For more than two years, the stock exchanges have been watching the unemployment rate closely to see if a trend reversal upwards is emerging. To do this, I have to take a short detour.

In the spring of 2020, the governments in the West (with the exception of Sweden) initially paralyzed the entire economy with their quarantine measures in the ultimately futile fight against the spread of Corona. A devastating economic collapse began. As a result, the US unemployment rate shot up to almost 15%.

Now the same governments woke up. Their re-election was severely endangered. They wanted to “catch” the resulting, gigantic losses through printing money and massive new debt. This seemed to work as well.

However, at the price of massive inflation that made whole population strata really poor. And at the price of an extremely high, no longer sustainable indebtedness. However, there were plenty of other scapegoats for this.

And now back to the labor market in the USA. Here the numbers in the course of the “rescue measures” went down very nicely and quickly (the price for this: see above).

With the unemployment rate it went down to the current level below 4%. This magic mark is still monitored by the stock exchanges with eagle eyes.

US unemployment rate: Currently everything is fine

Source: stockcharts.com

For a little more than two years, the US unemployment rate has remained in the range between 3.4 and 4%. As long as that remains the case, everything is fine for the stock exchanges. Even comparatively high interest rates are being tolerated. Which is by no means self-evident.

A further increase in unemployment above 4% would be fatal. Then consumption would collapse, on which the majority of US economic performance depends. Then neither interest rate cuts from the US Federal Reserve nor would help if people simply have no more money and can no longer get credit.

That is why it is also good that the US unemployment rate has recently decreased again – from 3.9 to 3.7%. With this value, the stock exchanges can live very well. If there are no further interest rate hikes in the USA “en masse”, this should remain so for a while. Further rising share prices would then be very likely.