When I was younger, I was fascinated by the stock market. Every afternoon I could catch the Dow Jones Industrial Average on the radio (the now-defunct NBC Radio Network had a brief news report around 5:00 on WCIR), and I'll admit it, there was a period of time when I would dutifully write it down. Very Rain Man-esque, sure... but I wasn't the most social butterfly back then, and besides, there just wasn't a lot going on in Beckley in the mid-80s. So I was more than happy to keep up with the numbers, stats, and crazy people trying to make a buck.
Black Monday, October 19, 1987. The Dow dropped 508 points. That was a big deal, and it still is — over 22 years later, it remains the largest one-day percentage drop on the Dow ever. (See, there are those statistics I was talking about.) It's a true outlier, and I was there when it happened.
Thursday, May 6, 2010. The Dow drops 654 points in the space of 22 minutes, putting it down almost a thousand for the day. And just as quickly, it bounces back, finishing the day down "only" 348 points. The huge plunge is an outlier in a different sense because it took place over such a short time frame and was completely unexpected.
And despite things bouncing back to "normal" — assuming you can call a 348 point drop normal — I don't like it. Since it's happened once, it could happen again, and there isn't necessarily going to be an immediate bounce back 20 minutes later. It makes me think the much-touted economic recovery is a convenient fiction.
While we're at it... let's take a look at some more numbers. The US added 290,000 jobs in April, which is the biggest pickup in four years. Yet somehow the unemployment rate rose from 9.7% to 9.9%. What?
Apparently the government has a different definition of unemployment versus the commoners. I've always thought unemployed meant "willing and able to work, but not doing so adequately." The government says you're not unemployed unless you're actually looking for a job. People who had previously given up looking for a job are now doing so, thus making them technically part of the labor force again where they previously were not, thus making the unemployment rate go up.
Bloomberg has a more realistic view:
The so-called underemployment rate — which includes part-time workers who'd prefer a full-time position and people who want work but have given up looking — increased to 17.1 percent from 16.9 percent.
So basically the people who weren't looking for work and decided they wanted to are already included in the Bloomberg number, and that number still went up two-tenths of a percent. Which means there are even more people who have employment levels below what they actually desire.
So is the economy improving or not? It's hard to say. The stock market isn't quite stable and the unemployment rate is iffy (not to mention its definition). The only way to know for sure is to look back on this point in six months and evaluate it then. Unfortunately, hindsight doesn't help anyone who's unemployed or underemployed today.