The American economy continued its winning ways in January despite the government shutdown, which caused unemployment to bump up to 4.0 percent from 3.9 percent in December.
The economy added 304,000 new jobs, way above expectations of about 165,000. Construction jobs are up 338,000 from a year ago, and manufacturing jobs are up 261,000. The participation rate, the percentage of the working-age population that is employed, ticked up to 63.2 percent from December’s 63.1 percent and well above last January’s 62.7 percent.
Further, the stock market had its best January in 30 years, up over 7 percent. To be sure, that was after a dismal December, but the market had already begun to recover before New Year’s. One thing driving the market is that earnings reports from corporations are coming in at about 18 percent above last year, thanks both to the booming economy and the cut in corporate taxes last year. Another is the Fed’s signaling that it will take a wait-and-see approach to raising interest rates when it had earlier hinted at raising interest rates fairly steadily.
Wages were up 3.2 percent above a year ago, a number above the rate of inflation. After stagnating for several years, more money is going into the pockets of consumers. So, too, will income tax refunds this year. Many people failed to adjust withholding when their tax rates went down last year and will get bigger than expected refunds.
These, of course, are the “crumbs” that Nancy Pelosi dismissed last year. But the 99.9 percent of the population that, unlike Pelosi, doesn’t live in the expensive Pacific Heights neighborhood of San Francisco, will use them to continuing to power the American economy in 2019.