Unemployment has shifted from a lagging indicator to a leading one and is warning government policymakers to confront problems in an economy mired in slow growth.
The consideration of unemployment as a lagging indicator is a favorite mantra among economists who believe the rate primarily looks at the past rather than what is to come.
But the internal details of current trends paint a different picture: More than half the labor force out of work for more than 26 weeks, the average length of unemployment at greater than 35 weeks, and the unemployment rate of 25.7 percent for 16- to 19-year olds.
Stock prices are getting toward fair value. We're not quite there yet because I don't think analysts quite understand what the new normal looks like in terms of lower growth and lower top-line revenue growth, but we're getting there.
We find it striking that consensus, which used to romance a 'V' (recovery) is now moving toward what we've been calling the new normal, and some people are going right through the new normal and romancing a double-dip and a depression. What you're seeing is a move in consensus that has repriced the bond market and is repricing the equity and credit markets.
~~ Mohamed El-Erian, Pimco co-CEO
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