NDR.bmp

We’ve been discussing the “Nonfarm Payrolls % change from Recession End” for quite some time now. Each time we revisit this chart, I am struck by how starkly different this recession/recovery cycle is from the preceding business cycle(s).

A reader sends in this Ned Davis chart (below), which looks at the issue from a somewhat different angle. NDR observes that the first interest rate hike does not occur on average until employment ticks up by 4% from the cycle low (The cycle low in August 2003 was payroll employment of 129.789 million).

Click for full chart
non_farm_payroll_vs_last_5_expan

Davis further states:

“If employment needs to rise 4.0% before the Fed takes the punch bowl away from the bull party, this would imply a rise of 5,191,560 new jobs. At 112,000 per month (last month’s employment rise – the best since December 2000) we would need to wait 46 months before the Fed hikes rates.”

Additonally, rate hikes aren’t nearly as fatal to the markets as many assume them to be: Davis notes that “stock prices continue to rise for 1, 3, 6, 9, and 12 months later, on average.”

Category: Finance

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