The jobs report for March came out, as usual, on the first Friday of the next month. It showed that 88,000 jobs were created in March, which might sound OK at first. But there’s a big problem with that figure. The economy needs at least 100,000 jobs to keep the economy on an even keel. Which means that, although we had an increase, it was not enough to support the notion that there is any underlying growth.
Actually, the front page article (April 5, “Large crowd attends job event in Fairfield”) about the job fair right here in town spoke volumes about the state of the economy. In a strong economy, naturally, there might be more openings than there are applicants. But when many more people show up for the limited number of jobs, it’s a sign that there’s little or no underlying growth.
On the other hand, unemployment did drop below 10 percent, but that might be attributed to fewer people looking for jobs. Of course, usually the unemployment report becomes a political football, with the party in power saying the figure is a sign of a recovery, while the opposition says it’s a sign of weakness.
It’s more common than not for political commentary to depend on which party you represent. I hope it’s not a sign of bias, but I think the market reaction is more important than any opinion from the talking heads on either side of the divide. of course, the eternal question is whether or not “the tape tells the tale.”
That’s a reference to the ticker tape to be found in many brokerage offices in years past. If the reaction to a statistic or an event was largely negative, the tape would show declining prices. The opposite was true, naturally, if traders and investors liked what they heard. Forgive me if I’ve mentioned this before, but more than 50 years ago I had a summer job as a quote clerk. This was in the days before terminals and computers made current stock prices readily available.
It’s hard to believe, but back then, the entire daily volume on the New York Stock Exchange, at least in the summer, was less than we see traded in 20 or 30 minutes in today’s markets. If I remember correctly, there was less of a reaction to economic statistics than we witness today. It might take hours, or even days, for the market to react to weekly or monthly figures.
I had the job, when I was as young as 8, to call on my parents’ behalf, a local brokerage firm and ask, “What’s the trend of the market?” Yuck. I didn’t even know what the question meant, and, at that age, I hated calling strangers for any reason.
Some days, I was obliged to make that phone call a second, or even a third time. Ah, the torture that parents can put children through. I bet the quote terminals were designed by someone who had gone through the same ordeal as a child.
In addition, the statistics that move markets these days were not even in existence back in the 1950s or early 60s. So, what accounts for the fact that, as our population has tripled, the volume on the New York Stock Exchange has gone up a hundredfold or more? The real question is whether, with all the instantaneous information we have, do investors make out better than they did 50 years ago?
Bud Stevenson, a stockbroker, lives in Fairfield. Reach him at [email protected]