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If you ask Wall
Street analysts, strategist, economists, central bankers, and sundry other
highly-paid experts where the U.S. unemployment rate is headed next,
most will say lower, with even those who are less sanguine about the outlook
suggesting we are nearer the top than the bottom as far as jobless tallies
go.
However, a post
at Streettalk Live's
Financial Blog, "Why
Unemployment Is About To Surge," citing one
data series stretching back decades, predicts exactly the opposite. The
reason, according to Lance Roberts, is that
every
time the STA Composite Employment Index [an average weighted index of the
employment components of the Chicago Fed National Activity Index, seven
different regional Federal Reserve manufactuing
indexes, and the National Federation of Independent Business survey] drops to
a level of 5 or less the economy has been in a recession. Of course, it is
during recessions that unemployment claims rise sharply as businesses cut
back on their labor force to reduce costs. This is clearly seen in the
chart.
Hard to argue
with that (except if you've got a vested interested in the Wall Street
pump-and-dump, of course).
(Hat tip Zero Hedge.)
Michael J. Panzner
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