News of the economy’s slow move upward continues to confuse the skeptics. High oil prices that aren’t really high aren’t slowing the economy down, and regular reports of bad news are contradicted by real data, and more importantly, real behavior. Yes, real behavior as shown through data is far more important than “expectations.” Even the American Automobile Association can’t figure it out. Every week they issue reports about “record high gas prices,” yet they haven’t made the connection that you wouldn’t have a record 40.3 million Americans making 50+ mile automobile trips over the July 4th weekend unless those gas prices weren’t really economy-killing record highs.

The economy is still doing well, though it’s rarely reported as such. The ISM manufacturing survey shows slowing growth, but growth nonetheless. The ISM non-manufacturing survey is robust and displaying unusual strength. These reports came after the first quarter GDP was revised up to +3.8%. Remember how “lackluster” it was when first reported at 3.1%? The new data actually made “experts” worry that the economy was too hot.

Employment has maintained a moderate rate of improvement, as the unemployment rate is now 5.0% and June payrolls were up +146,000. April and May payroll employment data were revised up. The household survey was up by +163,000. Wages were up, too. Remember, “full employment” is considered to be 4% to 6%, and someone once told me that 5% was the number right in the middle of that range. (I’ve always thought “full employment” should be considered lower than that, as some regions of the country have had 2.5% unemployment or less at various times in strong economic periods.) The net new business calculation is now at 72,000 per month.