Employment Report comes out Friday, should you care?

By Douglas A. McIntyre Published May 3, 11:34AM EDT

Follow 24/7 Wall St. on Google

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

This Friday everyone will be taking notice of the employment situation report for April. The Employment report is the result of two separate surveys:

The Household survey is a survey of roughly 60,000 households. This survey produces the unemployment rate.
The Establishment survey is a survey of 375,000 businesses. This survey produces the nonfarm payrolls, average workweek, and average hourly earnings figures, to name a few. Both surveys cover the payroll period which includes the 12th of each month

The unemployment figure provides a look into the economy’s production, consumption, earnings, and consumer sentiment. It’s not rocket science, a lower unemployment rate means increased expenditure, as more people have jobs and more money to spend on iPods, Dunkin’ Dounuts, Star Wars action figures, etc… .Increased expenditure encourages economic growth, which can spark inflation pressures (and remember that’s what the Federal Reserve Bank is worked up about these days). High levels of unemployment signal economic instability and weakened demand.

So why the economics lesson and is this really important?

It is, that magic word I just mentioned – inflation. Ben Bernanke and his gang of Federal Reserve guys are all worked up about inflation, and they’ve mentioned time and time again that if inflation gets out of control, there are going to be Interest Rate hikes. If people think interest rates are going higher, this could be the start of Bear season. Granted with everything going so well lately, I wouldn’t be surprised if the Bull Market keeps charging, but it’s something you should be aware of that could impact your stocks.

The Federal Reserve in February forecast annual underlying inflation of 2.75 percent for 2007. So, we’ll see what happens when Friday comes. If it’s good news, the Bulls will run higher, any bad news, and we may see an end to this incredible Bull run.

Stay tuned.

Frank Lara Jr.

Frank Lara Jr. can be reached at [email protected]; he does not own securities in the companies he covers.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.