The primary driver of this 10% correction in stocks has been the slowing economy here and around the world (see chart at Tuesday, 7:54 AM).
How slow is it? Take a look at the chart below that plots wages, employment & production. This plots the % change, not the level.That’s very important.
Click chart to enlarge.
The change rate in production and employment is back to the average rates before the economic mess that started around the end of 2007. So, their change rate is about what it used to be.
The problem is that does very little to make up for the large losses 2008-2010. At current rates, not much progress is being made on climbing out of the hole. We are higher in the hole than before, but not out. This is what is different about this post-bubble “recovery.” There is no big jump upward to rates that would erase the effects of the dip. We ought to have gone as high above the norm as we did below.