The Stock Market Is Back To December 2007 Levels; Here Is What Isn't

Tyler Durden's picture

This past week, America's premier financial comedy channel, which lately specializes in such "epic financial journalism" as the real billionaire hedge husbands of New York (because sagging Nielsen ratings are always a direct corollary of central market planning) wasted no time in advising its few remaining viewers that the market, which soared past 1,500, has now regained levels last seen before the start of the recession in December 2007. Sadly, this is the only thing that has been regained. Below we present some things that have not been regained since the last time the S&P 500 was at 1500.

First, as the chart below shows, the S&P is indeed above 1500 for the first time since December 2007.

Unfortunately for the economy, which has ceased to correlate to the stock market courtesy of the Federal Reserve, the stock market and the underlying fundementals, in this case jobs, are now completely independent. The chart below shows that while the stock market may be at its pre-recession levels, the employment situation has only managed to recoup half the total lost jobs, and with 4 million jobs still to go before all the jobs lost are recovered, it is very likely that not even by the end of Obama's second term will the economy have regained all the lost jobs since December 2007.

The chart above assumes that the job picture is static. It isn't. Because while America was losing jobs, its population was growing - there is now a staggering 16 million difference between the number of jobs lost and the increase in the US population.

Naturally, the BLS has an explanation for the above chart. It wants the world to believe that while the US population was increasing by some 200K each month, this was offset by the surge of people not in the labor force - orange line below - which has increased by a record 9.6 million people in the past 5 years, or some 160K each month. The implication is that over the past 5 years, the US labor force - blue line below - increased by a tiny 1.6 million: a number designed with one thing in mind: to show a declining US unemployment rate. Because had the the Labor participation rate kept up with the US population, the US unemployment rate now would be about 11%: not quite as politically palatable as an unemployment rate below 8% for an incumbent president.

The punditry is well aware of the oddity above, so the explanation that the "consensus" has come up with is that during what we already showed is the worst recovery in US history, the baby boomers, whose savings and interest income is virtually nil, can't wait to retire and are doing so in droves.

Great. There is, however, one small problem with this explanation - it is only the Americans aged 55-69, or those who are supposed to be scrambling to retire, who have seen gains in the nubmer of jobs. As the gray line in the chart below shows, since December 2007 it is only the old age cohort of US workers that has seen a pick up in employment, as some 5 million jobs have gone to US workers aged 55 and older.

To all those other American workers aged 55 and young? Sorry: the number of jobs lost since December 2007 in the 16-54 age group cohort is a stunning 8 million!

So to summarize: since December 2007:

  • The stock market is now green
  • US population : +12 million
  • US workers who have left the labor force: +9.6 million
  • US civilan labor force: +1.6 million
  • Jobs for Americans aged 55 and above: +5 million

That's the good news. The bad:

  • Total jobs: -4 million
  • Jobs for workers aged 16-54: -8 million

So who is driving this amazing stock market, and only stock market recovery: it is obviously not the workers which are still below 2007 levels, nor is it the actual economy, which as we showed previously, has "recovered" at the worst pace in US history:

Who is it? Here is the answer: