Unemployment Is Key To Economic Recovery

With a slew of economic and retail numbers due to be released this week, an interesting question will undoubtedly be the hot topic: Is the economy actually improving?

By looking at the overall U.S. market returns YTD, it would seem that we’ve definitely made heavy strides in the right direction, but then again what are we compairing them to…2008?

I’m a constant pusher in the belief that most, if not all, of the gains made in 2009 are largely due to acceptance and adapting of our current conditions: businesses took on lower inventory, households started saving more and spending less, and, quite frankly, we can only be in panic mode for so long.

Is the worst behind us? Perhaps, but look at all the problems we still have today. The U.S. wants to ship off more troops, oil is expected to rise, and unemployment is astronomically high at around 10%. Forget about seeing any major improvements until we can make a dent there. According to the jobs report, 5.9 million people have been out of work for 27 weeks and are still actively looking for a job. That’s more than half a year. As those weeks continue to build up, consumer spending will take even further declines and households tightening up their money even more.

Chain-store same-store sales are down 3.5% in November, the largest decline since December 2007, which again is an effect of unemployment. Of course, this is all relatively great news for discount retailers and wholesale clubs.

See: 7 retail stocks poised for big a holiday season

Nonetheless, when the holiday season is all said I think those numbers will give us great insight into where the economy actually is as a country and what direction we could see for 2010.