On Friday the Labor Department reported that the job market enjoyed excellent performance — nonfarm payrolls surged by 266,000 and unemployment fell to 3.5%, a 50-year low. Over the past year, almost 1.7 million people joined the ranks of workers. We now have enjoyed 110 months of job gains, resulting in a resilient economy.

The economy keeps expanding despite concerns that the Democrats could hold an impeachment vote on President Trump before the end of the year. Even the unsettled issues regarding trade negotiations between the United States on one hand and China, Canada, and Mexico on the other hand have not significantly impaired hiring. In addition to the foregoing, Trump fueled trade tensions with Argentina, Brazil and our European allies. Conversely, if we could settle these trade issues, most economists expect that we would see companies hire more workers and spend more on capital expansion and research.

These results far exceeded Wall Street estimates, which anticipated job growth of 187,000. Labor force participation rate was 63.2%.

Larry Kudlow, director of the National Economic Council, told CNBC’s “Squawk on the Street”: “These are happy numbers, these are sunny Friday numbers.”

Tony Bedkian, head of global markets for Citizens Bank, said in a note: “The unemployment rate is at a 50-year low and wages are increasing. Business owners may be getting more cautious due to trade and political uncertainty and growth may be slow, but consumers keep spending and the punch bowl still seems full.”

Jim Cramer, who appears daily on CNBC, said: “Like or hate Trump, these are the best numbers of our lives on jobs.”

In part, the excellent numbers reflected the settlement of the General Motors strike that added some 41,000 workers. These are the major sectors that witnessed increases;

  • Education and health services: 74,000
  • Manufacturing: 54,000
  • Leisure and hospitality: 45,000
  • Professional and Business Services: 38,000
  • Transportation and warehousing: 15,500

Education and health care increases were significant. This sector should continue to benefit from changing demographics and advances in medical technology.

Another positive sign was average hourly earnings. Over the past year it increased 3.1%, about 1 percent higher than inflation. The lower end of the pay scale has seen the biggest wage increases. Amazon’s decision last year to raise its minimum wage to $15 an hour across the country has pressured others to match them.

Consumers, who represent 70% of our Gross National Product, have been a key driver of economic growth. The University of Michigan consumer sentiment reported that Americans’ view of the economic outlook improved significantly in December.

For the foreseeable future, the Federal Reserve should keep interest rates steady.

There is little expectation that the Federal Reserve will cut interest rates for the fourth time this year. In recent weeks the Central Bank has signaled that unless they see a significant weakness in trade, business investment and manufacturing, they will not cut rates further.

Some economists argue that the Fed will not raise rates until inflation exceeds 2.25% for several months.

While wages have increased, they are modest given our half-century jobless rate. The official poverty rate is 12.3 percent, based on the U.S. Census Bureau’s 2017 estimates.

To overcome the problems of the working poor, I advocate a negative income tax. People earning below a certain amount will receive supplemental pay from the government instead of paying taxes to the government. Milton Friedman, the Nobel Laureate, supported a negative income tax because it would cost much less than our current welfare program, avoid interference with personal freedom and preserve incentives to work.

While I could accept returning to the tax rates initiated by the Obama Administration, I would oppose a drastic tax overhaul because, on balance, our economic system is working well.

Originally published in the Sarasota Herald-Tribune