Who is leading; who’s following?

Employers hate to have mass layoffs; they lose some good, experienced people when one occurs.  They also hate to take on the expense of new employees, delaying hiring until the need is overwhelming.  So empl0yment figures tend to be a lagging indicator, often bottoming well after cyclical economic recoveries begin.  On the other hand, housing starts suggest future demands for labor, materials such as lumber and carpet, durable goods like refrigerators, enough anticipated demand from employed, credit-healthy buyers, and so forth.  They are a leading indicator suggesting the economy’s future trend.  Today we hear unemployment claims are at a 27 year high.  Not good, but a lagging indicator.  We learned housing starts are at the lowest ever recording since the data series began compilation back in the 1950s.  Not good; that one is looking forward.  And Microsoft says they can’t even determine at present what they think business will be like by the end of this year, pulling their formal earnings projection.  Wow!  At least they’re being honest.  We don’t know who’s leading this danse macabre yet, so it’s hard to make bold asset allocation decisions.  At least that seems to be the message coming grom the bond markets with Treasuries still hovering around all-time lows.