Back in the stone ages, when I studied economics (late 60s, early 70s), and they taught us about the Philips curve, that says low unemployment leads to inflation (Philips was an engineer, not an economist, by the way), the idea was that 4% unemployment was the 'full' employment level in a healthy economy.
If that was true, and historically it was, then it is the last 30 years with 6-8% unemployment that was an anomaly. As I look at this, it occurs to me that there was another statistic that took off in the early 70s, one that has recently been falling back to 30 year lows: the crime rate.
Today's NY Times discusses whether the selloff yesterday was due to labor stats or energy concerns, etc. But, to the extent it was labor, as an investor, I would feel great about full employment and lower crime. Another great stat was that Black unemployment fell to 7% last month, the lowest rate EVER recorded.
The Times also reported unemployment in Ireland falling to 3.9%, in Canada to 6.8% (down from 7.1% the previous month) and economic growth in France +.7% in the previous quarter. And let's be happy for the people in Yugoslavia, too.
It's good to reflect when enduring these temporary seasonal market adjustments that there's a lot of great things going on in the world, and most of us are a lot better off materially than we've ever been.
Regards,
Tom |
