Crazy Good Stock Market; Crazy Bad Jobs Picture

U.S. stocks on Friday recorded a third week of gains, with the Dow industrials and the S&P 500 both hitting their highest closes ever. The Dow climbed to 15,464, and the S&P 500 rose to 1,680. Up for a seventh session in its longest winning stretch since July 2011, the Nasdaq hit 3,600. The Nasdaq is the highest it has been since it was sinking fast in late 2000 from its March 2000 all-time peak of 5,049, recorded during the truly crazy dot.com bubble.

The market first moved into outer space in May, reaching escape velocity by soaring above market theoretical limits of a Dow of 15,000, an S&P 500 of 1,600, and a NASDAQ of 3,500--a total of 20,100. These thresholds represent the limits beyond which our New FOX Index sails. Now with the Nasdaq blasting past its 3,500 atmospheric limit by 100 points, we for the first time on a sustained basis have all three components of the Index outside the atmosphere--by a total at present of +644 (see chart).

Back on the ground, the picture is far bleaker. Nicholas Eberstadt holds the Henry Wendt Chair in Political Economy at the American Enterprise Institute. Eberstadt finds American real per capita output still well below its six-years-ago level. On its current track, it will be another year or more before per capita output returns to pre-recession levels, to say nothing of showing any long-term growth.  For our actual economy, Eberstadt says, we are looking at a "lost decade":

the labor market. . . is basically a disaster, a crisis far worse than most commentators and policymakers seem to recognize, and with no clear prospects for appreciable improvement over the near-term horizon. Simply put, work in America has in large measure collapsed-and a recovery worthy of the name is nowhere in sight.

Eberstadt writes that if we look at the employment-to-population ratio,

there has been no "recovery" whatever . . . since the Great Recession. Quite the contrary: the employment ratio today appears to be stuck at the same awful level recorded in early 2010--the worst level for more than a generation.

if our national employment ratio today were as high as in early 2000, when this measure reached its zenith, about 15 million more Americans would be working today. And remember: over 10 million of today's men and women with jobs are working fewer hours than they want to--well over twice as many as in early 2000. When we look at the jobs problem this way, we see it is vastly bigger than the official unemployment rate implies.

Eberstadt zeros in on the core problem of our falling employment rate: men out of work (see chart). The male employment ratio reached its peak in the early 1950s; since then, it has taken an almost relentless descent. While the ratio is now at its lowest point, the decline of men at work has unfolded over decades. In the past 60 years, the employment ratio for adult men has collapsed by 20%. So had America's male employment ratios remained at their Eisenhower-era levels, well over 20 million more men would be working today. In 1953, just 14% of adult men were out of the labor force. Today 30% of men are neither working nor seeking work--nearly one in three.

This means, Eberstadt tells us, a large share of working-age Americans are checking out of paid labor altogether. For in today’s America, no work at all is neither unthinkable nor unaffordable, even for adults in the prime of life.

As the stock market booms, Eberstadt warns that:

America's leadership [isn’t paying] serious attention to the collapse of work in modern America. This is an egregious oversight. Our long-term social, political, and economic health all depend upon redressing this critical flaw.