Economic Conditions Dictate Cautious Movements

By Drahuschak, Gregory M. | Tribune-Review/Pittsburgh Tribune-Review, April 6, 2008 | Go to article overview

Economic Conditions Dictate Cautious Movements


Drahuschak, Gregory M., Tribune-Review/Pittsburgh Tribune-Review


An old line about employment and the economy says that when your neighbor loses his job, the economy is in a recession. When you lose your job, it's a depression.

If so, then last month, 93,000 more Americans were in a depression. Eighty thousand jobs evaporated last month and revised data showed 13,000 more job losses in the prior month than originally estimated. The unemployment rate rose to 5.1 percent, an increase of 0.3 percentage points.

Uncle Sam eased the job pressures by adding 18,000 jobs, but as some people sarcastically might point out, there never is a recession in the Beltway area.

The latest employment report merely was another in a string of weak economic data. The jobs report has a streak of its own going, with last month bringing the third consecutive monthly decline in the overall jobs situation and the fourth straight drop in private payrolls.

Stuart Hoffman, PNC Bank's chief economist, said in a recent interview, "If ever you were going to ring a bell on recession, these numbers (the last employment statistics) ring it."

But from a stock market standpoint, does it matter?

The unemployment rate is the highest since September 2005. Back then, the market did not seem to care as the economy was in high gear.

You would think, however, that the highest unemployment rate in the last 18 years, posted in June 1992, would have been a major market negative, but you would have another think coming.

Assume that you are 100 percent certain that the unemployment rate will rise for the next 16 months and that it will take 34 months before nonfarm payrolls would match the level of one month ago. Would you buy stocks?

If you had said no to this question in 1991 when these employment conditions existed and instead waited for the data to improve before you owned stocks, by the end of 1992, you would have missed a 27 percent advance in the Standard & Poor's 500.

Studying history to find clues as to how the economy and the market might react in certain circumstances can be worthwhile as long as you remember that no two periods are identical.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Economic Conditions Dictate Cautious Movements
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.