The ADP Employment report showed stronger than expected jobs gains for the month of December. Estimates called for the addition of 100,000 new jobs (which was in line with 2010’s average), but a gain of 297,000 was reported. This is very good news and extrapolated would indicate an additional 3.5 million jobs in 2011. That does not seem realistic, and we need to wait to see more corroborative data. Lest we not look a gift horse in the mouth, let’s be happy about this granule of good news.
Specific economic trends are improving. About a million new jobs were created in 2010. This kept up with population growth, didn’t do much to increase employment, but was helpful. Housing sales increased. The Producer Price Index and the Consumer Price Index both trended modestly higher following dangerously low levels in 2009. There is still no indication of run-away inflation. Moreover, corporations reestablished access to the capital markets both through debt and equity offerings. Consumer Confidence numbers were modestly stronger by year end, and vehicle sales were good.
It looks like GDP increased by about 3%, and with the extension of Bush era tax rates and an additional payroll tax reduction, economists are calling for about 3.5% GDP growth in 2011. Inflation should remain at bay for most, if not all, of the year. Unemployment figures should improve based on 3.5% GDP growth, but I don’t expect much movement from the 9.5% level.