Stocks soared, the most in months, Wednesday thanks to evidence of a stronger than expected economic recovery.
The manufacturing sector grew for the 16th consecutive month in November, says the ISM. Plus, the job market is improving. The private sector added 93,000 jobs last month, the most in three years, according to the ADP Employer Services survey.
What that means is we can finally put the fears of a double-dip recession to bed, says Economic Cycle Research Institute co-founder Lakshman Achuthan.
“In October we were able to rule out this double-dip nightmare scenario,” he says. “We are able to see very clearly, with a good deal of conviction, a revival in growth,” he tells Aaron and Dan in this clip.
The improvements are widespread, Achuthan says.
- Profit growth and productivity are on the rise. Achuthan says that leads to more hiring and capital investment in equipment.
- Housing has stabilised. The outlook may not be rosy, but “it’s not falling off a new cliff,” which means it’s not a drag.
- Cheap capital as a result of low interest rates. The private sector continues to create jobs.
- Pent-up demand. Thanks to the jump in jobs, people are less afraid of losing their positions, Achuthan suggests. And after two years of saving and worrying, consumers have “frugality fatigue” which is beginning to show in the improvements in holiday shopping data.
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