While we were away committing multiple-count felonies on our diets over the last two weeks, the economy kept humming along. The government reaffirmed its high GDP growth rate of +8.2% for the third quarter, and corporate profits were revised downwardthat is, until you look at the nature of the decrease, which is related to increased investment since original estimates of corporate cash flow were increased by +$9 billion dollars.

Personal income for November was up by +0.5%, as was disposable personal income. One of the highlights of the reportsupporting my contention of the bottom-up economyis the news that that proprietors' income increased an astonishing +$15.1 billion in November, and this was much higher than the increase of +$3.6 billion in October This is yet another reason why the payroll data used in unemployment are seriously lagging what is actually happening in economic growth. People are starting their own businesses, sometimes because they want to but often because they have to; and the latter is actually a good thing, as the animal spirits of the economy engage in the creative destruction that keeps economies strong. We are adding an average of 55,000 new businesses per month and have been doing so for over a year. (We'll discuss the latest data on this subject next week.)

The Conference Board's report of a slight decline in consumer confidence gives some insight into this. Though consumers were upbeat about the future, their sense of the present was down somewhat, driving the index down from 92.5 to 91.3. While they expect jobs to become more plentiful, the percentage saying jobs were hard to get went from 29.6% to 32.6%. This kind of frustration in a growing economy leads yet more people to go out on their own. As employment regulations, increases in health care costs, and the general cautiousness of CEOs influence the slow uptake of payroll employment, those factors play favorably for outsourcing initiatives that small businesses thrive on, and for new business creation.