So many people are asking the question, how bad will the economy get? Although there are a number of different data points and metrics to keep an eye on, I truly believe the real answer will lie in a single area, the job market. As a consumer and an investor, if you want to know just how bad things will get, keep a close eye on things such as the weekly jobless claims number as well as the monthly non-farm payrolls data.
Why do I simplify this all the way down to the job market as being the single thing that you should watch? It really is quite simple if you consider all of the reasons that a terrible job market hurts our overall economy badly. A consumers fear of losing their job certainly drives them to spend far less money, which in turn hurts economic numbers. If one actually does lose their job they most certainly won’t be out spending money on discretionary items. Finally, and very importantly, a poor job market means poor business to business spending as well. If a company is slashing jobs quickly it is unlikely that they are spending a whole lot of money to input new technologies, softwares, etc.
The most recent job numbers have been extremely bleak, and today’s weekly jobless claims number was the worst one in 26 years, so the signs are not looking good at all. In the interim it is likely that things will get even worse before they get better, but if our economy is going to stabilize anytime soon we will have to see a slowing in the number of jobs being lost. The American economy simply cannot turn around without the job market stabilizing. While all the experts are crunching every number, save yourself some time and energy and simply watch the job market, it will show you the economic picture.
