Very interesting labor-housing correlation there; thanks so much. It is my thesis that "this time is different" in that the retiring baby boomers tamp down Unemployment such that labor stats may not act as they historically have. HOWEVER, despite a willingness to spend and maintain lifestyle, those boomers will curb their spending on a dime once the inevitable contraction occurs. I am watching consumer spending very closely. Keep up the great work, terrific posts & charts!
I have been using a nearly identical NAHB/unemployment model and thus I expect a similar rise in unemployment.
Unlike your unemployment/moving average relationship I compare the current rate to where it was 2 years ago. If we stay at 3.9% we will be in recession in q1
Strategas has noted that equities tend to do well when the Fed is on pause; it’s when the cuts start that things go bad. I suspect the first few months of 2024 will be okay but the back end of the year could be dicey
That's a great point, Bill, regarding equities doing well while the Fed is on a pause but then not so much thereafter. Typically, that is because the Fed keeps rates too high, for too long (i.e., until something breaks) and then they have to aggressively cut rates to help shore up the economy. All the while, equities are moving lower.
Great stuff, I'm mostly bonds and cash awaiting the equity pullback that never seems to come. Will keep my current allocation earning 6-7-8-9% on various fixed income. There has to be an equity correction SOME DAY, right? Thank you.
Very interesting labor-housing correlation there; thanks so much. It is my thesis that "this time is different" in that the retiring baby boomers tamp down Unemployment such that labor stats may not act as they historically have. HOWEVER, despite a willingness to spend and maintain lifestyle, those boomers will curb their spending on a dime once the inevitable contraction occurs. I am watching consumer spending very closely. Keep up the great work, terrific posts & charts!
JS…I always appreciate your comments and thank you for reading this piece!
Good piece Jim... thanks for putting so much work into this. Love the Yogi Berra comment
Thanks Chad…I truly love putting this together each week and comments like this give me the motivation to keep going!
I have been using a nearly identical NAHB/unemployment model and thus I expect a similar rise in unemployment.
Unlike your unemployment/moving average relationship I compare the current rate to where it was 2 years ago. If we stay at 3.9% we will be in recession in q1
Strategas has noted that equities tend to do well when the Fed is on pause; it’s when the cuts start that things go bad. I suspect the first few months of 2024 will be okay but the back end of the year could be dicey
That's a great point, Bill, regarding equities doing well while the Fed is on a pause but then not so much thereafter. Typically, that is because the Fed keeps rates too high, for too long (i.e., until something breaks) and then they have to aggressively cut rates to help shore up the economy. All the while, equities are moving lower.
Great stuff, I'm mostly bonds and cash awaiting the equity pullback that never seems to come. Will keep my current allocation earning 6-7-8-9% on various fixed income. There has to be an equity correction SOME DAY, right? Thank you.