While today's job numbers showed a year-over-year percentage decline in payrolls that has been the steepest so far since this recession began, there is reason to be optimistic. Other readings of the economy are showing that there is some improvement underway.
Retail sales, manufacturer's orders and a broad index of stocks all have been rising in the past few months, suggesting that the worst is likely over when it comes to job losses. Of course, this does not mean a rapid turnaround in hiring, however, if we just start to see these job losses moderate, that could be good news for stocks and for sentimnet.
Won't stocks do better, at least temporarily, before unemployment levels off? Payroll cuts and the downward pull on wages will improve their margins.
ReplyDeleteWell, I guess its no secret that unemployment is a lagging number. Unemployment insurance payments are going to automatically increase the deficit too, putting more money in workers' hands instead of just the banks.
ReplyDeleteduring "normal" times, whenever a company elliminates positions the stock rallies
ReplyDeleteso it could be part of this current mini-bull wave that the reduction of jobs are keeping things floating a tad bit while the stimulus money provides a band aid.
is the recession going to be over by the end of year ?
Michael,
ReplyDeleteYes, unemployment is a lagging indicator. Remember the "jobless recovery" of 2003-2004?