Pundits keep warning about an economic slowdown, but the data continues to prove them wrong.
Only 199,000 Americans sought unemployment benefits last week. It was the first reading under 200,000 since November 1969, when the U.S. workforce was half its current size.
The drop, down 14,000 from the previous week, came despite 15,000 more federal government workers seeking benefits. In other words, the shutdown is having a small impact, although the strong economy is more than offsetting it.
Other numbers paint a similar picture. Rail traffic, a fast-moving gauge of economic activity, rose 6.9 percent last week and continues to accelerate from a tepid December. Remember, the market views transportation as a bellwether for economic growth. Several companies in the sector have also issued strong quarterly results:
- American Airlines (AAL) is rallying today after earnings surpassed estimates.
- Southwest Airlines (LUV) reported better-than-expected net income and revenue. It’s up more than 5 percent in the premarket.
- Textron (TXT), which makes Cessna planes and Bell helicopters, is surging 8 percent after profit beat consensus.
- Last week featured strong results from airline United Continental (UAL) and trucking firm JB Hunt (JBHT).
The chip space, notoriously sensitive to swings in the economy, is another positive area. Companies including Lam Research (LRCX), Xilinx (XLNX) and Texas Instruments (TXN) are all higher after surprising to the upside last night. Yes, the bears were worried about China. Now the market could be acting like those fears are priced in.
Today’s news follows several positive reports in the financial sector, where signs of a recession are few and far between.
In conclusion, plenty of observers continue to worry about the government shutdown and President Trump’s trade war. But, the numbers don’t seem to confirm those fears so far.