Gains in market, spending, and production leaves many asking “Where are the jobs?”

Less than a quarter of the way into 2010 economists are feeling quite bullish about indicators that the market and thus the economy can be trusted again. While these positive signs plus growth in consumer spending all lead to a recipe for economic improvements, the missing ingredient remains the lack of jobs that seem to be the countering aspect to this recovery, if indeed we can call this a recovery so soon.

Defining the actual timing of a return in confidence is the concern being cited by many, some say it is returning, others say it will follow soon while yet other economists infer that without a reduction in unemployment confidence will be fragile if even possible. Its that return in confidence that all the statistics and reports can’t make happen but a return to a feeling of trust in an economic system that has seen severe setbacks in the banking industry, unemployment hikes and diminished productivity over the last few years. So if you focus on investors is the confidence returning to that arena at least? After all this is a market that has seen very significant gains in the last 12 months, the average mutual fund is up over 40% in that period while the average bond fund has improved by 20%. You would think that such results would have investors feeling rather hopeful but the results of a recent survey leave that in some dispute.

A recent Bloomberg News poll surveyed 1,000 Americans to determine how their stocks are performing. The results seem inconsistent with market performance over the intervening 12 months but only 31 percent stated that their ‘portfolio was better off’. 22 percent stated that their value was ‘essentially the same’ while an alarming 46 percent stated their investments were either a ‘lot worse’ or ‘little worse’ than a year previous. So does this suggest investors are licking their collective wounds or that their is a lack of faith that the recovery is genuine at this point? Quite tellingly when asked how they felt the economy was performing versus a year earlier, 57% said it was either a lot or a little worse. That feedback belies a market that is at its highest point in almost a year and a half. Trying to interpret the survey leads to speculation but confidence must surely be playing a significant part.

Logic suggests that more optimism will only return when jobs come back to what are considered ‘normal’ levels. History proves that the job market is the last thing to bounce back post-recession but that fact doesn’t console those looking to invest or borrow capital into the overall market. This week the statistics for March are due and optimism is that a net gain of those who are employed will be displayed but that will not be enough to jump start a change in perceptions overnight. These are deep trenches to be digging out from and analysts feel it would take at least 6 consecutive months of growth in the labour market for a general acceptance of a recovery to be in place.

The last 18 months have shown (in the US) a tendency to print more money and throw it into the system, a process that in turn only leads to interest rates being pegged at the historically low rates they currently reside at. The changing facts, perceptions and data associated with the economy are proving fascinating to observe so far in 2010. We’ll do our best to interpret these events here at Miratel.

Survey statistics for this article are courtesy of Bloomberg.com