Post Number: 12544
|Posted on Tuesday, February 01, 2011 - 09:30 pm: ||
For the first time since August 2008, the Dow Jones Industrial Average closed above 12,000 today, and the S&P 500 Index above 1300. Some people are heralding this as an indication the recovery is in full swing, and it is certainly good news for anyone invested in stocks.
My question is this: if stock prices are a leading indicator, as indeed seems to be true, then how far do employment and housing figures lag behind it? For example, when will there be three consecutive months of unemployment below 8 percent, and two consecutive quarters with an increase in the sale price of existing homes nationally?
(Edited to correct spelling error. I spelled "housing" as "hosing." Some people would call that a Freudian slip. )
(Message edited by BillPierce on February 01, 2011)
Post Number: 445
|Posted on Friday, February 04, 2011 - 06:17 am: ||
I'm a pessimist. My generalization for the unemployment figures is that people who were the least employable found work during the housing bubble. They were the first to go after the bubble burst. They will have a hard time finding employment again. Of course as a generalization it's not accurate. Many talented/employable people are out of work.
Post Number: 2289
|Posted on Friday, February 04, 2011 - 01:17 pm: ||
Hit the nailed on the head....leading indicator. Employment lags well behind stocks and in some cases is decoupled. There is a huge amount of money sitting on the sidelines right now in the corporate world. I expect that as these companies see thier profits and stocks rise they will start working on bettering thier position in the growing market which transalates into highering. Another reason why high stock values are a good thing for the US economy is that we now have a very large and growing population of baby boomers who now see thier retirement investments growing again and feel better about spending their hard earned money. I have seen this first hand with my father-in-law who went longer than I have ever seen him go before replacing his car (usually every 3 years). The combination of dealers begging for his business and seeing his retirement investments going skyward again was too much temptation.
In all I say it will be 8 months to a year before we are all feeling really good about the future. Unemployment may still be 8% at that time but it will be headed in teh right direction and picking up steam.