After years of suffering through a jobless recovery, we have finally reached a point in which employers are hiring with regularity. Jobs growth is imperative for the recovery to continue. People who have jobs purchase homes and cars. People who have jobs are much less likely to go through a foreclosure. Because employment growth is so essential, it is no wonder that the monthly jobs stats are greatly anticipated by the markets. We can expect some volatility in stock prices and rates if the numbers are a surprise to the up-side or in the other direction.
Meanwhile, oil prices are approaching a level that have many analysts concerned with the dampening effect that $4.00 gas could have on the economy. Again, the creation of more jobs could help mitigate this issue. The question is whether the higher oil prices are due to tension with regard to Iran or a better economy. Most likely we are seeing a dual affect. While higher oil prices today may hurt the economy, in the long run these prices are likely to spur more production and further advanced of alternative energy sources, which is positive for the creation of jobs. We believe that as long as oil prices do not get out of hand and spike significantly beyond where they are today, the economy may be strong enough to withstand the rise in gas prices we have seen. Again, this is a price we pay for economic growth and hopefully the tension in Iran will lessen with diplomatic efforts. There is enough going in the region that we obviously don't need another major hot spot. Next week you can be sure we will be analyzing the results of the jobs report. Stay tuned.