S&P 500 and relationship to jobless claims
This is an interesting post that came up on Bloomberg recently based on the relationship between the S&P 500 and US jobless claims. The post was written in response to the people who say that the US economic recovery is a myth and that what you actually have is a Fed-inflated bubble (that is going to burst). The writer of the Bloomberg article referred to the chart below showing the relationship between jobless claims and the S&P 500 as one of his favourite ones, since it shows the correlation between jobs and the index's growth.
If you notice on the chart that jobless claims hit their worst level in 2009, exactly the same time the stock market bottomed out in 2009 . When the jobs claims fell, the S&P 500 rose. The growth in the economy and the fall in jobs has been in tandem providing evidence that the market turnaround was a genuine reflection of what was going on in the real economy. On Thursday, April 19 the initial jobless claims fell to a 50 year low at 192K vs 205k estimated. See here for the latest jobless claims release covered by Greg. This correlation would suggest that there is more strength still to come for the S&P500.