The latest U.S. employment report is surprisingly strong, suggesting that the economic recovery is gaining steam. And even as data shows the decline in government jobs continuing, gains in the housing market could bolster tax revenues for state and local governments and potentially reverse that government-jobs trend. All in all, it’s good news for stock-market investors, BloombergBlack Investment Strategist Adam Freedman writes.
The U.S. economy added 236,000 jobs in February, surging well past economists’ estimates. While there were some less unambiguously positive numbers in the report—employment totals were revised slightly up for December but also were revised substantially down for January—the data overall suggests the economy is shrugging off the increase in payroll taxes that took effect in January and the potential effects of federal government budget cuts that began earlier this month.
Also worth noting: One longer-term trend that continued in February was a decline in the number of government jobs. This has been happening ever since the middle of 2010 as cash-strapped state and local governments, which account for a vast majority of government jobs in the U.S., have had to cut back. If an ongoing recovery in home prices helps increase tax revenue for state and local governments, this trend could reverse, providing an additional boost to the U.S. economy over the medium term, Freedman concludes.
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