I've heard it so many times, "Why does this not feel like things are really not ok?" Usually that is in the context of economics in the USA. Here in Colorado I have to say that things locally have been doing extremely well with housing prices again going crazy up over the last few years. I seem to hear about startup companies coming out every single day. And it is easy to get caught up in linking the local economic success to the nation as a whole, but here I have to show you a couple of charts that I've updated each month for the last 10 years.
Both charts are built with the unemployment numbers the labor department publishes each month. The chart on the left is based on the reported unemployment percent, while the chart on the right adds back in the "Not in Labor Force" #s minus the historical average % relative to population #. Which just means I add back in the abnormal amount of unemployed individuals that do not belong in the "Not in Labor Force" bucket to get a true unemployment percent. It's rather simple math and logic, but it shows a very different picture.
It may explain why Denver is bringing in out of state families from all across the United States to come work here. I see a minimum of 8 to 10 out of state license plates a day just driving around. I usually only see that in the summer months but now its constant year around. Economics are not well nationwide and families are moving thousands of miles seeking jobs they used to be able to find within a hundred miles.
The real unemployment picture is not what everyone would wish to see and the reported picture I'm sure has had some positive effect of building back the confidence of the population, but for the investor it holds a concern. And that concern is this, "If the government cannot give a more accurate picture with the unemployment numbers how confident can we be in our economic fed picture?" I encourage you to do your own observations. I cannot predict market turn points with any accuracy, but when things start to make less sense for a long time it usually means a time will come to balance the equation. Just have a strategy for when the market goes up, sideways and down.
John Hamel is the Managing Member of Austec Wealth Management, LLC. helping business owners optimize relative to their company value and personal life.