Economic News...

Here is some of the economic news that came out this week:

http://biz.yahoo.com/ap/070515/home_prices_realtors.html?.v=22

In the latest indication of the housing market's slowdown, the NAR said home sales reached a 6.4 million annual rate compared to 6.9 million in the same quarter of 2006.

The report came on the same day that RealtyTrac Inc., an industry research firm, said mortgage lenders foreclosed on 62 percent more U.S. homes in April than a year ago.

Home prices are also still falling. The national median existing single-family home price in the first quarter was $212,300, down 1.8 percent from a year ago when the median price was $216,100, according to the NAR's quarterly survey of housing market conditions. The median is a typical market price where half the homes sold for more and half the homes sold for less.

CPI Moderates

Housing Slump Continues.

I wanted to point out couple issues, the housing slowdown is continuing and I've already beaten that horse to death. Some positive news is that CPI was lower than expected and this will be a positive force in our fight against inflation. The main reason for the lowering of CPI is that both our increased demand is being tempered and China is chilling out. I want to devote an entire entry to China changes, so I won't harp on it here. Unfortunately gasoline prices and food prices, outside of "CORE CPI" (consumer price index excluding food and energy) are still growing by levels that I'm not so comfortable with.

Well, food production and higher prices is being influenced by our age old problem with farmers, crazy subsidies, production of ethanol, and the high cost of transportation. Its kind of a crappy cycle, oil goes up, transportation cost goes up as a result, food prices go up (since they pass off the transport costs), higher oil stimulates desire to produce ethanol, farmers switch fields from food to corn for ethanol, costs of fields go up, and food goes up further. I didn't make too much sense there, but basically, our farmers are subsidized closing the market to cheaper competitors. These competitors have a better competitive advantage when it comes to ethanol. Brazil for instance has a tremendous amount of farming capacity, and ethanol producing capacity that they could use to supply the US with a variety of food stuffs and most importantly ethanol, so our farmers could go back to farming. Besides, Brazilian ethanol is made from sugar and as a result much cheaper and less environmentally problematic to produce...

We need to stop subsidized our farmers to produce ethanol and get them making food again, and allow the Brazilians to sell us ethanol if we want it.

Mortgage Market Gets Tougher

As the mortgage market gets more difficult, people are having trouble finding 0% down financing and are therefore, being forced to taper down their home desires. As buyers receive credit, demand and subsequently housing prices will come down. See AP article courtesy of Yahoo! Finance.

I like the this girl who bought a three story and has credit that won't let her refinance...

"Her 29-year-old daughter, a graduate student with an annual income of less than $20,000, qualified for a mortgage of $600,000 with no money down, split into two different loans at 8.75 percent and 12.5 percent interest rates.

With income from tenants, which didn't come right away, Beatty's daughter thought she could afford monthly payments of nearly $5,000.

But she hasn't made a mortgage payment in more than three months, and she's receiving letters threatening foreclosure."

Will we Americans ever learn?

Government estimates GDP at 1.3% for the first quarter

Government reported their estimate for first quarter GDP growth and it came in very low, the lowest level in the past five years. See article from The New York Times. Here's the AP article from Yahoo! Finance.

You may be saying to yourself, well what does it all mean?

I'll tell what I think it means, and I don't think its pretty. Usually, GDP goes down and the Fed acts to counterbalance a slowing economy by loosening monetary policy, which is almost always lowering the Fed Funds Rate (The rate banks charge to each other). Usually with slower GDP growth, prices also go down, because demand goes down. So the Fed acts to "stimulate" the economy. Effectively, they are pumping more money into the system. When more money comes into the economy the value of money goes down, subsequently stimulating inflation, because when you have more of something (supply and demand), its value is lower, making the things you buy higher priced.

This time around, the Fed has another problem. Inflation already is at a level in the economy where lowering rates is not possible, because then inflation would be too high. The NY Times article points out the following:

"The slow growth was not enough to brake inflation. The G.D.P. price index, a statistic closely watched by the Federal Reserve to monitor price fluctuations, jumped 4 percent in the first quarter — the biggest increase in 16 years."

