As I talked earlier, the NFP (Non-farm payrolls) said that unemployment rate in United States got from 5.3% to 5.1%, so a loss of 0.2 points. Meanwhile, I hear more and more by reading financial news that unemployment rates and the fact they decreases is not a good news for US markets, especially to the point of below 5%. I get to the point I don't really understand why market is once again unhappy of, finally, a sign of better economic health and of a recovery. Unemployment is the plague of badly managed countries and countries in recessions, like US was in 2008. But now, they seem unhappy with the fact it goes low.
As JR and I and others have said before elsewhere, (1) August unemployment numbers are typically inaccurate and subject to significant seasonal correction; (2) a change of 0.2% is statistically meaningless; and (3) the labor participation rate is low and getting lower. Frankly, I believe the labor particular rate, the number of under-employed -- those seeking full-time work but forced to work part-time -- workers, and the numbers of both long term unemployent and those completely dropping out of the job hunt are important measures of judging the health of the economy. These statistics are mostly ignored by the MSM that focus on the singular unemployment number. HTH. YMMV.
Yeah, there are many things that are only mildly better than they were 6-7 years ago, and some things like household income, business startups vs business shutdowns, debt to GDP, and national debt that are actually worse. This "recovery" has been the weakest since WW2, and the markets have been largely propped up by 7 years of zero interest rates. Actual unemployment is still at least 10%. The best thing to do is just set longterm goals, buy a diversified portfolio of quality investments in one or more tax-advantaged accounts, and dollar cost average every payday. If you also get things like bonuses from work and annual tax refunds, invest those funds as well - you may need to put some of that money into a taxable account if you are already maxing out an IRA (and hopefully a work plan as well) by contributing the maximum(s) to those during the year each year...
So you think that’s not enough good for market, even if the NFP shows better number than before? I know that some people said NFP was not reflecting the reality, but somehow it means people still gets job. And if, as you said, it’s statisically insignificant, and doesn’t represent the “real unemployment rate” where people gets full time work, this also means that Fed has less reasons to worry about the interests rate getting low. Because if they want to raise the interests rate, it’s because inflation will start to occur if there’s not enough unemployment. So are we are: either the Fed will feel like there will be inflation because of higher wages, but this would also means that the unemployment rates of NFP is believed by Fed, or they will think it wouldn’t be that much and keep the same interest rate. Sure, it is market-controlled and dependent as well.
I think the Fed is in a quandary because it is out of ammunition to "fix" the economy. The federal funds rate has effectively been set to zero since 2009 (https://en.m.wikipedia.org/wiki/Federal_funds_rate#Historical_rates). Yellen's "dashboard" -- http://www.bloomberg.com/graphics/2015-yellens-labor-market-dashboard/ -- of labor market data, more than just NFP, doesn't look that wonderful. The last calculation of the labor participation rate was ~63%. Bloomberg updates the compilation regularly. HTH. YMMV.
