We’ve Come A Long Way Baby!

It is encouraging to see that the S&P 500 just doubled, from the ominous low of 666, which occurred in March 2009. What a difference a couple of years can make!? I’m not saying we are “out of the woods” entirely. Nor am I suggesting that the economy is twice as strong as it was two years ago. However, I do believe that positive sentiment is reflected in the S&P 500’s 52 week high of 1,338 that we hit today. Yay! Helping the “bullish” improvement of the index is the fact that we have experienced good earnings this year, robust M&A activity, and generally positive economic reports.

It’s no wonder the S&P dropped so low on 3/9/09. 2008 was undoubtedly rough, and sentiment for the decade dropped to a saddening low in Q1 2009 (mirrored in the “666” of the S&P). Employment is always an important gauge, since hiring and positive employment rates naturally translate to higher spending and lending.

Some perspective:
Employment losses in 2008 had accelerated to a frightening degree by the end of the year. There were 1.3 million job losses in November & December 2008 - - the largest 2-month loss of this scale since September & October 1945 (when 1.9 million jobs were lost nationwide). For the year 2008, nonfarm employment fell by more than 3.0 million - - the largest 12-month loss, since October 1944–October 1945.* Yipes! The financial crisis of ’08 added fuel to the already spiraling weakness in construction, manufacturing, and professional and business services.

The trend seemed irreversible. Unemployment in the US reached an alarming number in Jan 2010 at 10.6%. Just this past January, it was still uncomfortably high at 9.8%. Last Thursday, there were 383,000 new jobless claims reported…which sounds bad, until you realize that is less than the 410,000 expected. Tomorrow we will see the jobless claims report and in a couple weeks we will see the new payroll figures. Fingers crossed.

*Source: http://www.bls.gov/opub/mlr/2009/03/art2full.pdf