1/27/17

I predict that the numbers of jobs created in the US economy (what is known as Non-Farm Payroll) on a monthly basis will show a significant increase on a monthly basis starting immediately.

I will not be surprised if the January report is already in excess of 250,000 and if, by March, we will be in a consistent 300,000 plus per month.

Just for comparison, in January 2016 the number was 168,000 and the average monthly increase for the whole of 2016 was about 180,000.

During Obama’s 8 years, NINETY SIX months, we had ONE month with jobs created over 400,000 and only THREE of slightly over 300,000. That is it. And the bumper month was in early 2010, following TWELVE months of contraction in jobs EVERY month in 2009 and was, itself, followed by four months of job contraction amounting to most of the one-time gain.

So what has all that to do with the Chicken or the Egg?

For an ostensibly serious blog discussing political issues, I have an obsession with both… having written about that subject at least three times in the past in the following posts:

All these posts dealt with the age-old question of what creates jobs in the economy; demand or supply. Progressives, Democrats and Keynesians religiously believe that demand generates jobs. Thus, they keep wanting government to create demand; in other words, deficit spend. Never mind that they tried it time and time again and it failed. Give them their due, they really do not care about facts once they make up their mind.

In all these posts I explained quite logically and, in my view, correctly that it is actually the EXPECTATION of demand that creates SUPPLY first and, thus, generates jobs which, then, creates DEMAND.

And how does one create the EXPECTATION? As I said before, it is all about the psychology. If businesses BELIEVE that demand will be there shortly, they will immediately hire to create the supply, which they can then sell to the expected demand. And, if they hire, they self-generate the additional demand. It is a sort of self-fulfilling wish, a virtuous cycle. Any more metaphors that I can torture?

Bottom line, the jury is now out. We clearly have a burst of optimism in economic circles since Trump was elected. All major indexes on Wall Street are hitting new records but, more importantly, you can see it in Main Street too. Consumer confidence is up by the largest margin in recorded history, small business confidence reaches new heights, and on and on.

We will now see very soon if this translates to more jobs.

Watch this space.