One of the last holdouts in the slowing economy story – employment - has now fallen in line.USjobs grew at its slowest pace in more than two years last month, according to the government. And almost all of the gains came from health care and government while the job losses spread beyond homebuilders and manufacturers. Unemployment rose slightly as well from 4.4% to 4.5%. The good news is that inflation pressure from wages appears to be on the decline. Workers' average hourly earnings rose just 0.2% after a 0.3% increase in March. Earnings were up 3.7% from April of last year. Easing inflation will give the Fed more room to loosen the money supply if needed to boost economic growth.

The government revised its estimate of how fast theUSeconomy grew in the third quarter from 1.6% to 2.2%. Stocks did very well mid week as investors were cheered by faster growth in the economy which drives corporate profits higher. Bonds on the other hand slid on the news as stronger economies can mean higher inflation. 

Having just been in the mountains of West Virginia I was reminded of some very interesting parallels to today’s stock market.  From the mountaintop it seems one can see forever.  The view is spectacular, the air is fresh and clear, and problems seem miles away.  But down in the valleys everything is close and problems seem omnipresent.  Travel can be treacherous on the tight sharp switchbacks.  Just yards ahead around the next curve there may be a ten-ton coal truck barreling down the hill pushing the limits of control. 

In April of 1991, the National Bureau of Economic Research declared that a recession had begun eight months earlier in July of 1990.  They later announced that same recession had ended in March of 1991.  The recession was actually over and recovery in progress before the recession was officially declared.  The same official body recently declared that our economy entered a recession in March of this year. The economy contracted at a 1.1% annual rate between July and September as consumer spending slowed, business spending slumped, and companies slashed inventories. It is the largest decline since the first quarter of 1991, at the end of the previous recession.