The Unemployment rate has dropped to 3.6%, the lowest it’s been since 1969. While it is true this gain is built on a smaller number of people applying for jobs, let’s not forget that the April jobs report estimates 263,000 new positions as well. Real world unemployment is about is good as it can be. In related news, corporate earnings season has been pretty good. Some sectors – particularly energy – have had struggles but sentiment has been high and earnings have been solid.
In the wake of all of this positive information, we’re not surprised by continuing stock market highs. What does surprise us is the reticence of the administration to welcome the good news. All they really have to do is stay out of the way, but additional threats of tariffs (to be enacted this Friday) wiped out three weeks of stock market gains in one morning. Market analysts assert this sort of bellicose escalation is par for the course from the White House and it is merely posturing. They believe an ultimate trade deal really is more probable than not, but there are few short term gains to this sort of pressure. Worse, it reminds investors of other potential pitfalls, notably the auto deal with Europe.
Good news generates political capital, so it seems like the administration might be best served if they could step aside and just accept the easy wins.