Economic Lessons from British New Wave

A few months ago I wrote about How To Make Yourself Feel Better When The Stock Market Tanks, and today's market action may be a good time to revisit that post.  Terrible economic numbers led to a huge selloff again today, capping off a really painful month of 8.5% declines in equities.  Unemployment is now back up to 8.2%, and in the past month, only 69K new jobs were created, which is half of what was expected, and significantly less rosy than the 275k jobs added in January.  So where's the silver lining?  For that we must turn to Europe.

In 1983, my parents decided to let me and my friend go alone to a rock concert at the Greek theater in Hollywood.  The top of the bill was scowling English singer (and one of my personal musical fav's), Joe jackson, and the opening act was another UK export: an impish young singer in a parachute jumpsuit named Howard Jones.  I was too young to understand anything about the world economy, but seeing as the U.S. jobless rate in 1983 was 10.4%, I now see what Jones meant when he sang "Things can only get better"!  In the UK it was worse --- joblessness in 1983 was over 11%.  By the end of Reagan's second term in 1988, the unemployment numbers declined to 5.4% here in the U.S., and they came down to 8.6% in the U.K., under the warm and loving leadership of Margaret Thatcher.  So things DID get better!  Did the economic improvement come as a result of Jones's infectious optimism?  Perhaps. 

(Later today, you'll have me to thank for the "wo, wo, wo-o-oh" stuck in your head.)

Relative to the impressive job creation data that was coming out a few months ago, today's job numbers look pretty bleak, but when those numbers eventually start improving, the new numbers will look great compared to what we got today, and then everyone will feel better, and start buying up stock to celebrate.  Of course, one of Howard Jones's other big hits was "No One is to Blame", and although that's a beautiful sentiment, we all know who's to blame this time.  Europe.  This whole austerity thing doesn't seem to be working out so well.  Think we've got it bad? Unemployment in Spain is like 24%!  But are they practicing Howard Jonsian optimism? No!  They're rioting in the streets!  They'd be thrilled to see unemployment at 8.2%.  See?  It's all relative.

We've all just been busy watching Kate Middleton's belly for signs of an heir, so we may not have noticed that the UK unemployment rate is currently at 8.2%, just like ours.  And we need a good distraction right now, because watching our investment portfolios decline in value is no fun, and economic improvement can sure take a long time.  The Brits are all wrapped up in Jubilee Fever right now, as Queen Elizabeth celebrates 60 years on the throne with a Diamond Jubilee extravaganza this weekend.  Sure, she's just a figurehead, but the British monarchy drives an estimated £800 million annually in tourist revenue, and the royal household alone employs about 1200 staff members.  Haven't you been watching Downton Abbey??

Watch the video of Howard Jones singing "New Song" .  You'll be so busy watching his improvisational mime sidekick Jed Hoile, that you won't notice there's no band or anything, just Jones and a keyboard, and that would be kind of boring to watch by itself.  Let this video be your example of how to distract yourself while market conditions improve at a snail's pace, and remember that crappy numbers make a good baseline for future year over year comparisons..  Also, busy your mind reading into the lyrics:  "Don't crack up, bend your brain, see both sides, throw off your mental chains."