Thursday, September 27, 2012

S&P 500 vs. Initial Claims

Click to enlarge.

Since 2000, there has been a high correlation between initial claims and the stock market. It's all about jobs, jobs, jobs!

Click to enlarge.

Before 2000, jobs were a given apparently. Any short-term cyclical problems would soon be solved. That's my take on it anyway. It's just an opinion.

This post inspired by jeff in the comments of an earlier post.

Source Data:
St. Louis Fed: Custom Chart


jeff said...

That was quick. And it does make sense the markets move based on employment reports. That is, more employment = higher spending = higher profits = higher stock price.

Also good insight on the transition in 2000. It seems something changed in economy in 2000. That was the start of gold's move, bigger deficits, the peak in nasdaq and peak in SPY (on a real basis), ZIRP, perhaps layoffs?

Stagflationary Mark said...


Perhaps by the time 2000 showed up, the only thing left that could possibly justify the stock market's lofty valuations was jobs.

And then, the last straw on the camel's back was finally placed.

Stagflationary Mark said...

September 7, 2012
40.6 Million Missing Jobs

That's a game changer. There is absolutely NO chance of resuming the former long-term trend (going all the way back to 1939). Contrary to seemingly popular opinion, neither Romney nor Obama have even a sliver of a chance.

We can't add 40.6 million jobs with "just" 12.5 million unemployed. It's virtually impossible (unless many, many people start working multiple jobs).

Don't even get me started on the trade deficit and its impact on long-term employment. Sigh.

Troy said...

we had one more trick up our sleeves in 2000 . . .

Accumulated trade deficit:

Stagflationary Mark said...


...we had one more trick up our sleeves in 2000...

Flush with cash! Not. ;)