All eyes are on Friday’s upcoming U.S. Labor Department unemployment figures for September. Rumor has it that the jobless rate will climb from 9.6% to 9.7%, but past that, we’re seeing some solid evidence that the employment picture remains grim, and that’s not good news for bank rate investors.
Tuesday, the ADP National Employment report said that the U.S. private sector shed 39,000 jobs from August to September. That’s not what the economy needs to get back on its feet.
"It's a disappointing number but it's not unexpected," Joel Prakken, chairman of Macroeconomic Advisors, said in an interview with CNBC. "GDP growth has slowed to below the growth rate of productivity and it's inevitable that you'd have this deceleration in jobs."
Another report, this one from the outplacement firm Challenger, Gray & Christmas, says that 7% of U.S. firms claimed they would cut more jobs.
If that situation sustains itself, the U.S. economy is back on the path toward 10% unemployment, and almost certainly a double-dip recession.
Low employment is anathema to bank rate investors. With the job rate up, the Federal Reserve will likely keep a firm lid on interest rates, and that helps keep bank rates down.