Unemployment claims and the stock market … interesting !

Not to worry, not another rant against the curious BLS reporting.

Business Insider posted an interesting analysis by GSAM Chairman Jim O’Neill, mapping the inverse of initial unemployment claims with the S&P 500.

First, it’s pretty clear that the series track closely.

Moreover, O’Neill observes:

”it’s worth noting the last time there was a severe break between the two lines was [Summer 2011], 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.”

In other words, the economy is improving, albeit slowly, and last week’s drop was related to the election … but it’s not “Obama elected, market tanks” … it’s “Will divided government gridlock or avert the Fiscal Cliff?”

So, if the fiscal cliff gets resolved, then following O’Neill’s logic … the market goes up.



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