Originally Posted by
TransWorld
Remember the stock market increases are a leading economic indicator. Unemployment is lagging. What that means is the stock market looks ahead 6 to 12 months, anticipating what is going to happen. After business starts picking up, then hiring takes place. If you are waiting for an all clear signal before getting in the stock market, you are too late. This is not me saying this, it is my investment management firm (and many others) who say this; loud and clear.
The unemployment rate in the Great Depression did hit 24.9%. And underemployment was probably another 50%. My grandfather lost his job as a teller at the bank when it failed. Went to work at the gas company doing door to door collections of overdue bills. (Think about how hard a job that was.) He was hired, then the guy who’s place he took got fired. He had to take two 10% pay cuts to keep his job. My grandfather had a 5th grade education. My parents lived through it, told me plenty. Men were riding the rails (hobos) and would go to the back door begging for a sandwich to eat.
The stock market is down and up and down and up but significantly down. It’s all over the place. How is that an indicator of six to twelve months from now??
The unemployment rate may “only” be 15% right now, but that is still much higher than after 9/11 and the 2008 recession.
The 15% unemployment is in a lot of areas that are small businesses. If those small business owners lose everything then those businesses won’t be here to reemploy them.
There are a lot of factors. I don’t want to be right. I want to be so wrong. But there is just so much working against a speedy recovery.
And again, no indication that things have bottomed out. Air travel may have, but it literally can’t get much lower. The curve may be “flattering” but the level of testing to really determine where we are and a lot of other things are a long way from being where they need to be to recover. And the inertia of declining economy is a pretty hard thing to overcome.