In the financial markets, there's a pattern known as a "dead cat bounce." The evocative phrase is perhaps another relic that should come up for reconsideration in our more carefully worded times, yet the concept is real: After a rapid fall from a great height, there's somewhat of a rebound off the bottom. But it fails to retrace the entire drop before stalling and falling again.
The question for today is whether this is where the U.S. economy is now.
The monthly jobs report came out Thursday. It showed that 4.8 million jobs were added and that the unemployment rate is 11.1%. Both data points reflect continued improvements after the dramatic declines that followed the full-fledged emergence of the coronavirus.
Take most any other measure you can think of — consumer spending, small-business health, the stock market itself — and you'll see a similar pattern. It didn't just go splat; it rebounded optimistically. But it's leveled off now without having returned to the prior peak — in most cases, not even close.
That makes sense, given the resurgence of the coronavirus in many places, the threat of new shutdowns and the approaching expiration of emergency unemployment benefits. Everything turns on the pandemic and the response. Some hope Americans can rescue themselves by more reliably wearing face masks, preventing the need for widespread reclosures. Another reason to wear them, if you needed one.
The patterns on the financial charts do look like a classic dead cat — er, bear market — bounce, but there's still a chance we're just seeing a cautious plateau en route to better times. In any case, aren't cats said to have nine lives?