GM, Starbucks, and the financial services industries are announcing thousands of layoffs, is it really a surprise to anyone that at some point in time it would be reflected in initial claims?  With unemployment at only 5.5 percent, how many of you believe that the contraction in the home construction industry was fully reflected in the change?  Did all those mortgage brokers just change hats to become foreclosure specialist?

As the economy continues to contract unemployment will grow.  I am looking in Europe and seeing that those developed economies are experiencing unemployment in the 10-12 percent range and thinking why is ours only 5.5 percent. 

If our unemployment rate rose to even 8 percent, how big would our economy be?  What level would the SP 500 be?  As Mr. Greenspan once suggested in the middle 90's that the US economy was in a "Virtuous Cycle" well, this is the opposite. 

We can only hope that the US dollar remains cheap relative to other currencies in order to support our export industries.  While a dollar rally may bring commodity inflation down, unemployment would go up.  What a pickle the Federal Reserve is in.