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The stock market is up and the economy is growing. But one thing that continues to lag in the U.S. is job creationWe recently had lunch with UBS U.S. Economists Maury Harris and Drew Matus. The team has been repeatedly recognised as the most accurate economics team on Wall Street. Bloomberg even named Harris one of the 50 most influential people in the world.
Harris walked us through several charts that explained exactly what was going on in the economy. He noted that one chart stood out due to its incredible predictive power.
It was credit lending standards charted against private job creation.
“Easier lending standards are usually associated with later employment growth,” said Harris.
As you can see below, lending standards have a long history of leading job creation.
Here’s a second chart that reiterates that same message.
For now, lending standards appear to be on the easy side. Hopefully, history will repeat itself and the U.S. will yield more jobs.