Despite the pandemic, despite events in Washington, D.C., and despite bad jobs report this morning, stocks set a new high closing price today.
In a world of turbulence, here’s this week’s report on the numbers that drive the economy and stock market prices.
According to today’s employment situation report from the Bureau of Labor Statistics (BLS), the U.S. netted a loss of 140,000 jobs in December. That was a disappointment attributed to the worsening Covid public health crisis.
December’s job loss follows a huge gain of 336,000 new jobs in November.
BLS today revised October and November’s job gains higher by 135,000. The unemployment rate remained the same at 6.7%.
To put December’s job loss in proper context, the U.S. has recovered 12.3 million jobs since April 2020. To recover to the all-time employment peak of February 2020 – just before the pandemic hit – the U.S. will need to create another 9.8 million jobs. That would put the employment rate back to the peak of the last economic expansion, the longest in modern history, which began in April 2009. The jobs recovery to the February 2020 peak in jobs is expected to take about three years.
Despite the job situation, stocks and other investment that historically paid a premium return compared to highly-liquid 60-day U.S. Treasury bills, continued to appreciate in value.
The Standard & Poor’s 500 stock index Friday set a new closing-high of 3,824.68. The new value paradigm caused by unprecedented low bond yields and low inflation has changed the traditional investment asset valuation paradigm. Please see our previous updates on this topic or contact us with questions about how the change in the relative value of bonds versus stocks might affect a portfolio invested for long run sustainability.
The S&P 500 index gained +0.55% from Thursday and +1.81% from a week ago. The stock market has gained an astronomical +52.36% from a March 23rd bear market low.
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The good news is that the Federal Reserve’s preferred measure of inflation may be bottoming, but the bad news is the American consumer’s purchasing power declined by -4.8% in the 12 months ended August 31.