Two Potential Buying Opportunities Based on Improving Economy
Currently, everyone is looking for the best stocks to buy based on the news of the day: What is the dollar doing? What are the jobless rates doing? What are housing starts doing?
If we take a broader look at what has been happening and what it is doing to the economy things are indeed looking up. With the possibility that we are indeed finally past the worst, what stocks look like a go for the long term? In the past we have seen that once people regain confidence in the economy they will start spending money again. Verizon Communications Inc. (VZ) is a potentially good buying opportunity.
Verizon is also in a good position to benefit from increased spending with a current price of $32.61 up from its 6 month low of $26.49. They also have strong underlying statistics:
So let's take a look at the unemployment figures to see if they support that we have indeed turned the corner and are headed back in the right direction.
Despite the fact that unemployment rates still linger precariously close to a 26 year high, the most recent Labor Department figures ending 10/15 show a drop of 23,000 in filed claims, reducing the overall unemployment numbers to 452,000. This may be cause for cautious optimism that the
worst is actually behind us. However, the promising figures must be balanced against a few other harsh realities. For instance, these numbers do not include “discouraged workers” who have simply given up looking. They simply disappear off the grid when they stop showing up to file each week. The number of adults accepting extended and emergency unemployment insurance is also not included in these findings. Last month, 279,000 found themselves in this category, raising the total to 5.07 million.
While it is true that firings and layoffs are continuing at about the same pace with about 95,000 people freshly out of work, 64,000 other workers were also hired to company payrolls. Unfortunately, many of the lay-offs were a reflection of local governments chopping away at their school expenditures, aka teachers, to try and make already pinched budgets work.
Neither do these numbers take into account the huge numbers of workers who were previously employed in 40 hour, benefit-paying jobs and are now working part time for no benefits and lower pay. The “gig” worker is showing up everywhere, getting paid by the hour or project, and hoping against hope that he/she doesn’t get sick because all the former benefits are long gone and now unaffordable.
Amid these discouraging facts, one must admit that there are also some tiny, albeit timid signs of economic recovery in the air. Whether the analysts that support the cyclical model are correct or those who favor a structural theory have the thing figured out remains to be seen. What is definitely true is that many employers are reluctant or unable to hire right now, and that is the primary reason the unemployment numbers are still so high.
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