This now becomes a larger problem, because the Fed is unable to act while inflation is high and the economy must work its way out of slow growth on its own, without monetary stimuli. The Fed has to wait until inflation moderates (the economy's demand shrinks to the point where prices begin to drop) before lowering rates. Now some people may claim that we have enjoyed low rates for a prolonged period of time and inflation was low, so we shouldn't expect to rates to stay high or even move higher, inflation will moderate. However, they are missing two important factors that contributed to low inflation. The first thing is productivity growth, which has been around 4% annually for 10 years. This is unprecedented and mostly due to the integration of IT into all kinds of businesses specifically manufacturing. The second thing is globalization, which has kept prices low due to a "world price." Now that second issue will bite back and affect our market more than we would like. We are not the only ones who want cheap electronics and computers, we've helped the developing world growth their economies so now they want to buy these things too.

The reason for this is increasingly due to China and other emerging markets. As emerging markets supplied the rest of the world and grew, their own demand grew, subsequently increasing world demand for all these products and the world demand for basic materials and other commodities.

This means that although we may have slower growth in the United States, due to increased world demand, prices may not moderate. This means the most dreaded economic environment may result, stagflation...This is where inflation is high and interest rates are high. But we won't get to the point of the 70s, we'll probably work our way out of it since the economy is much more diverse. So prices will be tempered by competition due to globalization, just don't expect interest rates to go down.

Consumer Sentiment Down

Consumer sentiment down... sales of existing homes sharpest decline since 1989... oh oh... more later, meanwhile, here's the link from Yahoo! finance ... oh and something about gas prices hurting our demand...

Realtors blamed...wait for it...

POOR CREDIT!!! What's that?

Toyota First Quarter Sales Top GM's

Well, it finally happened...

Toyota first quarter sales top GM's

The truth of the matter is, this metric is meaningless, all we care about is whether GM starts making profit again and that profit comes back into the Detroit metro area. Besides, the automotive industry is going to go through a giant transformation when era of the fuel injection engine begins to decline, after that its anyone's game, so who sells the most is just a metric that GM can use to let the UAW and Detroit know how far we have sunk and that drastic changes are necessary. Without the past year's losses and the devastation in the auto industry, the new leverage that GM has over its bloated labor infrastructure would have never been possible.

Commodities, Energy, and Housing

So over the past couple months we've finally been hearing about the meltdown in the housing market. Finally, all those crazy loans hocked by hopped up phone jockeys, with mediocre college educations, their own bad debt problems, and their perverted views of what is a normal way of living life are finally coming back to haunt these banks that wrote these loans. HSBC declared that they were taking a $10 billion write down to their exposure to sub prime loans. Other banks have fallen suit as other banks and financial companies have gone belly up crushed under their bad debts. But don't worry this is a small segment of the broader giant housing market, it will make a dent, but risk is spread better than you think. Thankfully, financial derivatives have both increased our risk preference and spread that risk as well.

It seems like worse news that it really is. I can rail on about how the fabric of responsible America society is crumbling under Chinese fueled consumerism. DVD players for $49, wow, I'll take six, now I can watch DVDs in every room in the house, let's see the AMEX is maxed, MBNA, Capital One, wait let's try that new one from Bank of Iowa Savings. I'll just refinance the house when the rates go down again. But that's meaningless because that's not the issue and that's not what's affecting the market in the US. The slow and determined shift of economic power away from the United States and to the Far East is happening, and will continue to do so. It's actually great that the standard of living is going up and more products are available to more people. Whether this is creating a higher standard of life is a matter for philosophical discussion that I don't care to talk about now.

Mainly, all this means is our desire for refinancing and consumer goods has been fueling a global boom. Our low interest rates and housing refinancing and subsequent appetite for goods and services has fueled the rise of emerging markets. We are not the only ones to blame, but the Irish, English, Spanish, and various other overheated housing markets. However this has kept the world economy churning for the past five years. Here's the problem, when you have low interest rates, assets become cheaper and building and growth is stimulated. Hey that's a good thing, right, right. But here's what happens, China and India and other emerging economies grow off this boom and become an engine all their own. So when before emerging economies are taking advantage of their labor cost advantage to supply the developed world, their people gain wealth and now must spend on their own, but what do they buy? Goods from the developed world, but also goods from their own country.

These nouveau riche or (middle class really) has grown into a large market all its own, and they want cars, apartments, and DVD players too. Now as demand grows, so does the demand for the basic ingredients and components of all this demand. What are these basic ingredients?

Copper, Oil, Gold, Silver, Natural Gas, Water, etc....

