Before an afternoon pullback today, the Dow Industrials tapped their highest intraday level since before the anxious days prior to Lehman’s collapse.
Of course, markets were descending back then as storm clouds continued to darken, rather than ascending as they are now. While the financial system certainly appears to be on firmer footing than it was more than two years ago, two enormous burdens on the economy — unemployment and the weak housing sector — are actually in much worse shape. And don’t tell us the market is pricing in better times for housing and employment, because neither one shows much sign of any meaningful turnaround.
Consider this: Back in Sept ’08, the unemployment rate was an enviable (by today’s standards) 6.2%, with roughly 9.6 million people unemployed. There’s now 15.1 million jobless, up 57% — in a little more than two years. Forty-two percent of the jobless now — or 6.3 million — have been out of work for 27 weeks or more; back in Sept ’08 there were only two million out of work for that long, or 21% of those unemployed.
Now for some housing stats to consider — September 2008 existing home sales were originally reported at a 5.18M annual pace; the latest data from NAR showed October at 4.43M pace, down 14% from the pre-Lehman days. Meanwhile, housing starts for Sept 2008 ran at a 828,000 annual pace; in October this year, the pace was off 37% from back then, at 519,000.
Stocks are back to where they were 27 months ago, but the two most crucial pieces of a lasting economic expansion still in the dirt.
Make sure you listen closely for a hissing sound, citizens.