CHART OF THE DAY: The Unemployment Chart You'll Love And Hate

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Here’s an unemployment chart you’ll both love and hate, from Citi’s Steven Wieting.

As shown below, since 1980, employment (in red) has fallen after corporate profits (in black) have risen, and vice versa. The relationship is very clear.

Problem is, there’s about a one-year lag between the two trends. This highlights what should simply make sense — companies hire people once they see profits rebounding, and more importantly once they believe that adding more people will lead to higher profits. Still, this fact of economics isn’t fun for the unemployed.

But here’s the good news. Given the recent rebound in corporate profits the U.S. has already experienced, there is a very high chance that employment will get better over the coming twelve months. One can’t stress enough the fact that employment is a lagging indicator:

chart of the day, corporate operating profits vs private employment

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