Unemployment is at a 14 year high according to figures released by the Labor Department last Friday.
The unemployment rate spiked to 6.5% in October from 6.1%. The country has lost about 1.2 million jobs so far this year, with more than half of those losses coming in just the past three months.
The post-World War II high water mark for unemployment of 10.8% was achieved in the 1982 recession that followed the Reagan administration’s ultimately successful war on inflation. The 1992 high point for unemployment was 7.8% following the 1990 – 91 recession and U.S. S&L crisis.
According to a report by the Wall Street Journal, many forecasters expect joblessness to top 8% by the end of 2009.
Spiking unemployment could actually be a positive sign for investors. In 1991, the year before the 1992 peak, US stocks climbed 26%.
An ETF with broad exposure to US stocks is the Vanguard Total Stock Market ETF (VTI) which typically holds the largest 1,200–1,300 stocks in its target index (covering nearly 95% of the index’s total market capitalization) and a representative sample of the remaining stocks.
1991 was even better for Latin America. Brazil stocks rose 1,569% that year.
The largest Brazil ETF is the MSCI Brazil Index Fund (EWZ). Top holdings include Petrobras and Vale.
For more, see Investing in Brazil with Exchange Traded Funds.