Sunday, November 4, 2012

Economy: A Virtuous Circle?

It looks like that the economic recovery is speeding up again - at least in the US, the leading economy of the world. On Friday we got news that the job growth there is accelerating. "The U.S. created a better-than-expected 171,000 jobs in October and hiring rose faster in prior months than previously believed", reports Marketwatch ( "Revisions added a total of 84,000 jobs to the employment count in the previous two months and brought average gains since June to 173,000", writes Bloomberg (bloomberg).

The job market is predominantly fueled by the solid consumer spending I have been frequently reporting on this place. Many retailers, car producers and other consumer focused companies are hiring to keep up with the rising demand. They are responding to the solid retail sales and car purchases of the recent months.

In turn the solid job growth fuels the consumer demand again because people get more money for purchasing. I reckon that this leads to a virtuous circle in which job market and consumer demand are amplifying each other. This should bring the whole economy on a solid growth track and could fuel further gains on the stock market.

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