We have good news and we have bad news.
First the good news: On Thursday the Department of Labor announced that applications for unemployment benefits in the U.S. fell to a 14-year low. That’s not a typo. Applications for unemployment benefits haven’t been this low since April 2000.
It seems like that ought to be a banner headline. But it isn’t.
That’s because of the bad news: The stock market went bananas this week. At its low point Wednesday, the Dow Jones industrial average was down 460 points – 2.8 percent – for the day.
When the good news about employment came out from the Labor Department at 8:30 a.m. on Thursday, the Associated Press quoted Ian Shepherdson, chief economist at Pantheon Macroeconomics, as saying the report was "spectacular" and "astonishing.”
The other big news service, Reuters, quoted Stephen Stanley of Amherst Pierpont Securities saying, "Have we achieved full employment? Not yet. Are we getting closer? Absolutely."
But all the big business and financial web sites were leading with stories about the continued stock market swings.
This schizophrenic snapshot pretty well reflects how voters and consumers on all streets other than Wall Street see the economic world. The pessimism wrought by the Great Recession simply hasn’t lifted. It is the longest financial bad mood of post-war era.
We can add more reasons for optimism to the conversation. The Federal Reserve announced, also on Thursday, that industrial production rose 1 percent in September, the largest monthly increase since May 2010. Oil prices have been dropping and are at their lowest price since June 2012.
The unemployment is down to 5.9 percent, a six-year low. The American economy added 2.64 million jobs in the past year, the best performance since April 2006. Using the Thursday Labor Department report, The Wall Street Journal calculated that “the odds of getting laid off are stunningly low: lower than the bubbliest months of the housing bubble, and lower than at the end of the 1990s tech boom, which was the longest economic expansion in U.S. history.” Yet the Journal notes that polling by Gallup find that 19 percent of workers fear they’ll be laid off soon.
The good numbers are mere factoids that roll off the “99 percent” like water off a lame duck. The worries endure, rationally. Hiring hasn’t bounced back as in prior recoveries, wage growth has been lousy and so consumer spending has been weak.
Many market watchers warned all year that Wall Street was ignoring the worries of Main Street, that stock prices were overvalued. This week saw a bull market in worries – about a market bubble, new problems in European markets, depressed consumer spending, changed in Fed policy and, of course, Ebola panic.
Voters – and consumers – never moved out of worry mode.
The lingering pessimism is the reason why the incumbent president’s party will fair poorly in the midterm elections. The political markets have been fully predictable even if the financial markets haven’t been.
But K Street and both ends of Pennsylvania Avenue also have been as oblivious as Wall Street in this sense: They don’t want to believe that voters are pessimistic about both parties and all the institutions of government and Washington.