On Wednesday two great economic reports were released. The January ISM and ADP reports showed the economy likely had a great month. While it is true that much of the stimulative measures Trump will enact will start to affect the economy in 2018, he didn’t need to do anything other than promise deregulation and tax cuts to see early benefits. Businesses have responded with increasing production and hiring in anticipation of these measures. The key will be getting them passed through Congress. I don’t see this as a new phase of growth which will cause accelerated growth in 2017, but I must remain objective. These reports were great.

Before I get into the reports, I must mention that Trump’s rhetoric has also affected the dollar. The dollar had its worst January in 30 years. As you can see from the chart below, the dollar is down 2.6% year to date and is down 4.1% since the peak in mid-December. Policy does not need to be put in place for Trump to cause the dollar to fall. Rhetoric has historically shown to be enough to affect it. I had called the dollar a bubble near the peak, so I have been expecting this fall. It will be a positive tailwind for multinational corporate earnings. It will also boost commodity prices which will cause increased inflation. It may decrease the size of the oil price decline I’m expecting. It will also help American exports. Exports may be hurt by reactionary tariffs, but that’s another aspect I won’t get into in this article.

The ADP private sector jobs report for January was fantastic as there was 246,000 jobs created which blew past the expectations for 165,000 jobs created. It will cause economists to increase their projections for the Friday monthly non-farm payrolls report. As you can see from the chart below, the 246,000 jobs gained was the 2nd best month in the past 12. There were job gains across most sectors and business sizes. Small businesses created 62,000 jobs. Mid-sized businesses created 102,000 jobs and large businesses created 83,000 jobs. The goods producing sector created 46,000 jobs and the service providing sector produced 201,000 jobs.