Perhaps you’re hearing a lot of gloom and/or doom about the economy. Most of it is pretty easy to refute, as Barataria has shown. There is every reason to say that we are indeed turning a corner into next year and that Spring is Coming.
Could there be any more good news? Of course there is. Let’s talk about energy independence and the lingering trade deficits that have been plaguing this nation since about the mid 1970s. Could it be that we’re about to slay at least one of the 40 year old demons that has defined the United States for as long as nearly half of today’s voters have been alive?
Are you not working a full 40 hours a week, though you would like to? A solid 4.1% of all workers report that they are, in technical terms, “Part Time for Economic Reasons”, which is to say that they’d jump at the chance for a full time job but don’t have one yet. It’s a decent improvement from the 5.3% in this position two years ago, when we last looked at the problem, but it’s still not good.
Worse, the San Francisco Federal Reserve, who studies the phenomenon, has come to believe that it’s a feature of the new economy.
Another quarter has come, and it arrived with good news on jobs. The stock market didn’t tank right away, but most investors agree that the daze of puffed-up valuations for everyone are over. The consensus seems to be that rather than a general fall, investors will have to be more selective and careful. This is consistent with an economy that is changing and gradually turning over, ahead of the next Big Thing that will propel a real bull market in coming years.
But where do we stand with respect to Yellen’s Dashboard – those key economic indicators that Fed Chair Yellen said she’d be watching for movement where there has been so little over the past few years? We don’t have all the data to fill in where 3Q14 stands, but we have most of it. And it all looks good. Which is to say bad, if you’re so minded, because it really does look like the Fed is going to raise rates.
Of all the various measures of the economy we have at our disposal, one of the most consistent and real-time is the Unemployment Initial Claims, which comes out weekly. It’s nothing more than a measure of how many people filed for unemployment insurance in the previous week, so it’s a solid number that doesn’t come from a survey or other statistical measure.
It still has its problems, however. It’s noisy, bouncing up and down a bit each week – a problem taken care of by looking at a 4-week moving average. Initial Claims numbers also don’t tell us a thing about hiring, but rather how many lost their jobs.
It hasn’t been useful for at least two years as attention turned away from job loss to job creation that would absorb the surplus workers looking for employment. But it’s worth checking in with this handy number one more time because it has hit an important milestone – and may be as low as it will ever go.
A short time ago, I asked my friends on facebook if they were optimistic about the economy. Scratch that – I insisted that the negative case for this slowly improving economy was bunk and got an eyeful of responses. Needless to say, my friends aren’t in the mood for Mr. Sunshine, as some of the commentators here have called me. Talk about fundamentals improving? Show them the money. Building a strong foundation for the next economy is nothing compared to a strong roof overhead and comfortable home inside.
So it is time to make the case for optimism, which is to say why I feel that things are going to get better in 2014. Either I’m ahead of the curve or I’m just plain wrong – you get to pick. All I ask is that whichever you pick now you file away, with this piece, and evaluate the decision for keeps later. But this is the case for the economy finally picking up this year and developing strong momentum into 2015 and beyond – into 2017 when I still think good times will be had.