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The August Jobs Report Is Not 'Mixed' It's Yuuge

Kellyanne Conway
The anti-Trump talking-down-the-economy crowd has America already in a recession, with POLITICO’s Morning Money leading its Thursday morning news with, “…manufacturing in recession and capital expenditures dropping, the strong consumer is the final leg holding up the U.S. economy. But the length of the work week dipped in July, often a leading signal that employers are cutting back. A sharp slow-down in job creation could follow.”

Morning Money also quoted Pantheon’s Ian Shepherdson: “Labor demand, as measured by an array of business surveys, clearly slowed from the cycle peak, recorded late last year. … Our composite hiring index … has fallen quite sharply this year.

“The index leads the official payroll numbers, and it now points to job growth averaging about 140K in the three months through October. For August, it is consistent with payrolls rising by about 170K.”

Then the ADP employment numbers were released. ADP reported Thursday that August payrolls rose by 195,000.

In contrast, employers added 164,000 jobs in July, with one forecast expecting the economy to show only an additional 158,000 jobs created in August. The unemployment rate in July still dropped to 3.9%.

According to Fox Business, it was the best month for private-sector hiring since April, which saw 255,000 new jobs added. Most hiring took place in the service-providing sector, with 184,000 new jobs created. Manufacturing hiring remained fairly steady, with 8,000 jobs added, making claims of a “manufacturing recession” look more like political wishful thinking by Trump opponents.

Reuters reported U.S. stocks hit a one-month high on Thursday on hopes of a de-escalation in trade tensions after Washington and Beijing agreed to hold high-level talks next month, while strong economic data eased concerns of a domestic slowdown.

Reuters said another private survey showed growth in the U.S. services sectors accelerated in August, rebounding from its weakest level in nearly three years, as new orders rose to their highest level since February amid trade worries.

“The trade news was the spark that lit this rally and then the economic data extended it,” Michael Antonelli, market strategist at Robert W. Baird in Milwaukee told Reuters.

“Manufacturing is in a bit of a global slump, but if you look at the other economic data, like the services and jobs reports, none of them point to an economy that is teetering on a recession,” Antonelli said.

Despite all the good economic news the best most of the establishment media could muster was that the signals were “mixed” even as the Dow hit a 30-day high.

All of the predictions of recession and establishment disappointment in a positive jobs report puts us in mind of what presidential counselor Kellyanne Conway told Fox News' "Fox and Friends" a few weeks ago.

“It’s nice to have the mainstream media finally covering the economy, but they only cover it when they can use Sesame Street's Grover word of the day: 'recession,'" Presidential counselor Kellyanne Conway told Fox News' "Fox and Friends."

"More people are working now than ever before in American history. More people are off the sidelines back into the workforce and those wages are up, particularly among blue-collar workers. A lot of the trade deals the president has renegotiated, continues to negotiate in a bilateral, reciprocal, more fairway to American workers and American interests and America are happening and also the optimism is there," Conway continued according to Sandy Fitzgerald of NewsMax.

Optimism is of course key to business expansion and based the third quarter’s Small Business Optimism Index, released mid-August by the National Federation of Independent Business, the Small Business sector remains very optimistic about the Trump economy.

At a reading of 104.7, the third-quarter index ran 1.2 points higher than the second quarter and 3.5 points higher than the first. As NFIB CEO Juanita Duggan stated in a press release: “While many are talking about a slowing economy and possible signs of a recession, the third largest economy in the world continues to defy expectations, generating output, creating value, and expanding the economy.”

CEO Duggan might also have reflected on the stark difference between the performance of the Small Business Optimism Index on Trump’s watch vs. Obama’s noted Gene Epstein in a recent article for Barron’s.

As Epstein’s chart shows, all sustained expansions have been accompanied by readings on the index of 100 or higher--with the sole exception of the expansion under Obama. The peak on his watch was 97.7 in first quarter 2015, before it subsided to a recessionary reading of 94.9 in fourth quarter 2016.

With Trump’s surprise win in November 2016, small business clearly became optimistic about the economy, as reflected by the jump in the monthly reading above 100. But the index was in need of a quarterly confirmation, which it got. By first quarter 2017, it stood at 105.9, a stunning 11-point gain from the previous quarter.

The Trump bump could have proved temporary. Instead, it’s persisted. The index has stayed solidly above 100, reaching a 35-year high of 107.9 in the third quarter of last year before falling back to 101.2 by this year’s first quarter. That it’s bounced back to 104.7 in the current quarter is surely encouraging concluded Mr. Epstein.

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