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First, the 321,000 new jobs reported by the BLS is off by about 100,000. It is unclear where and how the error occurred but a more accurate number is 225,000. That from a highly credible source who knows the numbers as well as anyone. Just look at the trend line and it is clear the November number is an anomaly. The real number is good, but there is still a very low participation rate. U6 is still about 300 basis points too high. Progress, but far from strong success.  The other good news is that there are beginning signs of some small wage increases, although not yet sufficient to make a material difference in spending. If nothing particularly bad happens for awhile, wages should start  to slowly increase. If oil stays low priced, and wages do inch ahead, that is all good news for consumers.  The offsets are healthcare just jumped due to Obamacare with the much larger deductibles plus on average 5% higher premiums. The other hidden issue is devices and internet bills. These have leaped in cost and for some families with teenagers it can be $400- $500 a month. That is way up from just a couple of years ago. We never understood that Face Book, Twitter and sexting would negatively impact consumer spending, but they do and noticeably. So don’t get all giddy over this last jobs report.  It is likely to be shown to have been materially over stated and 2015 will likely be another moderate growth year, 2 ¾%-3 ¼%.  Then there are all the new regulations that have been issued in the past couple of weeks including the war on coal and other EPA regulations that will raise costs. Financial regulations and fines are not yet over as now the NY AG wants to try to get publicity for his run for governor in four years. There are several cases now in or headed to the Supreme Court which will materially change or confirm the actions of Obama. Obamacare could get blown up but more importantly, the EPA is likely to be stopped from enforcing many of its new regulations depending on the coal industry suit headed through the courts. There is also the case where the issue of when is McDonalds a employer rather than a franchisor. Given all of this and the major weakness of the world economy, it is unlikely to see strong US economic growth and it is unlikely to see the Fed raise rates at all until Q3 and then only moderately. We have a long way to go before rates are back to historic norms.

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