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Why the French Have a Great Lunch Break
June 28, 2022
What Lawn History Says About Status
June 30, 2022
Today, we have an “on the one hand but then on the other” situation–the reason President Harry Truman (1945-1953) said he was searching for a one-handed economist.
Let’s take a look.
Economic Outlook
Optimism
In a recent “Morning Briefing.” economist Ed Yardeni suggested several reasons we can smile.
Starting with labor markets, at 3.6 percent, the jobless rate is exceedingly low. In addition, there are close to two job openings for every unemployed worker. As a result, even with Fed rate hikes, the labor market response need not be disastrous. Furthermore, a tight labor market could lead to more productivity, a number that has been slipping recently.
Dr. Yardeni also sees the bright side of dismal sentiment indicators. Citing the investor outlook, he quoted the Investor Intelligence Bull/Bear ratio as falling to an unusually low region.
You can see the rise of the bears below:
He also reminded us that consumer sentiment had plunged to historically low regions:
The good news is that he believes depressed sentiment is a contrarian indicator. When things seem so bad, they could be “signaling better times ahead.” Then, to this he adds we have a well-capitalized banking system and consumers that have a spending cushion.
Pessimism
The impact of inflation and Fed tightening takes us to the “on the other hand” side to all he suggests. But still, he says that a recession would be mild.
Our Bottom Line: Business Cycles
The National Bureau for Economic Research dates our business cycles. Composed of an expansion, a peak, a contraction, and a trough, the business cycle has four stages. During an April, 2020 trough, we had a quicky recession when GDP declined and unemployment temporarily soared. Meanwhile, the December 2007-June 2009 recession was much more severe.
We will only know if Dr. Yardeni is correct when the NBER looks back on the numbers:
My sources and more: You might want to see the Yardeni blog but his “Morning Briefing” has a paywall. I do recommend going to the NBER website for their data.
