A new ADP Payroll Report shows job gains of 202,000 from November to December 2019 far surpassing expectations. The increase was the largest gain since April ’19: “largest gain since April, driven mainly by professional and business services. Job creation was strong across companies of all sizes, led predominantly by mid-sized companies.”

(Reuters) – U.S. private payrolls increased by the most in eight months in December, pointing to sustained labor market strength though job gains last month were likely flattered by a seasonal quirk.
The ADP National Employment Report on Wednesday showed private payrolls jumped by 202,000 jobs last month, the largest gain since April, after an upwardly revised 124,000 rise in November.

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The Bureau of Economic Analysis (BEA) has released Q4 (November) import/export data showing a considerable drop in the U.S. trade deficit. [Release Here]  Exports increased approximately .7 percent ($208.6 billion) while imports dropped one percent ($251.7 billion.  Lowering the overall trade deficit to $43.1 billion.

While the pundits are surprised at the strong result, it should not come as a surprise to many CTH readers.  During Q2 (June) and Q3 (July, Aug, Sept) the rate of GDP growth was impacted -in part- by inflated U.S. purchases as companies bought holiday merchandise earlier than normal.  This was an effort to avoid looming tariffs, and as a result companies increased their overall inventory.  We predicted Q4 purchases (Oct, Nov, Dec) would be lower specifically because of this backlog of retail inventory.
With the massively successful holiday season now over, those inventories have sold.  Specifically because the value of imports are deducted from the GDP calculations, there will likely be a much stronger Q4 GDP growth resulting from less import activity.
The Wall Street financial pundits are too focused on the multinational side of the ledger; and they simultaneously don’t review data from a Main Street perspective; therefore they don’t see -or pretend not to see- the common sense equation staring them in the face.
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The 2020 Davos economic conference will be a little more important to watch this year (as it was in 2017) due to the completed U.S. Trade Agreements (S Korea, Japan, Mexico, Canada, and China) and the predicted focus for the Trump administration to pivot from Asia to the EU and U.K. for the next critical phase of the ‘America-First’ global trade reset.

As a result of the recent U.K. election, pending Brexit, a favorable $7.5 billion WTO ruling and USTR Lighthizer’s new $2.4 billion EU targeted tariff program, the administration has significant advantages going into a trade discussion with the EU in 2020.
Team USA has the world’s strongest economy, the largest market, legally bolstered tariff authority and a quiver full of powerful economic arrows.
Meanwhile Team EU has: (1) the UK leaving; (2) severe drops in German industrial manufacturing; (3) a shrinking French economy; (4) yellow-vests in the streets; and (5) demands for greater economic autonomy from many key member states.
Overlay Germany, France and Italy large economy challenges such as: their promise to meet NATO obligations – and their attachment to the strangling Paris Climate Treaty, and the EU’s collective economic position is precarious at best.

WHITE HOUSE – Today, President Donald J. Trump announced the Presidential Delegation that will attend the World Economic Forum in Davos-Klosters, Switzerland, from January 20 to January 24, 2020.

The Honorable Steven Mnuchin, Secretary of the Treasury, will lead the delegation.

Members of the Presidential Delegation:

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White House Manufacturing and Trade Advisor Peter Navarro discusses the state of the U.S. economy heading into 2020. The Fox crew uses the strawman poll: “some people feel”, to create a narrative that cannot easily be countered; however, the reality in the economic stats cannot be refuted.
Main Street workers are confident; wages continue to increase; inflation is low –  employment is high, consumer spending is strong and the future looks bright.

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Peter Navarro discusses the Trump administration’s trade agenda and some predictions for the state of the Main Street U.S. economy heading into 2020.
Navarro highlights the completed agreements with South Korea, Japan, China phase-1, and the U.S., Mexico, Canada USMCA agreement and what they can deliver next year.

