 By Alan Hall, originally published in the May 2011 Socionomist |
The list that follows shows six results of the two-year positive mood trend as of April 2011.
Economic activity has rebounded. The Conference Board Leading Economic Index for the U.S. is up 17% since March 2009. The index is based on 10 variables, including the University of Michigan’s Consumer Sentiment Index, the S&P 500, and the Census Bureau’s monthly report on building permits.
Unemployment is down slightly from its recent high of 10%. The number of hours worked is up.
People are borrowing and lending money again. Total Credit Market Debt has nearly regained its March 2009 all-time high level, while the National Association of Credit Management’s poll index, which measures economic optimism, has moved back into optimistic territory. Fear of credit risk has fallen, as evidenced by corporate bond yields, which are down from 25% to 7.7% since November 2008.
Foreclosures and defaults have slowed. U.S. home foreclosures [Bloomberg HOMFDEF Index] have dropped 56% since April 2009.
Economists are more relaxed and confident. As you can see from the headlines in Figure 6, economists were a bundle of nerves near the social mood low in February-March 2009, but brimmed with confidence in April 2011. In fact, this April 21, 2011 headline suggests that punitive focus has shifted to a new type of target, the harbinger of doom: “Wall Street Economists Question Nouriel Roubini’s Predictions and Investment Advice.” Roubini predicted the current housing crisis and continues to remain cautious about prospects for economic recovery.
Figure 6
The drug war re-escalates. The July 2009 issue of The Socionomist showed that society tends to enforce drug laws in bull markets and tolerate drug use in bear markets. In late April, U.S. and Mexican officials met to increase joint efforts to halt the increasingly violent cross-border drug trade.■
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Most economists, historians and sociologists
presume that events determine society’s mood. But socionomics hypothesizes
the opposite: that social mood regulates the character of social events. The
events of history—such as investment booms and busts, political events,
macroeconomic trends and even peace and war—are the products of a naturally
occurring pattern of social-mood fluctuation. Such events, therefore, are not
randomly distributed, as is commonly believed, but are in fact probabilistically
predictable. Socionomics also posits that the stock market is the best available
meter of a society’s aggregate mood, that news is irrelevant to social
mood, and that financial and economic decision-making are fundamentally different
in that financial decisions are motivated by the herding impulse while economic
choices are guided by supply and demand. For more information about socionomic
theory, see (1) the text, The
Wave Principle of Human Social Behavior © 1999, by Robert Prechter;
(2) the introductory documentary History's
Hidden Engine; (3) the video Toward
a New Science of Social Prediction, Prechter’s 2004 speech before
the London School of Economics in which he presents evidence to support his
socionomic hypothesis; and (4) the Socionomics Institute’s website, www.socionomics.net.
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The Socionomist enables you to see trend-shaping waves of social mood, as reflected by the stock market — and capitalize on them. The June issue looks at phases of social mood and features a “Research Roundup,” which highlights five academic studies that shine a light on important aspects of socionomic theory. Mood Riffs topics include “quiet luxury,” loneliness, the Writers Guild strike and efforts by countries to trade in currencies other than the U.S. dollar. Read the June issue when you become a Socionomics Premier Member.
