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Better Than Good

02/07/2015

The January Jobs Report was simply great.  Not only were 257 thousand jobs created last month, but we learned last year was even better than we thought, especially the last two months of 2014.  For the last three months, including January, we’ve averaged 336 thousand new jobs each month, which is the best since 1997.  Democrats were happy to see that average pay was also up, largely because sixteen states didn’t wait for the impotent Federal government to act and increased their minimum wage last month.

From a Republican viewpoint, the best news was that the Labor Participation Rate or percentage of population who wanted to work increased from 62.2% to 62.9%, as a million more Americans started looking for work.  It is not that a million Americans suddenly decided to stop being lazy or ran out of meager unemployment benefits.  It is that another million Americans thought the job market had improved enough that they might finally have a chance to actually get a job.  This is significant because the Fed has been carefully watching this statistic, and that good news makes the Fed more likely to increase interest rates sooner than later.  (Still, I don’t expect a rate increase before late this year or even next year.

Because this is the single most important economic statistic each month, one would have expected to the stock market to rally, and it did . . . briefly.  Then, Europe rained on our good news with bad news from both Greece and Ukraine. There is no question that the U.S. stock market would rally if we could suddenly reverse globalization and decouple from the world.  Of course, there is zero chance of that happening, and I’m glad . . . but only in the long run.

For now, let’s just be happy for the 257 thousand Americans!

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