally if unemployment numbers continue to drop. In the metro Detroit area, the continuing struggles of the big 3 and the waves upon waves of layoffs has completely destroyed high-end home prices. For example, the real-estate market in Oakland County is in a freeze, as the only houses that are actually sold are those that have cut the price to way below market level. With unemployment not seeing any stability, as various economists project the jobless rate could drop to as low as 10 to 10.5%, this rally may very well fall short. The equity market will indeed recover before signs of bottom in unemployment, but we are not even at that stage yet.
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2 comments:
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