U.S. job gains or losses receive prominent coverage in the monthly financial news cycle, with media and expert commentators generally interpreting employment changes as an indicator of future economic and stock market health. One line of reasoning is that jobs generate personal income, which spurs personal consumption, which boosts corporate earnings and lifts the stock market. Are employment changes in fact predictive of U.S. stock market behavior in subsequent months, quarters and years? Using monthly seasonally adjusted non-farm employment data from the U.S. Bureau of Labor Statistics (BLS) and monthly S&P 500 Index levels during January 1939 (limited by employment data) through June 2021, we find that:
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