Employment Report (Dec.)

The far bigger than expected 312,000 jump in non-farm payrolls in December would seem to make a mockery of market fears of an impending recession. Admittedly, employment is a coincident indicator, whereas the ISM manufacturing index, which we learned yesterday fell sharply in December, is a leading indicator. But, even allowing for that distinction, this employment report suggests the US economy is still expanding at an above-potential pace, which would normally require the Fed to raise interest rates.