EC The Labor Market: The End Of The Innocence?

One of the first of life’s lessons we all learned is that we need not rush life; it will do that for us and in the end against our will.

The inspiration for this wisdom could well have sprung from Ecclesiastes wherein we read these peaceful words: To every thing there is a season, and a time to every purpose under the heaven. Co-writers Don Henley and Bruce Hornsby embraced the spirit of this message as the 1980's were coming to a close. You must agree 1989’s The End of the Innocence, that haunting and mournful ballad, was just the coda needed to move on to the last decade of the last century.

“Let me take a long last look, before we say goodbye,” the song asks of the listener who can’t help themselves but to listen.

Many veteran investors, those who don’t need to be reminded about the Reagan era because they were there, may be feeling a bit more wistful as they peer over the horizon. They have lived through extraordinary economic times and maybe even recall the early 1970's, the last time initial jobless claims were at their current historically low levels. They know, in other words, this can’t go on forever, that we are nearing the end of our own innocence.

Federal Reserve Chair Janet Yellen has been adamant that economic cycles can’t die of old age. At the end of this month, we can proclaim to be living through the third longest expansion in postwar times. The parlor game occupying those on the Street these days entails devising scenarios that can push us into the second, or dare we dream, longest expansion of all.

The Wall Street Journal perfectly captures the infectious optimism, the yearning to keep that dream alive, by asking this in a headline: How Low Can the Unemployment Rate Go? Rather than keep you in suspense, the article’s answer is as follows:

“Assuming the economy adds around 200,000 jobs a month in 2017 and the labor-force participation rate stays relatively constant, the unemployment rate would fall to 3.9 percent by the end of the year, according to a model maintained by the Federal Reserve Bank of Atlanta.”

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Moon Kil Woong 3 years ago Contributor's comment

I don't believe Trump is actually a big factor in the recent run up and certainly not a factor for Christmas and NY spending. The constant promises about the end of a slow recovery and the ushering in of a new growth period are less innocence and more blatant lies. The only real way to get rapid growth back is to readjust our economy which would hurt painfully first as the economy goes back to small medium sized growth and gets off of the punch being offered by the Federal Reserve which has only led to massive hoarding and artificial wealth creation for the few which would be correctly named as corruption in other more innocent eras.