Back in the late 80’s the market began focusing on the monthly unemployment number as a catalyst for major moves in markets. Of course, long term interest rates were in the double digits. A “great mortgage” was under 10%.
When the unemployment number came out, there was a very real impact that the fed would move, either tightening or easing, depending on the tea leave interpreters.
What is my point? Well, with interest rates effectively at zero. With the government printing its QE2 for 600 Billion, with unemployment hovering around 10%, that unemployment number has less and less impact.
Time was, if you were trading bonds or equities, you would make our break your whole month based on the first Friday of every month. Many a successful trader would only show up for the trade that first week of every month. That’s how much business was done and how much opportunity that number represents.
Currently I would argue that the importance of this number is, actually, waning.
I honestly think that sometime in the next 2 years, before we have another Presidential election, you will see a push from economists “for the left” start a campaign to change “full” employment goal from the time honored 6% from the 80’s, to “something more realistic such as 8%”. Like everything else in the last 30 years, we are going to lower the bar.
Cut out dodge ball, cut out letter grades, don’t keep score in kids under 8’s soccer or baseball games… Why not lower the bar for what’s considered a “healthy” economy.
Of course, that’s just my opinion.
Bottom line, I wouldn’t get too excited about what this latest um employment lands on. Once caveat, if its north of 10% we’ll see another stimulus, job growth, push from the social engineers in Washington. When all else fails, just keep throwing money at the problem. That seems to be their mantra.
We really need to see 6-months or a year of job creation before there is any possibility of the economy resembling a blast furnace. For now, its a boyscout campfire on a rainy, windy day. It needs all the oxygen and twigs it can find to keep growing.
Please note that I am writing this in front of the number. Its 4:10 PM on Thursday the 6th.