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It really is quite remarkable that President Trump and the economic team could simultaneously diminish the interests of multinationals, focus on Main Street USA, and still create a situation where Wall Street stocks are growing.
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The Dept. of Labor reveals [DATA HERE] initial claims for unemployment fell again last week, creating the following Reuters headline: “The number of Americans filing applications for unemployment benefits fell last week in a sign of ongoing labor market strength.”   Another strong labor report, followed by another media report outlining how the results beat all economic analyst expectations; a consistent theme throughout 2019.

White House – DRIVING A RECORD-SETTING ECONOMY: The booming economy and strong labor market allow Americans of all backgrounds to find work and succeed.
♦ The current labor market revival is not a continuation of past trends, but instead a direct result of President Trump’s pro-growth policies.

• Since President Trump was elected, more than 7 million jobs have been added to our economy – surpassing the Congressional Budget Office’s predictions by 5 million jobs.
• This year, the unemployment rate has fallen to 3.5%, its lowest level in 50 years.
• Unemployment for African Americans, Hispanic Americans, Asian Americans, veterans, individuals with disabilities, and those without a high school diploma have all reached record lows under President Trump.
• The President’s policies are bringing people off the sidelines and into the labor force.
• The prime age labor force has grown by 2.1 million under President Trump.
• The surge in labor demand has resulted in 7 million job openings, which outnumber job seekers by more than 1 million.
• Before President Trump took office, there had never been more recorded job openings than unemployed workers.

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Whooo-doggies, middle-class Americans spent more this holiday shopping season than any year before it.  Despite losing a week due to the late Thanksgiving holiday, total Christmas sales growth was +3.4 percent year-over-year.

(Reuters) […] The holiday shopping season is a crucial period for retailers and can account for up to 40% of annual sales. But this year, Thanksgiving, which traditionally starts the U.S. holiday shopping period, was on Nov. 28, nearly a week later than last year’s Nov. 22, leaving retailers with six fewer days to drive sales between Thanksgiving and Christmas.
E-commerce sales this year made up 14.6% of total retail and rose 18.8% from the 2018 period, according to Mastercard’s data tracking retail sales from Nov. 1 through Christmas Eve. Overall holiday retail sales, excluding autos, rose 3.4%.
“E-commerce sales hit a record high this year with more people doing their holiday shopping online,” said Steve Sadove, senior adviser for Mastercard.

Now watch the Reuters spin…
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Donald J Trump was the only candidate in 2016 who knew how to use China’s panda playbook against them.  Thus, when you plant your tree in another man’s orchard, don’t be surprised when he charges you to harvest your own apples…

BEIJING (Reuters) – China will lower import tariffs on over 850 products from Jan. 1, including frozen pork and frozen avocado, the finance ministry said.
It will also further lower import tariffs on some information technology products from July 1 next year, said the ministry, in a statement on its website. (link)

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As expected the House of Representatives has passed the USMCA trade agreement with an overwhelming 385 to 41 vote.  Pelosi’s political objective was to use USMCA to water down the toxic political environment created by her impeachment fiasco:

Also as expected, after passing the USMCA the House went into immediate recess for the Christmas holiday without any movement on the fraudulent impeachment articles.
In the time-frame between today and the return to the next congressional session in January, House lawyers will attempt to use the passage of the articles to support their background court cases: (1) McGahn forced deposition; (2) access to Mueller 6(e) grand jury information; and (3) possible access to Trump family financial records.
[PREDICTION for bookmark: Upon return in January Speaker Pelosi will refuse to allow impeached President Trump to deliver a State of the Union address in the House.]
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Great interview with United States Trade Representative Robert Lighthizer as he described the goals, objectives and outcomes of the USMCA and U.S-China Phase One agreements.
While answering a question about Wall St. journal criticism of the USMCA, Lighthizer discussed the dynamic of Wall Street -vs- Main Street as part of the bigger picture objective in the revised deal. He avoids the words “globalism” -vs- “nationalism” but the sentiment as described is there.
On China Lighthizer emphasizes the “phase one” deal is really a test to see if it is even possible to have an enforceable trade agreement between a communist state-run economy (China) and a free-market economy (U.S).

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