First of all, the monthly jobs number is not as disappointing as it appears. Look at where jobs were added. In key sectors, there was solid growth. The much lamented manufacturing sector added 49,000 jobs in January, compared to an increase of just 9,000 in the month a year. Even more encouraging was that the durable goods sector added 62,000 jobs. And if that shows a pick up in demand for things like cars and appliances that’s real good news. Durable goods are the type of high-ticket stuff we buy when we are optimistic we will continue to be getting a paycheck, even a larger one.
And indeed, many people did get larger paychecks in January. Over the past year, average hourly earnings are up 1.9%. And at a time when the inflation rate, despite rising recently, is still pretty low, that’s good news. And it’s good news for spending as well.