Great Goldilocks Job Report

More Goldilocks from today’s solid jobs report.

With prior monthly revisions non-farm payrolls increased 207,000—that includes 132,000 new jobs in June, 190,000 in May, and a 122,000 in April. Not too hot, not too cold.

Year-to-year wages for non-management workers increased 3.9 percent. Comparing that with the 2.3 percent increase in the headline inflation personal consumer deflator (for May, the latest month) leaves about 1.5 percent improvement in real wages.

The unemployment rate remains at a historically low 4.5 percent. This means the Fed will neither tighten nor ease. Holding its target rate steady, with a rising economy and profits, is very bullish for stocks.

(Note: If you graduated from college your jobless rate is 2.0 percent. If you failed to graduate from high school your rate is a much higher 6.7 percent. Message: Stay in school.)

The whole economy is experiencing a midyear pick up, led mostly by business, though consumers will be chipping in. For the consumer pessimists out there, remember Say’s Law—supply creates its own demand. In other words, as businesses invest, produce, and hire more, rising incomes will spur consumer spending.

Congress take note: Raising investment or business tax rates will undermine Jean-Baptiste Say and the whole economy. Message to President Bush: Keep your veto pen handy for economy-slowing tax hikes or trade protectionist tariff increases.

Without tax hikes, it’s still the greatest story never told.