Today, the Unemployment Rate fell to 7.7%, and we added 146,000 jobs. This is great news for U.S. workers.
The signs the economy was doing well have been obvious for a while – if you look at a few, very specific data points.
First up: Taxes withheld
Taxes withheld is an incredible real time indicator. This is the number gets reported to the U.S. Treasury every day from the banking system as taxes withheld from paychecks. Here is Matt from the Daily Jobs Update:
“The data is a simple bean-counting of how much money was collected. It is not estimated, adjusted, or messaged in any way. You are looking at the most-precise depiction of the economic cycle ever invented.”
Daily Jobs Update is the site which puts the data into an easily useable format for you. Here is the chart of those numbers, via Barry Ritholtz.
Right now, YoY growth is very nice and consistent with a moderately growing economy. Moderate growth is far better than what we’ve had for the last few years, so this is good news.
It’ seems to me as though anytime taxes withheld are growing at more than 5% per year, we must be seeing decent jobs growth.
We are not seeing wages go up that much. Average Wages are up about 1.5% over the last year. Hours worked are flat over the last year at 33.7 hours. So this increase in taxes being paid to the government must be coming from more jobs.
That is good news and matches the jobs data we see today.
Next up: Gallup Consumer spending
I like this chart, because it shows how much we’ve been spending over the last few days. You can see from the long view of the chart, consumer spending is far lower than it was before the crisis. Still, there are signs of improvement over the last 6 months.
You can see the number of spikes over the last 6 months has been much higher than before. The “slower” line is the 14 day moving average. This line is a bit harder to pick out, but here is a great statistic: There have been 29 points of greater than $80 in spending in the 14 day moving average since March 15, 2009. 24 of those days have come in the last 6 months.
Consumer spending is going up. It’s higher and it’s more consistent.
These two data points show we’re seeing decent economic growth – supporting what we see in the unemployment numbers from today.