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Worst-Case Conjuncture With A Silver Lining
If you wanted to, you could describe Wednesday's key data out of the world's largest economy as a kind of worst-case conjuncture.
I don't think it's necessary to be quite that pessimistic, but if you're so inclined, I wouldn't blame you.
The US labor market remained a funhouse mirror headed into the final month of 2022, the closely-watched JOLTS report showed, while the December vintage of America's marquee manufacturing survey printed in contraction territory again.
Together, the data painte
I wonder to what extent the post pandemic gig economy is distorting employment and JOLTS numbers.
That’s a good question. I should have an answer. I’ll write something about that at some point soon.
The US economy is services-dominant, but the S&P 500 is goods-dominant. The rapid decline in goods inflation is, I think, more positive than negative for stocks. Not that declining pricing power is “good”, but getting that decline over with relatively quickly is good. For investors, if not for managements. They have to manage through this, we can sit on our hands until they do.
For this and other reasons, I think we may see 2023 play out as the opposite of 2022. In 2022, US stock prices were punished more than the broad US economy – admittedly it won’t have felt like this to mortgage bankers, real estate agents, Target’s executives, etc, but I think that is a broadly defensible characterization. The close of 2023 may see Main Street more teary-eyed than Wall Street.
Of course, if the no-recession camp is correct, maybe Main Street won’t be all that teary (except for the lowest income, whose life is basically all tears), but it’ll be Wall Street popping the champagne.