Back in 2009 during the height of the recession and the lows of the stock market, many had wondered if the fundamentals of the economy had changed forever. PIMCO, California’s trillion dollar asset management firm, declared that the economy had entered a “new normal“: an extended period of subpar economic growth and high unemployment rates.
Stock market guru Ed Yardeni isn’t completely convinced that the idea of the “new normal” holds.
“While Bill Gross sees a world full of new normals and paranormals, the old normal business cycle continues to show that it is still in gear,” wrote Yardeni in a recent blog post.
Yardeni overlaid the performance of initial unemployment claims during the last four business cycles. It turns out that the shape of the current jobless claims curve is remarkably similar to those of the previous for recessions.
Here’s Yardeni’s chart:
Photo: Dr. Ed’s Blog
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