What does this mean for the rest of us? That even as the American economy slows due to our over-extension in housing the price of commodities and energy will continue to be high. Worse, the American economy will have less and less of an impact on the movement of these prices, and further, the American government and the Federal Reserve will become increasingly weaker in controlling its own destiny. Therefore, as China, Brazil, India, and the other emerging markets grow, American influence will temper and we will have to get used to higher prices for energy and commodities. Even as the current prices shake out, they will only moderate slightly as we enter a period of higher costs making energy and commodity efficiency more important.

The Budget Debate: Diane Rhem show today with Steven Moore and Robert Greenstein

The Diane Rhem show today featured a debate on the budget by two budget experts, Stephen Moore and Robert Greenstein... The show web page introduces them as follows:

Guests

Stephen Moore, member of the Wall Street Journal's editorial board and former President of the Club for Growth

Robert Greenstein, founder and executive director of the Center on Budget and Policy Priorities

The show was great because it took two people from both sides of the spectrum and allowed them to debate the budget, however, Stephen Moore got continuously ambushed and berated from liberal listeners on heart string issues that kept these two commentators from finding middle ground on positives about the budget, which they tried to do a couple times.

The budget proposed by the Bush Administration argues to make permanent the tax cuts and make a series of cuts to federal programs while increasing spending on defense. There are a wide range of cuts both small and large, but most of the dollars come from Medicare including a program to mean test for wealthy seniors to pay higher premiums for Medicare. There are 141 small programs that are being cut that are earmarks and programs from both sides of congress. I don't want to focus too much on the actual cuts, because the information is out there. I think that special interest groups consistently draw our attention away from the meat and potatoes problems and harp on small issues that make one or the other party, whoever is in control, look bad.

I think there are several problems that face the US Budget and the way we go about approving it.

1. The main issues and problems around the budget revolve around our ballooning spending on Medicare and Medicaid. These programs are growing at double digits rates every year. There have been back and forth discussion about this, Stephen Moore argued to turn it over to the states, Robert Greenstein didn't have a solution, but commented that the growth rates are similar to private sector growth rates. However, these two things don't address the issue. The United States either needs a comprehensive universal health plan that provides a minimum level of coverage, a type of low premium high deductible plan and an option for premium service
2. When the Bush administration or another President cuts a program that affects, children, the elderly, or minorities, even if that program is a very small fraction of the budget, the tax cut is painted as rewarding the rich at the expense of the poor. Or the tax cuts hurt widows, orphans, single mothers, etc. which is not accurate and is used to further a special interest agenda, as government departments swell and budgets go out of control.

3. The New Deal is something is a seventy year old battle that we have been fighting which has been framing American domestic politics. Politicians play this game on both sides of the aisle to justify their programs or justify the cutting of them. The truth is that we need a new paradigm that has some social safety nets but turns certain things over to the market. In my mind, health care should have more government involvement while social security should become more private. These are the giant elephants in the room that need to be addressed. Nitpicking over $10 million dollar programs in a budget many times larger is ridiculous. Yes, these programs affect people, but their effects are grossly exaggerated.

4. Income inequality has grown and this is a problem. The truth is many people have become rich from asset bubbles of late from stocks to housing to commodities. The diminished strength of the union, which can only be attributed to globalization (which is positive on the larger scale), the loss of pensions and benefits at many companies, and the increasing cost of health care has put increased pressure on the middle class. The truth is that income inequality is due to the fact that most wealth in the United States is created through asset ownership, whether those assets be stocks, housing, small business, or any number of asset classes. The hard working middle class worker does not participate in these markets except through intermediaries such as pension funds. The middle class needs greater access to wealth creation, the first step of which is home ownership, and then later other assets such as stocks through 401(k) plans.

5. Most of the time, tax cuts do benefit the economy. It's that simple. Sometimes they don't have as great an affect, but they do spur innovation, more money chasing ideas and venture capital, as well as investment in assets. Bush's tax cuts fueled the housing boom and kept the stock market moving after the technology bubble crash. Of course, the main driver of this was the Fed, but the tax cuts freed cash that was spent on goods and services that kept the world economy humming.

In summary, the budget needs to refocus the income gap discussion. We need to refocus our "social safety nets" so that people's health is a higher governmental priority than their financial health, which they should become more engaged in through a culture of ownership. The two main issues are health care and social security discussed below. The way we handle these two large items in the future could determine the future success of the United States as a world leader and superpower.

