Idea storage

Saturday, July 09, 2005

Unemployment hits lowest rate in almost four years.

Unemployment rate hit a nearly four-year low in June at 5%. It hasn't been lower since September, 2001. Interesting how this AP Economics story doesn't discuss that curious coincidence/ connection (how you describe it depends on your perspective). Meanwhile, the price of oil barrels dropped slightly. I think high oil prices are good for the economy. See here for my opinion on that.

On news of the low jobless report, the dow went up to 10,449. The dow, in my opinion, is "our" (all of the people in the United States) collective best estimate of a representation of our total net worth. While the dow doesn't necessarily reflect how much we have, it reflects how much we think we have which, for immediate purposes that we deem "the economy," is more relevant. Economics is ultimately psychology -- the more we think we have, the more we'll spend, and the less hard we'll work, and thus our standard of living will immediately rise. However, the more we spend and less hard we work in the short-term, the less we'll have to spend and the harder we'll have to work in the future. This will then force a reassessment of our assets in the future, when we have less than we otherwise would have. (Of course, such a simple analysis ignores the factor of technology, which theoretically means that total assets could rise even with less total labor). That explains the cyclical nature of the economy - the constant reassessment of assets.


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