Feb 022012

The chart below shows how S&P 500 and Weekly Unemployment Claims have trend since 2001. There is an obvious relationship as Unemployment Claims can be thought of as a barometer of the economy’s health, and S&P 500 is also dependent upon that. However, it is not a straight line relationship as Claims cannot keep falling forever for S&P to keep going up. Between 2005 to 2008, claims bottomed at around 300K, but as long as they were not growing, S&P 500 kept gaining strength until claims started rising in 2008.