How does the unemployment rate impact my investing strategy?

Hey there, fellow and future investors and curious minds! February's jobless rate came out today at 3.9%, up from 3.7% in January. Woohoo, more people are unemployed, and investors are feeling pretty optimistic! Wait, WTH?

Let's start with what the jobless rate is. It measures folks who really want to work but can't find a job, not even at the local burger joint. I don't know who couldn't get a job at my In-N-Out since the line is always around the block, but that's what it measures.

Think of the jobless rate as a kind of thermometer for the economy. When the economy's temperature is the "normal" 98.6°F (38.3°C), it feels pretty good! Businesses are hiring, people are spending, and folks are only calling in sick because they are hung over. But, when the economy's temperature is 101°F (37°C), it doesn't feel like doing anything, especially shopping. Also, like you, when the economy's temperature is 97°F (36.1°C), it's not doing anything but Googling what is wrong with them. Like a too-high or too-low fever, a jobless rate that isn't normal can signal trouble. So, again, why would an investor be happy?

It's all about what a "normal" temperature is for the economy. My body is typically about a half degree lower than "normal." Let's face it, no one is normal, and it's the same with unemployment. Economists (smart dudes) say that "normal" unemployment is a tad over 5.1%. So, with the February unemployment rate up 0.2% from last month to 3.9%, the economy is getting closer to normal, and that's a good thing! The economy is Googling less about what's wrong with it and going to In-N-Out for a burger! Let us know in the comments what you do when you are feeling good! Also, post any questions that you have about investing, unemployment, interest rates, or the economy!

Until next time, happy investing, and keep chillin'!

XOXO Rich Mom