The labor market pulled back from the brink last month. Private-sector job growth rebounded in September for a net gain of 137,000, a dramatically higher pace over August’s meager 42,000 rise, the Labor Department reports. The case for expecting a recession’s near, in other words, has fallen a notch or two. But while September’s job market improved, the growth rate is still weak. The unchanged 9.1% unemployment rate for September makes this point loud and clear.
Daily Archives: October 7, 2011
The Calm Before The Storm?
The Treasury market’s inflation forecast has been a reliable barometer of the ebb and flow of crisis and recovery in recent years. In July and August of 2008, just ahead of the implosion of Lehman Brothers that triggered a financial panic, the yield spread between the nominal less inflation-indexed 10-year Treasuries was falling sharply. That was a warning sign of trouble ahead. In early 2009, by contrast, this inflation forecast started trending higher, telling us that the worst had passed. When inflation expectations softened again in the spring of 2010, the shift sent a message that the economy faced new challenges. Later on in the year, when this market forecast hit bottom at the end of August 2010 and started climbing soon after, it represented a vote of confidence that the Fed’s newly announced QE2 monetary stimulus would have some traction in the economy. And earlier this year, when inflation expectations turned down again, starting in April, that was a sign that a new macro storm was lurking.