Job Market Still Historically Healthy, Confidence Spread Between Present Situation/Future Expectations at Hurricane Katrina Levels

- The Change in Non-farm Payrolls for November was 94K versus estimates of 80K and 170K in October.

- The Unemployment Rate for November remained at 4.7% versus estimates of 4.8% and 4.7% in October.

- Average Hourly Earnings for November rose .5% versus estimates of a .3% gain and a .1% increase in October.

- Preliminary Univ. of Mich. Consumer Confidence for December fell to 74.5 versus estimates of 75.0 and a reading of 76.1 in November.

BOTTOM LINE: Employers in the US hired more workers than forecast in November, suggesting job growth will help prop up spending, Bloomberg reported. Service industries, which account for the majority of US growth, added 127,000 jobs last month. Average Hourly Earnings rose a strong 3.8% year-over-year. The Monster Employment Index is just 6 points off its all-time record set in May. The 50-week moving average of jobless claims has been lower during only two other periods since the 70s. The unemployment rate is a historically low 4.7%, down from 5.1% in September 2005, notwithstanding significantly fewer real-estate related and auto production jobs during that period. The unemployment rate’s current 12-month average is 4.6%. It has only been lower during two other periods since the mid-50s.

Furthermore, most measures of Americans’ income growth are still very healthy. The 3.8% year-over-year gain in Average Hourly Earnings is substantially above the 3.2% 20-year average. The 12-month moving-average of the rate of growth of Americans’ Average Hourly Earnings is currently 3.94%. 1998 was the only year during the 90s expansion that it exceeded current levels.

Besides a healthy job market, the Case-Shiller Home Price Index is up 114% over the last decade and the S&P 500 has risen 105% since the October 2002 major bear market lows. As a result, Americans’ net worth just hit another all-time record, a fact that continues to be ignored by the record number of stock market participants that believe it is in their financial and/or political interest to paint a bleak picture of America. This is the main reason that consumer spending hasn’t fallen off the cliff that the many bears have predicted incorrectly for years.

The preliminary University of Michigan Consumer Confidence reading came in slightly below estimates, Bloomberg reported. The Expectations component of the index fell to 63.2 from 66.2 the prior month. However, the Current Conditions component, which gauges consumer attitudes about their current financial situation and whether or not it’s a good time to buy a big-ticket item, actually rose to 92.1 from 91.5. The last time the spread between the Expectations and Current Conditions components was this high was September/October 2005, right after hurricane Katrina ravaged the Gulf coast and wreaked havoc on the psyche of the nation. From the lows in October 2005, the S&P 500 gained 14% in under seven months.