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Continued improvement in weekly claims supports equity prices

Unemployment claims continue to decline in a fairly impressive fashion. I take this as a sign that businesses have worked very hard to cut costs and trim their labor force; most of the layoffs that were required by the economy's new reality (a housing and financial market bust) have already happened. This sets the stage for a resumption of healthy growth, which should become apparent in the months to come. Below is the same chart I posted yesterday, updated with today's numbers. The message is the same: improving economic fundamentals provide strong support for equity prices.

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