Tags: Job Gains | Economy | Stocks | Unemployment

Job Gains Show Economy and Stocks Are Peaking

By    |   Friday, 12 June 2015 10:33 AM

Unemployment data is probably the most widely followed economic news. Every month, traders react to news about changes in the unemployment rate.

Every week, analysts try to find meaning in the number of new claims for unemployment insurance. Unfortunately, many analysts seem to be misinterpreting the data.

Many analysts seem to believe low unemployment indicates the economy will do well in the future and the stock market should move higher. But that’s not the way it works.

Employment is a lagging indicator of the economy. In good times, businesses hire and in bad times they cut back. Hiring and firing are responses to what happened at a business in the past few months. Few businesses, for example, are looking ahead and hiring when sales are low because they expect an uptick. They are laying people off when sales are low and they are hiring when the economy is growing.

When unemployment is low, it’s time to look for the top in the economy and in the stock market.

Weekly unemployment claims are now at their lowest level since 2007, the last time the market and the economy peaked. New claims for unemployment have been below 300,000 for 14 consecutive weeks. According to Bespoke Investment Group, this is the first time we’ve seen claims this low for more than three straight months since 2000, the previous peak in both the economy and stocks.

Will history repeat? If it does, we can expect a recession and bear market within months. Betting against history has often been a way to generate large losses. This time, it’s best to listen to the news about unemployment and prepare for the worst case.



© 2019 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
MichaelCarr
Unemployment data is probably the most widely followed economic news. Every month, traders react to news about changes in the unemployment rate.
Job Gains, Economy, Stocks, Unemployment
277
2015-33-12
Friday, 12 June 2015 10:33 AM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved