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Jobs Improve, Stocks Happy

Last week we received some good news. The unemployment rate was reduced significantly to 8.6% (the lowest in more than a year and a half) amid expectations that it would remain above 9.0% through the 2012 election year. While the government cut 20,000 jobs in November, private businesses added 140,000 jobs.

The job market opening up is all the more important to the nation’s young adults, considering that 16- to 24-year-old employment has dipped as low as 47%. However, nearly two-thirds of the rise in employment in the past three months is attributed to the hiring of young folks, albeit perhaps those with low-paying wages. The retail sector recently added 50,000 jobs and around 22,000 jobs were added to the restaurant industry. Job report numbers are adjusted to account for seasonal trends, so these new jobs are not considered primarily a result of holiday hiring. This growth in consumer-oriented industries could be a reflection of resurrected confidence and – something we all could really use – hope.

CLICK HERE to read the Bureau of Labor Statistics jobs reported released on December 2, 2011.

CLICK HERE to read “Young workers getting hired again” at CNNMoney.com, December 1, 2011.

The stock market, for one, appeared quite happy with the news. Blue chip stocks added close to 800 points by the end of last week and are now up by more than 3% for the year. The S&P 500 and NASDAQ have both narrowed year-to-date losses to 1%.

While it appears that the stock market has been keeping lockstep with breaking news concerning the European debt crisis, it’s possible that Europe’s woes may be just smoke and mirrors for stock market investors. LPL Financial recently published year-end research and commentary that – stepping back from the day-to-day and week-to-week trading – reveals a different, longer-term pattern of stock market performance. The report demonstrates that the U.S. stock market has closely tracked real-time economic data as measured by unemployment benefits reports.

CLICK HERE to read Outlook 2012 by LPL Financial Research, November 2011.

Perhaps because hope tends to accompany the holiday season, December has historically been a rewarding month for stock investors. In fact, 18 of the last 21 Decembers have produced a positive total return for the S&P 500. The average December performance since 1990 is a gain of +2.1% – the best of any month – according to BTN Research.

Recent signs are positive. We’re seeing real movement to reach a bipartisan budget agreement in Congress, despite the disappointing outcome of the Supercommittee’s efforts. Republican opposition may be ready to extend the payroll tax break by the end of the year in exchange for a compromise to reduce expenses.

The trends for the rest of the year are clear: Shop. Invest. Hope. Please feel free to contact me to discuss opportunities arising from the recent news.

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