Friday, September 4, 2009
If you want to focus on the level of unemployment, the situation today looks about as bad as it's ever been. Only once in post-war history has the unemployment rate been higher, and that was in the truly painful 1982 recession, when the Fed was fighting double-digit inflation with sky-high interest rates.
But if you want to focus on what is changing on the margin, the outlook becomes much brighter. Layoffs are declining, job losses are declining, productivity is picking up, commodity prices are rising, volatility is declining, and credit spreads are declining, among many other green shoots mentioned here and elsewhere. Improvements on the margin explain why the stock market has been moving steadily higher since March, even as the unemployment rate has soared. You can't wait for the jobs numbers to turn positive to buy the market. Indeed, by the time we get positive job numbers (later this year or early next year), the market will likely be much higher than it is today.
Posted by Scott Grannis at 11:53 AM