Yeah, the November jobs report crushed it. A
whopping 266,000 new jobs vs. Wall Street expectations of something more like
187,000 or so. That’s a strong number even if you chunk out 50,000 striking GM
workers returning to their jobs (but maybe also consider total jobs in the
prior two months were revised up a net 41,000 jobs). There was also more decent
— maybe more than decent — wage growth with average hourly earnings rising 3.1
percent and wages for production and non-supervisory employees increasing by
3.7 percent from a year ago. (Fun fact: This is the twenty-first month in a row
that the unemployment rate has been at or below 4 percent, notes RSM economist
Joseph Brusuelas.)

All in all, said the econ team at Goldman, a
“quite strong” report. “The resounding message from this release is that the
labor market has regained considerable momentum,” said Barlcays. Capital
Economics put it this way: ‘After the sharp slowdown at the start of the year,
the recent rebound in employment growth is clearly encouraging, and suggests
that the loosening in financial conditions this year is starting to support the
economy.

Of course, the big missing piece remains missing (at least for now). JPMorgan economist Michael Feroli (bold by me): “We continue to track Q4 GDP growth around 2.0%. Given a similar gain in hours worked this quarter, business productivity looks to be about flat in Q4. The solid gain in labor income should be a support for continued solid consumer spending, but in conjunction with tepid productivity growth may present a challenge for business profits.” 

And it’s that missing productivity piece that really dispels any notion that this is the strongest economy in decades. In the late 1990s, for instance, productivity growth was well over 3 percent vs. less than half that today.

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