A Tale of Two Economies
Stock market indices rebounded in early 2019 and seemed to reverse the downward spiral witnessed in 2018. During the final days of 2018, financial media coverage, discussions, and debates centered on the root cause(s) of the decline, but as of January 8, 2019, those discussions began to address the reasons for the markets’ reversal. Indeed, market watchers and participants should understand that in general, equity markets demonstrate volatility in the short term. Supplementing the market view are the fundamental, economic statistics releases occurring each week and month that reveal changes in hiring, wages, exports, orders, inventories, and other economic flags.
Offsetting 2018’s interpretations of major stock indices’ movements, were reports of a 312,000 increase in hiring in December 2018 by the Bureau of Labor Statistics. Overall payroll employment continues to increase in this Administration, based on the latest statistics. A declining equity market combined with better prospects for American workers might suggest the existence of contradictory signals, but more likely, point to dual economies or even to a bifurcated economy. In this economy, workers and small to medium private business owners experience economic prosperity and growth while large-cap companies, subject to global influences, begin to falter in the face of downsized financial projections. Payroll employment for the year in 2018 increased by 2.6 million over 2017, led by the healthcare, construction, food service and manufacturing industries.