We’ve found that comparing apples to apples — that is, the same points in time relative to the beginning of a recovery or recession — is a useful technique for giving context to the present.
These types of charts are gaining popularity amongst sell-side research analysts, and are a pain to construct involving a lot of manual work.
We’ve always found it a treat to view them, so we spent some time this weekend to develop a piece of GNU R code to automatically generate cycle graphs over all of the available data.
Here are three examples. If you’d like to see any more, let us know, and we can run them.
Let’s start with payrolls:
This recovery has been miserable for job growth – which shouldn’t be a surprise to anyone. It however is not the worst post-war employment recovery. It in fact is outpacing the 2001 recovery (which saw the dot-com bust re-suppressed by the fallout of September the 11th), as well as the Reagan recovery of 1980 — which was squashed by the Federal Reserve less than a year in.
Perhaps surprisingly, the Initial Claims for Unemployment Insurance trend is actually the best of any recovery from 1970-on (when this data first becomes available). This potentially has a portends a more optimistic future for employment than widely projected.
The S&P 500:
The S&P 500 has experienced the best post-recession performance since index inception. This should be viewed that it is relative to the magnitude of the largest decline since index inception.
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