Friday, February 6, 2009
Job losses were significant in January. There's no way to gloss over the fact that the economy has lost about 4 million jobs so far in this recession—that's ugly. The only piece of good news was that average hourly earnings rose 3.9% in the past 12 months. Employers have cut jobs at a brisk pace, but the situation is not so dire that salaries and wages are being slashed.
Despite the worse-than-expected news on the jobs front, the equity market is up about 2% as I write this. News reports are attributing the market's gains to hopes that Obama's stimulus package now has a greater chance of passing, given the ugly employment situation. My explanation would be that the fundamentals of the economy have been pointing to improvement for the past few months. Jobs, after all, are a lagging indicator of what's going on in the economy. So I think the market is now responding, finally, to the improvement in the economy.
Posted by Scott Grannis at 8:56 AM