Here’s a chart we’ve run numerous times over the past couple of years.
It shows the S&P 500 (blue) vs. initial jobless claims (in red, flipped upside down, so that the line goes up, when claims improve).
The two lines don’t move perfectly together, but they generally trend together because initial claims is a pretty good real-time measure of the economy, and the stock market is driven in large part by economic fundamentals.
Anyway, lately the stock market has dropped pretty hard (two a three-month low actually), while initial claims remain near their best levels post-crisis.
The two lines might close again pretty quickly, but it’s worth noting the last time there was a severe break between the two lines was last summer, around the debt ceiling fight, a scenario which the current fiscal cliff debate harkens back to. Then the market freaked out, but mostly the economy kept on rolling.
That being said, the US economy is not bulletproof. Although housing and consumer confidence are major tailwinds, there’s been a sharp dropoff in Capital Expenditure growth and so forth. Anyway, this is one to keep an eye on.
Business Insider Emails & Alerts
Site highlights each day to your inbox.