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New Jobs Report Shows a Very Strong Economy

Posted on March 13, 2018

The economy produced 313,000 in February, the U.S. Bureau of Labor Statistics reports, exceeding expectations by a large margin. But that wasn’t even the best news.

Unemployment was unchanged at 4.1 percent.

Employment rose in construction, retail trade, professional and business services, manufacturing, financial activities, and mining.

Getting back to the topline number: economists had only expected to see around 200,000 new jobs – which would have been great.

A gain 313,000 jobs, with the unemployment rate frozen at 4.1% for the fifth straight month, indicates that the job market is pulling in workers hitherto uncounted. Discouraged workers and long-term unemployed (the kind that don’t show up in the official unemployment rate), are re-joining the workforce.

The total counted as "employed" in the Labor Department survey increased by 785,000 during the month, to a record 155.2 million.

Why Wall Street Is Happy

Two figures that aren’t moving much is the inflation rate, and wages. On the down side, wages aren’t shooting higher despite the stellar job growth and low unemployment rate.

On the plus side, strong job growth with low inflation makes the Fed less nervous, and less likely to hike interest rates.

This notion of a “Goldilocks Economy” – with strong growth in corporate profits and jobs without rising wage or price inflation – makes Wall Street very happy, indeed.

The Dow industrials shot up 375 points Friday afternoon following the release of the jobs report. This happened despite downward pressure on stocks following President Trump’s announcement regarding new tariffs on steel and aluminum.

Given how nervous Wall Street has been about the possibility of a trade war, the fact that stocks rose shows just how good the jobs report is.