This was not supposed to happen: US employment growth is accelerating despite a prolonged ‘trade war’ between the US and China (that is possibly extending to the Eurozone). Private sector payrolls rose by a 3-month average of 200k in November. This was the fastest increase since January. The report is not a fluke either: initial jobless claims fell again last week, to just 203k.
These numbers offer a remarkable testimony to the power of technology to create jobs.
President Trump will doubtless claim all the credit. November’s payroll report, combined with recent low readings for the core consumption deflator, suggests that US equities can and will rally to new highs. A New Year target for the S&P 500 of 3,500 looks very achievable. Longer term, it is not hard to see the S&P 500 rising to 4,000. That will provide an auspicious backdrop for the incumbent at next year’s presidential elections.
The economic fundamentals are exceptional. This is already the longest economic expansion since records began (1854). Profit margins may be stabilising, after falling since 2014. Record IT investment, with growth in the IoT, 5G, & 3D printing offering huge opportunities and big cost savings, will propel the US economy forward in 2020.