America needs some kind of universal baseline coverage, with a higher level plan to be purchased from private carriers. America effectively already has a baseline plan, except that as the numbers of people with insurance decline, the remaining are paying for those people anyway. I believe that a three tiered system can achieve the goals of insuring the country. The first tier will involve standard checkups, testing, shots, all to be administered by nurses and physician's assistants. This tier of service will be completely paid for by the government. A second tier will be a high deductible low premium plan to be offered by or through the government (with a number of providers or just government administered) that will cover emergencies and other high cost medical items. The first two tiers will be mandatory and be paid through a tax increase on corporations for the first tier and the second tier will be paid by each individual or for a family. The third tier will be an elevated service level that will be entirely private, with private insurers, doctors, and hospitals. The second and third tier will overlap as necessary. Just a thought. I could write more in another post.

As low income people pay into social security, they need to feel that the money is going somewhere that they can access when the time comes, and they need to be the judge of what is sufficient and what is not. We need to have financial safety nets, but they need to be spread wider and not be the result of passing fancies of whomever is in office. Those safety nets must help people in tough situations and provide for a reasonable retirement and pension. I think we will get there faster through privatizing social security than from continuing to fund it.

New Bright Eyes Track

Hey:

Bright eyes is coming out with another CD. Since I was musing about the need for the combination of user reviews, professional reviews, and purchase options, I caught a blog post by Fred Wilson about a Bright Eyes new track that was released before the album called Four Winds that highlighted a website called Hype Machine.

The website basically takes all the music being talked about in blogs, displays tracks that you can listen to and user reviews and link to where you can buy them. Not exactly the all in one package I was talking about, but a cool site none the less.

Pitchfork has probably been doing this for a little while, but it's cool

I noticed a cool feature on Pitchfork Media's Website that is called Forkcast. It's pretty cool cause it puts up new music and videos and like a weekly Forkcast that does reviews of new music. I think its a great way to take a break from work if you're on the computer and check out some new music.

Also, even though pitchfork is relatively mainstream, I find the reviews and new music to be very good, and its independent enough for me and who really cares if the music's good. One thing I really like about this, is that I used to visit Pitchfork mainly for the reviews or when I was pondering a new album, because I usually trust their pics, but now, this feature gives me another reason to spend more time on the site. What I don't like is that Itunes seems to be one of the only outlets for downloading music and more independent stuff isn't on there. Therefore, I use EMusic.com, but some kind of combination of great reviews and news like Pitchfork or NME and an easy purchase interface would make a lot of sense. Also, I think the other great idea out there is where music is ranked by users and that determines the price of each track, with a cap at $.99/track or $1.29/track. This way you can combine professional reviews, music distribution, and user reviews into one thing.

Anyway, here's the pitchfork link again.

Israeli Petitions

Petitions for Israel, worth a look:

http://www.israelpetitions.com/index.html

Personal Savings at a 74-year low.

This is more of the same economic news. Americans are in debt, overlevered on their mortgages, getting paid less, and still spending like drunken sailors....The Personal Savings of Americans has dropped to a negative 1%. For more click here...

The good news is jobless claims went down and we added more jobs to the economy. But those jobs are not paying the same and we need to be wary of this disturbing downward trend in personal savings. Here is the link again:

http://biz.yahoo.com/ap/070201/economy.html?.v=8

X-Hawk 10

This story came across the AP wires yesterday and the Free Press picked it up. A man in Israel, Rafi Yoeli, from the city of Yavne, (Ten Li Yavne v'chochameha) has created a flying car or truck that can act like a helicopter, stay airborne for like two hours and he believes will be viable for sale by 2010. He is working with bell helicopter on the flying car. You can see the car in the background.

















To read the article courtesy of the Free Press click here.

The Boom and Bust Cycle continues... even if it is muted by the Fed

WEB 2.0 ... more like BUBBLE 2.0

Keep drinking the kool-aid people. Yes, its true your blog has fifty widgets and gets a bunch of hits from people like Eric and Steve, but the big dungeons and dragons party that is your blog is a bubble... wait, is that me.??

Your favorite tech bubble is back again, round two, valleywag talks about being a jerk about it.

This is just the beginning of this bubble as you hear of once famous unprofitable social networking names struggle to make money and finally either get out before its too late, or come crashing down. As I'm sure you have read in many places, 2007 is the year the no profit party stops, and many of these "social networking" (there I said it) sites take a swim in the swirling waters of the toilet. I just don't see the problem in a facebook or a myspace charging $1.99 a month for the service it offers. After all, server storage space isn't cheap on that scale, and some peopl who have 500 pictures uploaded on Facebook, are generating cost in energy, storage and maintenance that they are not paying for.


