As I expected, the labor report showed 261,000 jobs created. It was far below the 310,000 expected as the hurricane effect didn’t turn out to move as many jobs from September to October as economists thought. The jobs report is always tricky to project. Adding the weather into the mix only made it more challenging for prognosticators. Instead of the jobs moving from September to October, they stayed in September as there was a big revision like I thought would happen based on the ADP report showing 135,000 jobs added in September. The 33,000 jobs decline in September was pushed up to an 18,000 increase. The August result was also revised higher from 169,000 to 208,000 which means the September number might be revised even higher. While these reports may be backward looking, I’d rather focus on a number we know to be true compared to one which can be updated in a drastic manner. It wouldn’t be impossible for the October report to eventually come in at 310,000 jobs created after being revised twice.

With this 90,000 improvement and the 261,000 jobs added in October, the unemployment rate fell to 4.1% which is the lowest rate since December 2000. We’re nearing the point where whatever indicator you look at should show the labor market is very tight. This isn’t good news for stocks. It likely means we’re near the end of the business cycle. I think the tax cuts could stimulate the economy another year to stave off a recession. It’s weird timing to get a stimulus at the end of the business cycle instead of after a recession starts. The reason the timing is off is because usually recessions occur at the end and beginning of presidencies. Presidents like to stimulate the economy to get it off to a good start. The recession usually provides an impetus to get a tax cut/spending increase done. In this case, we’re just getting the tax cut with no recession. That could be a mistake because if a recession occurs right after the stimulus, then the government won’t have any ammo to stave off the recession.