Like a hot shower at the end of a long day, Friday’s monthly report on the labor market was simply refreshing. Following the slow drain of a lingering trade war, declining GDP growth, a badly weakened manufacturing sector, a major strike at GM, falling consumer confidence, and slowing job creation, our country still produced 128 thousand jobs in the month of October. Economists expected only 88 thousand. Plus, job growth for the last two months was better than expected. October was the 109th straight month of job gains. For 2019, job creation is running at a rate of 167 thousand a month, down significantly from 223 thousand last year. Wage growth at 3% is down from the 3.4% year-over-year increase in February but is still greater than the inflation rate. All-in-all, it was a great jobs report.
Probably, the most surprising economic data point has been the continuing strength of corporate earnings, usually beating expectations. As often said on Wall Street, corporate earnings are the mother’s milk of stock prices, and the stock market just hit new highs. This led famed pundit Jim Cramer to say that anybody who predicted the trade war would hurt the economy should apologize. (I was one of those people and remain confident that trade wars are always bad economics in the short-run and often in the long-run.) Once the trade war is resolved and the stock market jumps strongly, will Cramer still say the trade war has had no affect on the stock market?