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Here's the warning sign this jobs report is flashing to Trump

President-elect Donald Trump pauses while speaking at an event in Cincinnati, Ohio, U.S., on Thursday, Dec. 1, 2016.
Daniel Acker | Bloomberg | Getty Images
President-elect Donald Trump pauses while speaking at an event in Cincinnati, Ohio, U.S., on Thursday, Dec. 1, 2016.

President-elect Donald Trump is inheriting an economy that is already approaching its eighth year of expansion, one of the longest on record and above the post-World War II average of five years.

After today's BLS jobs report, where 156,000 private sector jobs were added we are seeing the growth in jobs as naturally slowing as most of those willing to work are already working.

To illustrate, over the past three months private sector job gains are now averaging 165,000 versus the six month average of 181,000, 12 month average of 170,000 and the 2015 average of 221,000 and versus 240,000 in 2014.

With the U.S. economy arguably at full employment, the fiscal stimulus that Trump plans on initiating will not be felt as broadly as it would have been if it was initiated at the early part of an expansion.

I say 'arguably' because 95 million Americans are not in the labor force creating the perception of a large pool of slack that can come back to work. Mysteriously, the participation rate of those aged 25-54 at 81.4 percent is still below its 25 year average of 82.8 percent.

What will it take to bring more of this important demographic back into the labor market? Higher wages and/or less generous transfer payments? Most likely, a bit of both.

With the labor market tight (in regards to those willing to work), Trump may find it hard to produce all those construction workers to build those new roads, bridges, airport runways. If they come from other construction sites, then there is no new incremental economic growth created. Pay may have to rise in order to entice those not working to come back to work.

In Friday's report, however, wages were a disappointment, unexpectedly falling by .1 percent month over month compared with the estimate of up .2 percent and grew 2.5 percent year over year, a trend that we can't seem to get out of.

This may be more due to the mix of wages rather than a broad trend. Those aged 16-24 years old saw a job gain of 136,000 where the category above them up to 54 years saw job losses in November. The younger people obviously get paid less. Wage pressures are building and many companies are saying so.

Here's the bottom line. The economic cycle is aged, but that doesn't mean it has to end anytime soon. That said, the fiscal policies of our new president will be met with many tradeoffs.

One will be the potential positive of rising wages at the cost of lower corporate profit margins.

Another will be a rising interest rate environment in the context of an economic and market construct that has been built on lower and lower rates over the past seven years.

The behavior of an economy under a president is often policy driven for sure but many times it's also just luck depending on what stage of the recovery we are in.

Bill Clinton and Barack Obama got lucky as they caught the ends of recessions and ensuing expansions while George W. Bush, and possibly now Donald Trump, have caught the end of the cycle's expansion and that means managing through a recession.

Commentary by Peter Boockvar, the chief market analyst for the Lindsey Group and co-chief investment officer at Bookmark Advisors. Follow him on Twitter @pboockvar.

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