Payroll Data! The Plough Horse Recovery Continues: Wesbury

This month's edition of the Most Important Number Ever came out better than expected, sending stocks to all-time highs and pushing the S&P 500 (^GSPC) over 1,600 for the first time ever. The move was driven by Non-Farm Payrolls (NFP) coming in at a better than expected 165k vs official estimates of 140k and unofficial expectations that were much worse than that.

Brian Wesbury of First Trust Portfolios says the numbers were consistent with the glacial pace of the recovery investors have come to expect. "We've described it as the plough horse economy," Westbury explains in the attached video. "We have the Kentucky Derby this weekend, [but] this horse is not going to win the Kentucky Derby. Not even close."

After a spate of weak data heading into the non-farm payrolls release, analysts were expecting evidence that the recovery was ready for the glue factory. Pessimists have been expecting the economy to drop back into a recession at any moment since the March 2009 stock market lows. When mediocrity is a pleasant surprise, the odds favor a bullish reaction to data.

The fly in the ointment was labor participation. At 63.5%, the number of Americans opting out of the labor market is stuck at levels last seen more than 30 years ago. Wesbury thinks the participation is a function of an aging population coupled with some unknowable expansion in the so called "grey market" jobs where workers are paid in cash or trade to avoid taxes.

Although "we're not booming," Wesbury concludes this isn't an economy that's "going to fall back into another recession" either.

For at least the moment that's good enough for the stock market.