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October 8th Jobs Report

10/07/2010

  1. Overall employment fell by 95,000 jobs
  2. Jobless rate held at 9.6%
  3. The critical component of the report - Private Sector Jobs - increased by 64,000
  4. The underemployment rate rose significantly from 16.7% to 17.1%

  • The Street was expecting private sector job growth of +75,000.  Clearly, today's report is disappointing.
  • The Jobless Rate has now remained above 9.5% for 14 consecutive months, the longest stretch since 1948.
  • The Labor Department's preliminary estimate for the employment revision report suggests a loss of 366,000 more jobs than previously reported in the 12 months ending March 2010.

This report will have significant impact on the two critical events of November 2.

  • First, the report will greatly impact voter decisions in the November 2nd Midterm elections.
  • Second, the multiple negative components of today's report will motivate the FOMC to expand its balance sheet more than previously forecast. I believe the market expectation for that expansion was $500 billion.  I now raise the estimate to $750 billion to $1 trillion.

    Virtus Investment Partners provides this communication as a matter of general information. The opinions stated herein are those of the author and not necessarily the opinions of Virtus, its affiliates or its subadvisers. Portfolio managers at Virtus make investment decisions in accordance with specific client guidelines and restrictions. As a result, client accounts may differ in strategy and composition from the information presented herein. Any facts and statistics quoted are from sources believed to be reliable, but they may be incomplete or condensed and we do not guarantee their accuracy. This communication is not an offer or solicitation to purchase or sell any security, and it is not a research report. Individuals should consult with a qualified financial professional before making any investment decisions.