HOUSING BUBBLE

This has driven the boom in America and softened the technology and stock market bust from 2000. Americans are moving from one boom to the next as the last boom busts. Sounds like a stupid tongue twister, but people are questioning what is the next boom that will sustain the economy through the next five year period. Enthusiastic people who are joyfully watching the housing market crash can be found at the following links:

http://thehousingbubbleblog.com/?p=470

http://www.salon.com/tech/htww/2006/04/12/flippers/index.html

Mainly, the housing market has been the result of low interest rates read cheap debt, speculation, and the frenzy characterized by any bubble. However, those that believe that a continued cheap debt situation will exist as productivity growth is slowing and inflationary pressures still exist in the economy are in for a hangover. Fix your rate if you can and hold on as the equity in your home falls. Good news, your income might go up, bad news, that vacation condo/investment you bought in "that new luxurious area" in Florida, just next to the garbage dump that is being turned into the golf course, is out of funding, and the garbage dump is doing better than ever, they might even put in an incinerator.


COMMODITY AND ENERGY BUBBLE

Metals, oils and other commodities have been coming off their highs now only after a long five year boom cycle. The prices for copper, zinc, nickel, aluminum, oil, corn, everything has been going through the roof. I will focus on metals, because as some of you know, I am in the copper industry.

Most importantly, a sudden idea or perhaps you think myth of peak oil and a shrinking of other resources has driven up the price of commodities. In oil and metals, a surging India and China, particularly China, has sent people into resource scarcity mode. Mostly, people get scared into behavioral finance and drive up the prices of natural resources. Do you want Vladimir Putin on the gas spiget...or some other dire prediction.

Even though some of these problems may turn real, markets cool and in terms of commodities, which can fluctuate tremendously, the highs and the lows can create some serious ulcers. Although there will continue to be a sustained higher price in commodities due to increased demand, a great deal of supply continues to come on in some of these metals. Oil is an entirely different discussion. However, one thing is for sure, prices are inflated and corrections are always made, just ask the partners of Amaranth.

In conclusion, as we move from boom to bust and back again, I leave you with the words of a smart Jew, Bernard M. Baruch with the following quote:

"I made my money by selling too soon."

Ameritube LLC

Just in case some of you have been wondering what I've been doing the past couple years, I am currently running an copper tubing facility in Texas that produces tubing for the heat exchanger industry. You can read about the company here:

http://www.ameritube.net

I make the coffee, type dictated letters, and forward phone calls.

Enron: They're not Crooks...

I've had this blog for about five months and the one thing I can tell you is that no one reads this thing. But the one long diatribe I had about Enron I got comments on, and from some securities lawyer who thought he was right. Although, I had to concede some point Enron is not wholly innocent, I still maintain that technically Skilling and Lay did nothing explicitly wrong. Further, Fastow's "crimes" have been over exaggerated and his prison term was excessive.

Either way, don't take it from me, read what Malcolm Gladwell has to say in the New Yorker.

http://www.newyorker.com/fact/content/articles/070108fa_fact

I heard a rumor that he may be writing a book on the subject. more will follow if you comment.

Great Article on Bangitout.com, How to get drunk on a kosher budget

This is a funny article that was on Bang it Out. I think Mad Dog 20/20 is disgusting and made specifically for drunks, the fact that it is made by a kosher wine company is hilarious...
http://www.bangitout.com/articles/viewarticle.php?a=1714

You can also get more information about this wonderful beverage at :

http://www.bumwine.com/md2020.html

Since everyone is on the Apple Bandwagon...

So Apple came out with the IPhone... finally. It was supposed to be amazing and be a camera, music player, phone, video player, email, pda, and it is. It's pretty sweet...I could give you links but you've probably read about it everywhere. Here are some links anyway...and one picture.

http://www.engadget.com/2007/01/09/
the-apple-iphone/

The second thing is they came out with was Apple TV, which will enable to you to beam anything off your IPod, music, video, TV, onto any actual television.

Last, they changed their name, its not Apple Computer anymore, its just Apple Inc. Everyone is saying that this means they are now a consumer electronics company...well interesting announcements.

Now onto the people who were skeptical about Apple's other products or the IPhone in particular, because the only thing anyone has been writing about it seems is how great Apple is, check it out in these links.

http://techeffect.thedealblogs.com/2007/01/is_the_itunes_walled_garden_on.php

http://www.engadget.com/2007/01/09/the-iphone-is-not-a-smartphone/

The question is who is going to break their two-year jail sentence with their carrier to switch to Cingular and pay $600 for a phone. Not business users, who are the ones that may need a portable 8GB of space and exchange compatibilty (but the IPhone does not support Exchange). But Apple is only after 1% and I hope they get it...Would've been nice if it actually was a smart phone.

