In January, 157,000 jobs were added, not much more than the 150,000 minimum required for healthy economic growth. What else stayed remained lackluster? The unemployment rate rose a bit, to 7.9%, as did the number of unemployed, increasing from 12 million to 12.3 million. Combined with the contraction in economic growth in December, you would think skittish investors would drive the stock market down.
Instead, the Dow is closing in on its record of 14,164.43 set in 2007. Why? The Bureau of Labor Statistics revised the numbers up substantially for November (161,000 to 247,000) and December (155,000 to 196,000). In addition, construction jobs increased, signally a strengthening housing market. Third, Wall Street is just plain relieved we didn't fall off the fiscal cliff and aren't headed for a debt ceiling crisis -- at least for now. Investors have been so battered by crisis and catastrophe for so long that now no (bad) news is good news.
Job increases were across the board:
- Retail --32,600.
- Construction -- 28,000.
- Health care -- 27,600.
- Leisure and hospitality -- 23,000.
- Information -- 9,000.
- Manufacturing -- 4,000, including 2,500 in automotive.
- Financial activities -- 6,000.
The losers were not surprising.
- Government -- 9,000 (probably getting ready for sequestration).
- Temporary help -- 8,100 (letting go of workers after holiday shopping season).
(Source: BLS, Employment Situation Summary)
What This Means for You
Wall Street optimism despite lackluster economic news means it's time to review your investments. Already, yields on the 10-year Treasury note are above 2%, as investors switch from bonds to stocks that offer a higher return. Talk to your financial planner about rebalancing your portfolio.
Now is also the time to take out any auto, furniture or home equity loans, as rates will probably not be this low again in our lifetimes. Although the job market hasn't improved appreciably, it will sometime this year IF we get through the budget issues facing us this spring.
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