Well, well, well … 166,000 new jobs. Twice the consensus view. Did somebody say Goldilocks? Did somebody say the greatest story never told?
U.S. businesses and entrepreneurs are in very good shape. These are the real job creators. And with low tax rates, low inflation, and low interest rates, the economic and stock market outlook looks extremely bullish. The economic bears continue to underestimate the strength of the consumer because they continue to underestimate the strength of business. Ultimately, it is business that creates jobs. And it is jobs that create income.
Here’s the key point: Outside the struggling financial and consumer discretionary sectors, the economy is firing on all cylinders. Economy-wide profits are up a smoldering 15 percent in the third quarter when you remove these two laggards. And in addition to today’s robust, expansionary jobs number, GDP blew away forecasts earlier this week, coming in a hair shy of 4 percent. (For the record, this represents the biggest back-to-back quarterly gain in four years.) This means healthy American businesses are generating jobs. Meanwhile, hardworking American workers are out there spending money, with real, disposable, after-tax, after-inflation income running around 4 percent — a big number.
In the October jobs report, average hourly wages for non-management workers increased 3.8 percent, well above inflation. These wage gains don’t come from home-equity lines. They come from strong job creation. This is the heart of the consumer story. The October jobs gain is the best in five months. Over the past year, 1.7 million new jobs have been created. The bulk of these, by the way, are coming from high-pay service jobs, including business and professional services, as well as education and health services.
Looking back over four years, from the middle of 2003 when President Bush’s tax cuts took effect, the economy has created 8.6 million new jobs. Presently, non-farm payrolls in the U.S. stand at 138.5 million, a new record high. The unemployment rate today is a low 4.7 percent. And total civilian employment stands at 146 million, just shy of the record high. In fact, when you look at the October jobs report, it appears that employment is speeding up, not slowing down.
Message to all you worrywarts out there: The U.S. economy remains strong. There is no recession ahead. Goldilocks rules.