By Vahan Janjigian - Two pieces of economic data that came out this morning were not particularly encouraging. First, the Commerce Department said September's trade deficit rose to a greater-than-expected $36.5 billion. The good news is that exports were up from $128.3 billion in August to $132.0 billion in September. However, imports surged from $159.1 billion in August to $168.4 billion in September. While it is certainly nice to see that world trade is picking up, we still are a long way from where we were a year ago. In September 2008, exports and imports amounted to $152.0 billion and $212.1 billion, respectively. Furthermore, given the tremendous devaluation in the U.S. dollar, it is extremely disappointing that exports are not rising faster than imports.
The second item was November's Michigan Sentiment Index, a measure of consumer confidence. This metric was expected to climb marginally to 71.0, but instead dropped to 66.0. The rising stock market, which typically makes consumers feel better, wasn't enough to offset their anxiety over the lack of jobs. As yesterday's initial claims report showed, corporations are still laying off workers at a rapid clip.
All in all, there is not much economic news to explain the strong rally we've seen in stocks. Things might be getting worse at a slower rate, but they are getting worse nonetheless. A few corporations are reporting year-over-year revenue gains, but most are telling us that business is down. They are squeezing out profits by cutting costs. In other words, they are eliminating jobs. With more and more people out of work, I don't see where the consumer spending that is needed to revive the economy is going to come from.