By Tom Hudson, The Miami Herald –
There are just two more employment reports to go before Election Day. The next comes Friday, with early voting already under way in half of the states. Both political parties will bend and twist the numbers to fit their messages. But the data are unlikely to matter much to the investment markets.
That seems strange, considering employment’s fundamental role in a growing and prosperous economy. After all, the United States’ economic engine is powered by consumer spending. That spending requires cash or credit — and those require income. But despite stagnant job growth, eroding household earnings and tight credit standards, the stock market has climbed higher. The stock rally hasn’t been in spite of the weak employment market but, at least in part, because of it.
Consider the S&P 500 index is up more than 20 percent in the past year while almost 1 million Americans have dropped out of the labor force. Employment has been trumped by the Federal Reserve’s declaration that it stands ready to help the economy in general and the job market specifically.
That pledge has drawn billions of dollars into investment markets even as American companies remain reluctant to add jobs. And in the logic of markets, until job creation picks up significantly for months on end, the Fed is likely to continue with its easy-money policies.