Where the Jobs Really Are

 

Another month, another strong jobs report.

On Friday, the Labor Department reported the economy added 209,000 new jobs in July, the second consecutive month of job growth above 200,000. The unemployment rate ticked down to 4.3%.

The report confirmed what most of us already knew: The U.S. economy is mostly in very good shape. True, workforce participation remains depressed and wage gains are subdued (both for structural reasons, I’d argue), but the good second-quarter GDP number (2.6%) and the last two jobs reports suggest growth may be picking up.

If this continues, even with 2.5% wage growth, I think the Federal Reserve will hike the federal funds rate at least once more this year, though traders currently aren’t expecting it.

Gradual rate increases, accelerating economic growth and solid corporate earnings are all good news for stocks, which is why, though a correction is long overdue, I expect the market to keep moving higher over time.

But I’d like to step back from the weekly market madness to take a closer look at what’s really happening in the job market.

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