Commentary

August 6, 2009 (FinancialWire) (By Philip Holmes) — Stocks ended lower on Wednesday as investors took in disappointing reports on jobs and Procter & Gamble (NYSE: PG). They both pointed toward the same troubling question: What if you had a recovery and the consumer didn’t show up?

Investors await government jobs data on Friday, but if Wednesday’s ADP numbers on private employment are any indication, they won’t be happy data. The ADP reports showed 371,000 fewer private payroll jobs in July.

On the other hand, U.S. factory orders were up in June, by 0.4%, according to ISM data released Wednesday.

So is there a recovery on, or what? We’ve seen encouraging headlines on business spending and housing, but are consumers spending again?

As BusinessWeek’s Ben Steverman says, “For the first time in a while, there is some good news for the U.S. consumer and for companies that rely on consumer spending.” He cites the recent uptick in the S&P 500, (which closed earlier this week above 1,000 for the first time since late last year). The index gained 47% since its low point in early March.

Commerce numbers show consumer spending gaining 0.4% in June, led by spending on nondurable goods. The government’s “cash-for-clunkers” program helped Ford see its first monthly sales increase in nearly two years.

But, as Steverman points out, “The problem with all this optimism about the U.S. consumer, however, is that it runs into a depressing reality: Americans are still losing their jobs, so they have less money to spend.”

They also have less credit available, according to numerous consumer credit issuers, who have reportedly cut back on limits and even culled accounts deemed risky. The savings rate is up, normally a good thing but in a recession it slows recovery and signals that consumers are worried.

As ADP data shows, consumers should be worried. Investors would be well advised to keep a keen eye on employment-related data above all else. There’s a lot of noise in the other data, especially the housing numbers. But there aren’t “pending jobs numbers” to Cuisinart into happy talk headlines; the economy is either producing enough jobs or it isn’t.

The FirstAlert(tm) Economics Calendar lists Chain Store Sales for July, Weekly Initial Jobless Claims (8:30 a.m.).

The FirstAlert(tm) Events Calendar showcases MDRX Oppenheimer & Co. Healthcare Information Technology 1-on-1 Conference; THQI Shareholders Meeting; VPRT Special Meeting of Shareholders.

FirstAlert(tm) Website of the Day: http://www.terrain.org/essays/14/cohen.htm

Quote of the Day: “The secret to staying young is to live honestly, eat slowly, and lie about your age.” Lucille Ball

Today is: Independence Day in Bolivia and Jamaica, Hiroshima Day.

Happy Birthday: Alfred Lord Tennyson, Alexander Fleming, Louella Parsons, Lucille Ball, Robert Mitchum, Andy Warhol, Piers Anthony, Isaac Hayes, Catherine Hicks, Mike Greenberg, Soleil Moon Frye.

Today in History: Bogotá, Colombia,was founded in 1538 by Gonzalo Jiménez de Quesada. Sixty proof sheets of the Constitution of the United States were delivered to the Constitutional Convention in 1787. Norwich University was founded in Vermont in 1819 as the first private military school in the United States. Alice Ramsey and three friends in 1909 became the first women to complete a transcontinental auto trip. Henry Sullivan swam the English Channel in 1923. In 1926, Gertrude Ederle became the first woman to swim across the English Channel. In New York, the Warner Brothers’ Vitaphone system premiered in 1926 with the movie Don Juan starring John Barrymore. Harry Houdini spent 91 minutes underwater in a sealed tank before escaping in 1926. Prometheus, the world’s oldest tree, was cut down in 1964.

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