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Letter to the Editor
This article originally appeared in the April 2009 Issue of INSIGHT
April Showers
The number of Americans filing new jobless claims jumped unexpectedly during the last week of March, while those continuing to receive benefits hit a tenth straight record high. Both figures indicate to me that the labor market remains weak and is unlikely to recover anytime soon, despite some signs the U.S. economy's decline is moderating.
The Labor Department reported that initial claims for unemployment insurance rose to a seasonally adjusted 669,000 from the previous week's revised figure of 657,000. That total was above analysts' expectations and the highest in more than 26 years, even though the work force has grown by about half since then.
One bright spot in the melancholy economic news is that the Commerce Depart-ment claimed that orders for manufactured goods rose 1.8 percent during February, much higher than analysts expected, and reversing six straight monthly declines.
It will be interesting to see what comes out of the G20 summit meeting of world leaders in London, well underway as I put pen to paper. Global stocks have thus far risen sharply, and the price of government debt fell on optimism over efforts to solve the economic crisis.
Oil prices climbed more than eight percent to above $52 a barrel after an agreement was reached to pump an additional $1 trillion into the ailing global economy through extra funding for groups like the Inter-national Monetary Fund.
Investors hopefully will calm down a bit, as they see a coordinated effort to tackle the worst global economic downturn since the Great Depression.
3M Company has announced plans to cut another 1,200 jobs, or 1.5 percent of its work force, because of the global economic slump. Fewer than half the jobs will be in the U.S., but include hundreds in 3M’s home state of Minnesota. The 1,200 figure includes cuts made earlier in the first quarter.
Auto dealership giant CarMax continues to surprise me this month, with a per share price of over $11, up a tidy 36 percent YTD. AutoNation’s stock price rose a bit, too. Penske Automotive continued to see red at the Dow during March, but Sonic Auto-motive has lost the most. The company’s shares can be purchased for just a hair over $1.50 each at the moment.
The loser among auto insurers this month on Wall Street is Allstate again. Its per share stock price has been cut in half since New Year’s Day.
What is a worry for our industry is that a shockingly high 86 percent of shops responding to our TrendLine survey this month reported a decrease in business compared to February 2008. Perhaps we should all hope for some hail storms with our April showers to get some work through the doors.
-Charles Baker-
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