As expected, the Jobs Report came in at 192 thousand new jobs in February, safely between the concensus estimate of 185 thousand and the "whisper" estimate of 220 thousand. As a result, the market moved very little, having already priced in a good report.
Looking at the larger economy, this was indeed a good report. The economy continues to improve at an accelerating rate, albeit a relatively slow one. Absent a blow-up in the derivatives market, there is virtually no chance of a double-dip recession.
Getting back to the market on Friday, the fear that our recovery is jeopardized by the spike in oil prices pushed the market down, with the Dow down 88 points for the day . . . big deal.
While it is amazing that we are still so dependent on oil imports almost 40 years after the first oil shock, it is more understandable when you realize that oil is mis-priced from an economic standpoint. When you go to the store and buy a loaf of bread, you are paying all the costs associated with producing that loaf of bread, e.g., the wheat, the cooking, the transportation, the labor, etc. When you go to the gas station and buy a gallon of oil, you are not paying the full cost of getting the gas, because you are not paying for the very real cost of cleaning up the environment, you are not paying the very real cost of being dependent upon untrustworthy vendors, you are not paying the very real cost of foreign aid to Israel, etc. While we may pay that cost in taxes (or increasing borrowing from the Chinese), we would buy less gas if we paid the true cost of oil dependence at the pump. One economist estimated that cost over $100 per gallon.
If we paid the true cost at the pump instead of paying it in taxes, our economy would be severely damaged. The market was fixated on that nightmare scenario on Friday afternoon.
