The labor market is continuing to strengthen, as evidenced by the gain of 195,000 new jobs created in June. Despite headwinds from the spending sequester, the employment number over the past three months has remained resilient. The strong advance in the employment count provides support for the Federal Reserve to start to taper back on its quantitative easing in the near future. More and bigger paychecks (average wages picked up significantly at 10 cents relative to May), together with more consumer confidence that could be derived from this surprising strength in the labor market, all feed consumer demand – which in turn feeds two-thirds of GDP. To continue this strength in the labor market, the key is not just the number of new paychecks from new jobs, but the additional spending power to perk up spending. Business will have to hire if there is more demand for goods and services. This momentum can be sustained with strong tailwinds from the housing, energy and automotive sectors.