Jobless count out of order
Using unemployment numbers to suggest the current state of the economy is like using your rearview mirror to drive.
Unemployment is not good for anyone. However, history tells us that unemployment data are always a lagging indicator. It is the very last of the indicators to turn positive.
The reason the markets are up so much this year is that they are responding to what is coming, not what was. For instance, consider worker productivity. Up quite a lot in the second quarter, it is a main driver of the economy. Improved productivity not only generates higher corporate profits, it also makes it more attractive to hire additional workers, both of which are leading indicators of improved future demand for labor and lower unemployment.
The negative case can appear to be intelligent and articulate, as it is looking at current events and current data, while the positive case requires an opportunistic view of the future, built on possibilities and probabilities.
The biggest thing that is now limiting banks to lend, households to spend and companies to invest is an unnecessarily negative future view, which seems to be reinforced by using old news to create a headline.
Michael J. Maehl