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5.79 Million Useless People

06/09/2016

It is important to remember that recessions and bear markets are different.  Recessions happen in the economy, while bear markets happen on Wall Street.  There is a relationship but not a tight one.  We like to think that, since the average IQ on Wall Street is higher than the average IQ on Main Street, bear markets precede recessions by six months or so, because investors foresee the recession before mere humans can see it coming.  But, this is not a reliable predictor.

There is a slight seasonal pattern to bear markets.  Stocks usually take a summer swoon and rally by year-end.  There is no seasonal pattern to recessions.

Following last week’s awful Jobs Report that only 38 thousand jobs were created in this country during the month of May, there has been much hand-wringing that a recession is coming.  The answer is that YES, there is a recession coming . . . at some point . . . but not today.  There is ALWAYS a recession out there somewhere.

This week’s JOLTs Report offers reassurance that the next recession is not this week either.  (JOLT stands for Job Openings, Labor Turnover.)  There are 5.79 MILLION job openings right now – an all time high.  This doesn’t indicate a recession this month.  If businesses could find qualified people, they would hire another 5,790,000 people, and that’s a lot of taxpayers!

I side with the Democrats on this issue.  The Republicans argue we have 5.79 million too many lazy people in this country.  They cite the fact that 43% of the unemployed have stopped looking for a job.  The Democrats argue we have failed to educate or train 5.79 million students properly.  But, I do seriously question whether throwing more money into our hidebound educational system is the right answer, which is more concerned with maintaining the status quo than re-inventing itself.  One-third of the unemployed are between age 18-29, fresh from their experience in our hidebound educational system.

So, yes, a recession is approaching, which will be followed by a recovery.  And, yes, a bear market is approaching, which will be followed by a bull market.  Those things are sure to happen, as sure as the tide coming in and going out.  I just hope another 5.79 million people don’t get washed out to sea and left behind by our 20th century educational system.

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