The next chart features a 12-month moving average of the UR with the troughs highlighted. Now let's take a look at the unemployment rate as a recession indicator or more specifically the cyclical troughs in the UR as a recession indicator. The COVID-19 pandemic briefly showed the same type of relationship between equities and unemployment, though the impact was temporary and irrational exuberance took over once again. The mirror relationship appears to repeat itself with the previous bear markets. Note the increasing peaks in unemployment in 1971, 19. Unemployment is usually a lagging indicator that moves inversely with equity prices (top series in the chart). ![]() The chart here shows the pattern of unemployment, recessions and the S&P Composite since 1948.
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