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2019.12.08 Penn Wealth Report Vol 7 Issue 05

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Penn Wealth Publishing Subscription Information https://www.pennwealthreport.com Penn Wealth Publishing 9393 West 110th Street 51 Corporate Woods Suite 500 Overland Park, KS 66210 4 penn wealth Report volume 7 issue 05 08 Dec 2019 Penn Wealth Report Copyright 2019. All Rights Reserved. From the Editor/ As we write this, the ink is still wet on the hotly-anticipated November jobs report. It is fair to say that we don't remember a better report in a long, long time. e markets agreed, with Dow futures quadrupling from +50 to +200 before Friday's open. It got better from there. First the numbers, which surprised even the most bullish of economists. Against predictions for 187,000 new jobs, there were actually 266,000 new positions created in November, 254,000 of which emanating from the private sector. e unemployment rate ticked back down to 3.5%, a rate not seen since Neil Armstrong set foot on the lunar surface in 1969. As if that wasn't good enough, the previous two months' numbers were also revised higher, bringing the 90-day rolling average to 205,000 per month. Speaking of 1969, while the jobs were there that year, very little else resembled the current economic situation. e US was trying to extricate itself from an ugly war, inflation was off the charts, and wages were stagnant—the last two morphing into a condition known as stagflation. How about wages this time around? November showed wage gains for the American worker rolling in at a decent 3.1% annualized clip, well above the cur- rent rate of inflation. Even more impressive, if we strip out management and other upper-echelon workers, the rate actually hit 4% annualized. It has been a long time since the chronic naysayers like Moody's Mark Zandi haven't been able to find the storm cloud in the silver lining, but the closest pot-shot we heard on Friday was, "is is the result of Obama and Yellen, and was despite Trump." Ignorance must not be bliss, as the "expert guest" seemed angry as he uttered the comments. Where do we go from here? It would be hard to imagine cob- bling together another year for the markets like we have had—at least thus far—in 2019, but we certainly don't see a recession on the horizon for next year. To be sure, we can expect a few scary months, and a probable impeachment via the partisan US House of Representatives, but even that should be window dressing—the Republican-held US Senate will not convict. With the Chinese desperately needing to get a trade deal done or continue to hear that giant sucking sound of manufac- turing companies leaving their shores, they will decide it is no longer prudent to wait out President Trump. A decent-sized deal will get done, sooner rather than later. As for waiting out Trump, the state of the economy deter- mines election outcomes. Just ask Bush 41, who saw a massive favorability rating wither away into a 1992 loss to Bill Clinton following the recession of 1991. Based on the current state of the US economy, the Chinese are going to want to go ahead and ink that deal as soon as possible. MSH Michael S. Hazell editor-in-chief The American Economy is Steadily Rolling into 2020 Generations'-low unemployment, a rocking stock market, and a trade deal that China badly needs.

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