I couldn’t resist throwing at least a little cold water on the good jobs report. My fundamental position is that time will tell and one good jobs report doth not a trend make. While I rejoice in the good jobs report I think we need to consider it more closely.
I’ve already mentioned my first cavil: we’ll need to see jobs reports like last month’s for a good two years before we reach the previous jobs peak. How likely is that to happen?
According to the NBER, the official scorekeepers on recessions, roughly 84 months have elapsed since the last peak in the economy. In the post-war period only three business cycles have seen expansions longer than that: the expansion that began in 1961, the expansion that began in 1982 (the Reagan boom), and the expansion that began in 1991 (the dot-com boom). Does this feel like any of those periods to you? Me, neither.
Average post-war duration from trough to peak has been 54 months.
Also, consider the graph at the top of this post. It depicts oil prices from 2000 to the present. The current spot price is below $71 per barrel. There is a non-conformist theory of the Great Recession that says that buying houses you couldn’t afford, credit default swaps, and so on were all sideshows and the real cause of the Great Recession was a rapid increase in the price of oil. The Saudis won’t keep the taps open forever. Even if they wanted to they can’t.
There is a folk tale, made popular in the movie Patton, that in an official Roman victory celebration, something only granted by the Senate to the greatest victor or vir triumphalis, the victor paraded through Rome in a chariot but stationed behind the vir was a public slave who whispered in his ear, “You are not a god.” That’s the little voice I’m referring to in the title of this post.
Or, as Han Solo put it, “Great kid. Don’t get cocky.”