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paltry 60 thousand jobs. The less-closely-watched household employment survey painted an even dimmer view of recent labor market performance. Household employment dropped 1.239 million jobs in January,the biggest one month decline on record going all the way back to 1947. This was sufficient to push the U.S. unemployment rate up four-tenths of a percentage point in just one month to 7.6 percent. This is the highest rate of unemployment since 1992. Yet, if the labor force had remained stable instead of declining by 731 thousand in January,which was the fourth biggest decline in the labor force on record,the U.S. unemployment rate would have hit 8.0 percent!!!! The augmented unemployment rate,which includes under-employed and discouraged job-seekers,rose to 13.9 percent in January,the highest since records for this measure began in 1994. The average duration of unemployment rose to 19.8 weeks from 18.9 in November. Average weekly hours remained low,but unchanged at 33.3 hours,though the aggregate hours index slipped another 0.7 percent in January. Stocks popped higher on the news,gaining more than a percentage point,perhaps due to the belief that the worst is over for this report,or perhaps taking the view that this report will require even more government action and money to stem the tide of rapid job losses. Sadly,I do not share in this optimism. Today's report is unequivocally bad for equities. Ten year Treasury yields are moving up as well,which will push mortgage and corporate bond rates even higher,cutting off any recovery in the demand for loans. It means consumer and business demand will likely remain weak for some time to come,pinching corporate profits even harder. Moreover,the political will to do more in Washington once the latest fiscal stimulus is passed is rapidly diminishing. The government is already all in,and the scope for additional action is marginal at best. Sure,the government could start the money printing presses at full-speed ahead,but the side effects of that action may be as dire as the disease of stagnant demand we face today. If economics teaches us anything,it is that there is no such thing as a"free lunch_" United States Job Growth • January 2008 - January 2009 Percent Change Educ./Health Services 2.8% Gov't 0.7% Mining 5.6% Info. Services ■ -3.4% Leis./Hosp. Services -1.8% Financial Services -3.1% Construction -10.0% Prof./Bus. Services _ -4.5% Trade,Trans, Util 3 7% Manufacturing -7.5% -1200 -600 0 600 Thousands of Johs Source:Bureau of Labor Statistics • INFORMATION IN THIS REPORT IS THE PERSONAL VIEW OF THE WRITER,NOT NECESSARILY REFLECTING WELLS FARGO 8 CO. IT IS FOR YOUR PERSONAL USE. THE WRITER DOES NOT REPRESENT THAT IT IS ACCURATE OR COMPLETE. NOTHING IS GUARANTEED.©2008 Wells Fargo Bank,N.A.All rights reserved.