Unemployment NOW at Pre-Obama Levels . . . we just don't know it yet!
We'll know much more Friday, but here's the story you HAVEN'T heard in the news. Unemployment under 26 weeks is NOW at Pre-Obama Levels. Why is that significant? Logic dictates when you pay people to be unemployed beyond 26 weeks (and up to 99 weeks), a chunk of the population will take full advantage of the free moeny. Note what happens between 2008 and 2010 - granted, the unemployment < 26 weeks is up - about 17.4% - but the LONG-TERM unemployement skyrockets 264%!! What changed? We started paying folks to be on long-term unemployment, up to 99 weeks. This started to taper in 2011 and was officially cut off at the end of last year. You see THAT "Tapering" (more on Fed Tapering, later :-) up to the 2013 numbers, but you'll see it drop WAY off beginning Friday, with January's report, and further in February's report next month.
See the Chart Here!
The Fed has made no bones about the fact that they will taper down to around 6.5% Unemployment, and then begin looking at reducing the $4+ Trillion Balance Sheet under 6.5%. Here's the rub - I believe 6.5% or less happens in 3 days. The Long-Term unemployed, no longer subsidized, will drop off the rolls and seek either employment or retirement. I'll go further to say that I would be SHOCKED if the unemployment rate is above 6.4% on Friday (down from 6.69% in December). And eventually, it drops to reflect full employment ala 2005/2006. Note that this is our current REALITY - we just haven't received official word from Big Brother - that comes in 3 days.
How to prepare: Interest rates should skyrocket in 2014. Get your loans while they are still cheap (I am!!). Consider TBF or TBT (or shorting TLT) as Interest Rate Plays.
Good Luck! And, congratulations, America - you're back!!