Last Friday, due to the optimistic jobs report stating only 11k individuals lost employment, the dollar rallied as the value of gold plunged. Economists had predicted a loss of 125,000, but the actual job loss in November turned out to be the lowest reading since December 2007.
While the numbers provided some confidence toward an economic recovery, the rise in the dollar put significant pressure on commodity and equity markets, mitigating the euphoria created by the statistic. For example, companies such as Exxon Mobile, Alcoa, and DuPont may suffer if the dollar continues to rally in the coming weeks.
This news appears contradictory to Renown economist Paul Krugman’s remarks on December 3rd, where he stated
“I have never been fully committed to the notion that we are going to have a double dip recession, but it has been clear for a while that it is a serious possibility…a large part of the growth has been driven by the stimulus….and the rise in manufacturing production is to a large extent an inventory bounce.”
Both the decreasing jobs numbers as well as recent strength in the dollar seem to provide support for the recovery…and lessen the chances of a feared double dip recession.
Group 6
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1 comment:
Gold may have a pullback from time to time but as long as we go from one financial crisis to another we will see gold move higher.
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