February Unemployment Rate Drops to 8.9%

The employment numbers from the Bureau of Labor Statistics showed a gain of 190,000 jobs in the country in February. There are many caveats that come with this number. First is the fact that this is a BLS  number, where the BLS uses antiquated techniques to measure the employment situation in the country. Second, February is a tricky month given the bad weather that develops over parts of the country.

In other words, don't take the specific number too seriously, though television talking heads will analyze every detail, as though this is a hardcore number. The most you can take from this is that there does appear to be a down trend to the unemployment situation. Beginning and end of story.

The improving unemployment situation should come as no surprise, given the amount of money Bernanke started pumping into the system in 4Q 2010. The tricky thing to determine is how extended will the improving unemployment picture become. Since the first of the year, much of QE2 money printing has ended up as excess reserves. If this continues, the improvement in the  unemployment picture will stall. However, if banks start lending out, the picture will continue positive for the economy. We are really right on the edge at present, with the stock market, unemployment and the overall economy dependent on what banks do over coming weeks with the huge excess reserves they have on their books and with the new Fed printing that continues to come down the chute.