U.S. Payrolls Fell 84,000; Jobless Rate Jumps to 6.1% (Update3)

Sept. 5 (Bloomberg) -- By Shobhana Chandra

Highlights

• Jobless Rate: jumped to 6.1 percent, from 5.7 percent the prior month raising the unemployment rate to a five- year high.
• Payrolls Fell: "by 84,000 in August, and revisions added another 58,000 to job losses for the prior two months."
• William Poole, former president of the Federal Reserve Bank of St. Louis: ``It certainly increases the probability that we really are in a recession,'' `It is a weak number, including the revisions.''
• Effects of the housing slump and the credit crisis: Can be seen in payrolls as builders fell 8,000 after decreasing 20,000. Financial firms trimmed payrolls by 3,000 for a second consecutive month.
• Today's Report: brings the total decline in payrolls so far this year to 605,000. The economy created 1.1 million jobs in 2007.

Comments

CRB Commodity Cash Index: is now trading below 500. Look for continued decline in a slow saw tooth price pattern. Why? Because global demand is dropping for goods reflecting falling demand for commodity products - - Big time. Similar to a canary in a mineshaft the commodity markets are foreshadowing troubled times ahead.

The Perfect Financial Storm is now coming Ashore
Resulting in:

* Rising unemployment.
* Falling real wages in the middle and working class sector of the economy.
* Continued Eroding Families net worth, creating downward pressure on consumer confidence.
* De-Leveraging of Banks and Large Financial Institutions resulting in tightening of domestic and International credit which will have a negative impact on consumer spending and business growth.
* Contracting profit margins along with rising bankruptcies.
* Elevated Deficient spending in Government and Private sectors will exacerbate recovery as Businesses and State, Local, and Federal Government begin to try and balance their books.

Deflation is the flip side of Inflation: Few people really understand it and what it means to their pocket book let alone the International Economy. But we will find out as this economic cycle continues to unfold.

Jim