Friday, January 05, 2007

Goldi Scores Big

The Goldilocks economy scored big this morning, with new jobs from corporate payrolls rising 167,000, while unemployment held steady at 4.5 percent. Meanwhile, inflation indicators like gold, oil, and copper continue to fall. It's a near perfect combination.

In the jobs report, service sector employment led the way by creating 178,000 jobs in December, including a 50,000 gain from professional and business services. Manufacturing and construction firms shed jobs, but by a much smaller amount than in recent months. Meanwhile, average wages are up 4.2 percent over the past 12 months, more than twice the current 2 percent inflation rate.

In the more important household employment report, which includes entrepreneurs and small businesses, jobs rose by an incredible 303,000 and have averaged a 340,000 monthly gain over the past three months. For 2006, corporate payrolls rose 1.8 million, while household jobs rose 3.1 million.

Since the Bush tax-cuts of mid-2003, corporate payrolls have grown 7.2 million, while household employment increased 8.4 million.

The stock market roared ahead in 2006 despite early-year headwinds from rising energy prices and Fed tightening. As an accurate barometer of the future health of America's businesses and economy, stocks shrugged off bad news from Iraq, Iran, and North Korea, as well as the domestic housing slump.

Low-tax, free market capitalism is a wonderful thing.

The new Pelosi-led Congress is all abuzz with talk about a "new direction".

But, shouldn't calmer heads be asking: "if it ain't broke, don't fix it".