Strategist Ed Yardeni says that the “New Normal” scenario that has been promulgated by Bill Gross and PIMCO is off base — and says recent economic data proves it.
“While Bill Gross sees a world full of new normals and paranormals, the old normal business cycle continues to show that it is still in gear,” Yardeni writes on his blog. He presents a chart of the trend of initial unemployment claims following the past four cyclical peaks (2009, 2001, 1991, 1982). “The latest cycle looks just like the past three cycles and even the earlier ones too,” he writes. “Jobless claims spike up in recessions. They peak at the end of recessions. They fall sharply early during recoveries. Then they meander for a while at relatively elevated levels above 400,000, causing widespread anxiety that the recovery is jobless. Then they drop closer to 300,000-350,000.”
Yardeni says other economic data — including manufacturing figures and homebuilding data — confirm that we’ve been seeing an “old normal” play out yet again, not the emergence of a “new normal”. Americans, he says, “are getting back to business and doing their darnedest not to get distracted by the apocalyptic scenarios that have been in fashion since the near-death experience of 2008.”