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Prudent Analysis Of News Affecting Your Wealth Over The Long Run

More good economic news this past week: In November, the Institute For Supply Management's index of non-manufacturing activity registered 57.2%, an increase of 2.4 percentage points over October's reading of 54.8%, indicating continued growth in the non-manufacturing sector for the 82nd consecutive month.

A reading of more than 50% indicates the non-manufacturing sector economy is generally expanding, while a reading below 50% indicates the non-manufacturing sector is generally contracting. According to ISM, a trade group for supply chain managers at large businesses, the relationship historically between the index and the overall economy indicates that November's 57.2% reading corresponds to a 3.3% increase in real gross domestic product on an annualized basis. That's strong growth!

In 1950, manufacturing jobs accounted for 37% of the jobs in America. Today, that figure is 10%.

With non-manufacturing jobs accounting for 90% of U.S. jobs, the rise in non-manufacturing is what really drives growth in the overall growth in the U.S. economy.

The arrows from manufacturing indicate where the manufacturing jobs have gone. Some of those jobs have been replaced by lower-paying jobs in leisure and hospitality. However, many more of those jobs have been replaced by equal- or better-paying jobs in health services and professional and business services.

The good news on the jump in non-manufacturing comes on the heels of last week's data showing a sharp drop in the unemployment rate in November, from 4.9% to 4.6%, along with the creation of 178,000 new jobs in November. In addition, the final growth rate for the third quarter of 2016 was revised upward to 3.2%, while the consensus forecast of about 70 economists interviewed in early November by The Wall Street Journal was for growth of 2.3% through the third quarter of 2017.

As the end of the year approaches, the economy is in a virtuous cycle and a chain of good economic news begat more good news.

How long can this last?

On Friday, the Standard & Poor's 500, an index of share prices in the biggest American companies sold to the public, closed at a new all-time of 2,259. Investors bid stock prices higher for a sixth straight day, a winning streak, the Associated Press said, not seen for three years - three bull-market years of volatile but sharply higher share prices.

The bull market is old by historical standards and a drop in stock prices could occur at any time. When a sudden change of sentiment or unexpected bad news hits, a lot of investors sell and cash out. That happens every year or two historically and you have to expect it. However, investor ebullience recently is occurring at a time when key economic benchmarks are showing none of the signs that normally precede a recession. To the contrary, the virtuous cycle of good data could continue for months. The seven-and-a-half-year-old economic expansion is long but far from the longest on record in post-War America.

Facts do matter and we are a trusted source for economic and financial news and analysis based on fundamentals and authoritative data sources. With all the concern about fake news affecting important decisions and stock prices hitting new highs, this weekly report empowers you with analysis affecting your wealth. The Internet has made it possible to offer you an independent financial news channel not influenced by big media, Wall Street, or politics, a prudent analysis of news affecting your wealth over the long run. Please feel free to share our timely weekly reports with your family and friends.

This was written by a veteran financial journalist based on data compiled and analyzed by independent economist, Fritz Meyer. While these are sources we believe to be reliable, the information is not intended to be used by as financial advice without consulting a professional about your personal situation. Indices are unmanaged and not available for direct investment. Investments with higher return potential carry greater risk for loss. Past performance is not an indicator of your future results.