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Issue 1 · Late October 2026
US stocks → Nonfarm payrolls
Common explanation (Ripple · same direction): Rising stock prices add to household wealth and spending, and hiring rises.
This issue: US stocks at 94 (hot), Nonfarm payrolls at 28 (cool) — US stocks above normal, Nonfarm payrolls below normal, not in line with the common explanation.
Hot and cold describe position, not good or bad: warm does not mean a fall is coming, and an extreme reading does not mean a quick reversal. We describe history only, with no buy or sell advice.
Hover over a pendulum or tick to see its name; click to open that indicator.Tap a pendulum or tick to see its name; tap again to open that indicator.
Where it stands now
Where the two indicators stand this issue
US stocks: 94 (84.4% above its 10-year average). Nonfarm payrolls: 28 (0.74 percentage points below its 10-year average).
Tests
Does this link hold up?
Common explanationRising stock prices add to household wealth and spending, and hiring risesSource: National Bureau of Economic Research, “Stock Market Wealth and the Real Economy: A Local Labor Market Approach” (2019). The article measures employment and the total wage bill, not year-on-year payroll growth, and the effect holds only if monetary policy does not offset it.
Tested against our dataBy position (each compared with its own normal — do their highs and lows move together?): agreement between US stocks and Nonfarm payrolls (12-month lag) is +0.12; across every 5-year period (shifted one year at a time), the two moved in that direction in 41 of 62.By change (how far each position moved over the past 12 months — do their swings move together?): agreement +0.26; the two moved in that direction in 50 of 61.
By position41/62
By change50/61
1958–19632019–2024
Each cell is a five-year period (shifted one year at a time): filled = in step with the common explanation, outlined = out of step.●○○Weak or inconsistent
Periods when it did not holdAcross the 5-year periods (shifted one year at a time, so they overlap), the periods out of step cover — by position (62 periods): 1958–1964, 1975–1987 and 1988–2020; by change (61 periods): 1974–1982, 1988–1993, 1997–2013 and 2015–2021.
Does it predict?Prediction test: passes all three hurdles (p < 0.001; the smaller, the less likely by chance), yet when a recent stretch of data not used for estimation is actually forecast, the error for Nonfarm payrolls is 4.8% larger (using Nonfarm payrolls’s own past alone = 100; adding US stocks = 104.8).This is a historical test, unrelated to “Where it stands now” above. The third hurdle’s test (Clark–West) first removes the extra estimation noise that comes from using one more indicator, so a link can pass it while the actual error grows; that is why it is not in the top tier.●●×Error not reduced
History
The two lines, overlaid
Data: Professor Robert J. Shiller, public data; US Bureau of Labor Statistics, via FRED (Federal Reserve Bank of St. Louis). Positions: our calculation.
US stocksNonfarm payrolls
Limits
What this card cannot tell you
Moving together does not prove that one causes the other.
Results for every period are listed in full, including periods that did not agree.