What, Me Worry?

To the ordinary citizen, a big jump in the unemployment rate seems like bad news. What could possibly be good about the fact that almost 400,000 more people were out of work in April than in the preceding month? After all, that painful increase hurts not only those without jobs and their families, but the malls and supermarkets where they shop as well. Yet when the Government reported that joblessness rose by 0.3% to 5.3% in April, financial insiders ( applauded, the bond market surged while stocks staged a brief but sharp rally, and publications ranging from USA Today to investment-house tip sheets heralded the increase as "good news." What gives?

The answer lies in the contrary way that economists have come to view the world during the long expansion of the 1980s. Instead of bemoaning the big leap in the number of unsuccessful job seekers, the experts cheered it as a sign of a slowdown that lessens the chance of a new burst of inflation. "No matter how bad the news," observes Pierre Rinfret, a Manhattan-based economic consultant, "the market will find something good in it." Just as the market, which seems to obey none of the usual rules, almost always manages to find something bad in the very best of news.