Today’s Labor Department report showed that the private sector added 67,000 jobs in August, beating estimates of 41,000, while the unemployment rate checked in up slightly to 9.6%, right in line with consensus estimates. On the news, the S&P 500 futures instantly popped 1+% and markets across the board are now trading higher pre-open.
This comes just two days after a strong PMI report out of China and an ISM which greatly surpassed expectations. Over the last few months, the rhetoric had grown increasingly loud and ominous about the fragile state of the economy. Just a month ago, I pointed out that the GDP figure was clearly demonstrative of the fact that the rhetoric did not come close to matching reality. As the rate of change in the stimulus went from a net addition to economic activity to net neutral it was expected that the rapid bounce-back in economic activity would slow down.
I can’t help but think at this point that a large quotient of the negative rhetoric results directly from the upcoming mid-term elections. In such a climate it’s rather difficult to set apart economic reality from political discourse, and as a result the prevailing negativity from both sides of the aisle in Congress lost touch with the true status-quo of our economy. Fortunately as the data comes in, it has been consistently “less bad” than anyone expected.
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