The Employment Situation Room: All Clear, For Now.

Summary

Another month, another strong employment report.
US unemployment rate moves down to 3.7%, its lowest level since December 1969.
"It is more difficult to stay on top than to get there." - Mia Hamm.
Looking for a community to discuss ideas with? The Wheel of FORTUNE features a chat room of like-minded investors sharing investing ideas and strategies. Get started today »
Another month, another strong employment report.
We are counting the 96th (exactly 8 years) consecutive month of jobs growth, the longest streak in history, by far.
longest positive streaks for non-farm payrolls
US Unemployment Rate moves down to 3.7%, its lowest level since December 1969.
In-spite of the headline disappointment, it's not enough to derail the bigger picture.
I will be the greatest jobs producer that God ever created. And I mean that. - President Trump, January 2017.
Say whatever you wish about the US president character, but it's impossible to argue with the economic data that has been recorded since he got elected.
If that chart doesn't work for your narrative, this one should do...
(Author's special request: Please don't use the below thread to turn this factual data into a political debate. Stick to investment/finance/facts please!)
The clear takeaway from this report is that the US economy steams ahead, with wages continuing to rise and the unemployment rate falling to a 48-year low.
I guess that the most interesting thing to ask now is: What such a low unemployment rate means for investors going forward? Well, looking at the relationship between the unemployment rate and stock market S (SPY, DIA, QQQ ,IWM, IWN) returns - there's no reason to be super-enthusiastic.
S&P average forward total returns based on unemployment rate
Sure thing, the data is statistically positive, as is (always been) the case for stocks on a historical basis. However, a closer look will reveal that we are coming off the:
  • Weakest quintile (bottom 1/5th) when it comes to toal returns over the next 1-2 years.
  • Second-weakest quintile (second 1/5th from bottom) when it comes to total returns over the next 3-6 years.
It is more difficult to stay on top than to get there. - Mia Hamm
Bear that in mind.