Comprehensive college student survey

The most connected guy in Silicone Valley, Auren Hoffman apparently, has a really great blog, he recently posted a link to this survey of high school students and college freshman. The survey is extremely comprehensive and worth a look.

Check it out here.

Otherwise, I downloaded the file (which is a powerpoint) and you can get it here.

Study:
The American Freshman: National Norms for Fall 2005
By Sylvia Hurtado & John H. Pryor
(the 2006 study should come out next month)

Oil takes a tumble

Some good news on Oil is always nice...

http://biz.yahoo.com/ap/070109/oil_prices.html?.v=10

Lower temperatures has increased inventories of crude oil and lower usage of heating oil in the Northeast dropped oil futures trading by over $2.00 a barrel in afternoon trading yesterday...

The economy is undergoing a correction to inflation as base metals and commodities go down. This will lead to some lower prices and may stimulate growth again, either that, or soften the impending disaster of the housing market.

Operation Screwball, too bad I missed this one.

"OPERATION SCREWBALL"
IN MONSEY! In Conjunction with
&

LOUD, LEGAL, LAWFUL PROTEST AGAINST NETUREI KARTA'S ATTENDANCE AT HOLOCAUST DENIERS CONFERENCE

WHEN: SUNDAY JANUARY 7 1 P.M.
WHERE: NETUREI KARTA HEADQUARTERS
102 SADDLE RIVER ROAD MONSEY, NEW YORK - CLICK HERE FOR DIRECTIONS

SHALOM TV!

SHALOM TV! As reported on the Daily Show and Bangitout.com

http://www.bangitout.com/videos/viewvideo.php?a=445

The Chevy Volt... GM Engineering at its best.

The all-new Chevy Volt Concept, now if GM got something like this into production, it could change the company....

You can get a good greeny write-up here...

and more pictures...but heres another teaser...

I'm gonna start posting about anything and everything

No one is reading this anyway, so I am just going to start posting about politics, music, art, my life, religion, pretty much anything that's on my mind....

Check out some of the additions on the side panel

1. The Wallstrip - If it works here and the content is interesting, I'm gonna leave it on (www.wallstrip.com)

2. Radio Economics - This is a cool economics blog, if you are an economics dork like me, so it'll be up on the right.

Hope maybe people might start reading this thing.

Debt up to our Eyeballs

Isn't it nice that we keep borrowing and borrowing? Check out the following articles that highlights the recent jump in November in consumer borrowing. It seems we just can't get enough.

http://biz.yahoo.com/ap/070108/consumer_credit.html?.v=4

The only thing I can say is that people's excuse may be the holidays, I think credit card debt is a problem in this country, a large one, but I think its mortgages and housing where we need to be most worried. Let's hope borrowing goes down in December and January.

Employment Numbers Look Good

Happy New Year! Alright, I'm a little late, but either way... we received some good news this year as base metals and oil declined and we received a nice jobs update on Friday 1/5/07. Even though, retail sales declined, the broad US economy may be in for a softer landing than previously anticipated as inflation pressure begins to cool down. Housing is housing, and the carnage has just begun in that sector. For this post I'd like to just focus on employment.

Employment increased by a healthy 167,000 jobs in December none of which came from the retail/trade sector which was unchanged from November. Over the year, the US economy added 1.8 million jobs.

"Total nonfarm payroll employment increased by 167,000 in December to 136.2million, following increases of 86,000 in October and 154,000 in November (as revised). Over the year, payroll employment rose by 1.8 million. In December, employment growth continued in several service-providing industries. Employment in construction was about unchanged over the month, and the number of manufacturing jobs continued to trend downward." (http://www.bls.gov/news.release/empsit.nr0.htm)

Usually an increase late in the year is attributed to seasonal hiring in retail or construction, but retail trade was flat and construction hiring was flat after a total decrease of 53,000 in October and November.

 "Employment in retail trade was little changed over the month after rising by
 39,000 in November.  Building and garden supply stores lost 8,000 jobs in
 December." (http://www.bls.gov/news.release/empsit.nr0.htm)

This jobs report is a good sign for the economy as it continues to add jobs and wages are trending upward. The key now is to make sure people put this new money from their jobs into paying down their debt and not in spending haphazardly.