Stocks Drift Down but Outlook Getting Better

Of course, we never like to see the global markets go down. However, when you look beneath the surface, the U.S. economy is still doing far better than what this week's performance implies. Behind the losses and ongoing election exhaustion, there are a number of strong indicators that the economy is growing. This week, we learned that the trade deficit shrank, the service sector grew for the 81st consecutive month, and manufacturing continued its steady growth.

 
On Friday, November 4, we also got to see new data on jobs and payrolls - the last significant economic report before Election Day.

What did the jobs report show us?

• Unemployment Rate Dropped                                                              

The unemployment rate hit 4.9% - only 0.1% above the Federal Reserve's  target unemployment rate.

• Economy Added 161,000 Jobs                                                          

While this job creation rate was below economists' predictions, it is not necessarily a cause for concern. The growth was matched by revised August and September reports that added another 44,000 jobs.

• Hourly Earnings Increased                                                           

Earnings increased by 0.4%, pushing them 2.8% higher than this time last year. We haven't seen an earnings increase this large since 2009.

• People Left Their Jobs at Higher Rates                                              

Last month showed the highest number of people who voluntarily left their jobs since 2007. This statistic matters because it can show that people are more confident they'll be able to find new jobs.

The Takeaway

For years, this plow horse economy has been adding new jobs at a slow and steady pace. Now that we've almost reached the benchmark unemployment rate, people are finally starting to see their wages increase and new opportunities arise. Typically, better jobs mean more disposable income, which equals increased consumer spending - and economic growth.

The rest of 2016 might not be a smooth ride, as the election and potential interest rate increases remain on investors' minds. But it should be of some comfort knowing that beneath this short-term volatility, signs are appearing of growing economic strength.