The mainstream media were shocked today when U.S. job growth continued at a very strong pace in November, despite the October government shutdown that ended on October 17th. Employers added 203,000 jobs and the reported unemployment rate fell from 7.3% to 7%, its lowest level since November 2008. Economists had predicted a rise of only 180,000 jobs and a slight percentage decline to 7.2%. Despite government shutdowns, deficit spending, and ObamaCare taxes, the American manufacturing and energy sectors are providing the real type of economic stimulus that generates job growth.

For the second month in a row, job growth was far better than expected. The production sectors for manufacturing, transportation, and warehousing led the jobs gains in November. It is especially good news that transportation and warehousing jobs for couriers, truck drivers, and warehouse storage provided the largest gains, with 31,000 new jobs. Historically, this type of extraordinary growth is an indicator that production orders are expanding rapidly and business has gained new confidence to build inventory to meet expected higher demand.

Equity investors were thrilled by the positive news and the Dow Jones Industrials stock index leaped 143 points at the open of trading on the New York Stock Exchange. But what is good economic news for the economy may be bad news for fixed income investors, as the price of bonds fell and interest rates rose.

I follow the non-seasonally-adjusted unemployment claims data reported by the Bureau of Labor Statistics. The monthly report demonstrates the rate of new claims has been consistently shrinking at an 8.25% rate for 104 months. Most analysts have become experts over the last thirty years at tracking the growth of the "consumer economy", as consumption spending in the U.S. rose from about 62% of GDP in 1981 to 71% in 2013. This has resulted in confusion lately as retail sales are sluggish, but employment has continued to rise steadily. It is my belief that most analysts lack the focus or do not understand that the America economy is changing to emphasize production industries.

The Federal Reserve has been trying to goose consumption with four rounds of "quantitative easing" (QE). This is a fancy term for the unconventional monetary policy used by the central banks of the United States to stimulate the economy when standard monetary policy of driving down interest rates has become ineffective. The Fed is currently printing money out of thin air to purchase $85 billion of long-term financial assets from commercial banks and other brokerage firms. The goal has been to put more money in peoples' hands to stimulate housing, auto, and retail sales. This has been ineffective at spreading the wealth to create greater consumption, because banks have tended to loan the money only to the wealthy to buy more assets.

But away from federal government stimulus to crony capitalists and Federal Reserve charity to the rich, the energy and production sectors of the economy are beginning to boom. The Commerce Department reported on December 4th that the U.S. trade deficit totaled $40.6 billion in October -- down from an upwardly revised $43 billion in September. U.S. exports of goods and services reached a record monthly high of $192.7 billion, up a comparable 18% from September; while imports rose by only 4.5% in October, to $233.3 billion.

U.S. oil exports surged 11% in October to $7.7 billion versus an import of petroleum increase of just 1.5% to $18.2 billion. American domestic oil production has risen by a million barrels each of the last two years due to the hydraulic fracking of shale deposits to release oil. This improvement has driven domestic oil and natural gas prices down versus China and is created a big cost advantage for American manufacturers.

The Federal Reserve has focused on trying to stimulate the American consumption economy. But the average worker is still too indebted and worried about higher ObamaCare premiums and deductibles to increase retail spending. The Fed now finds itself in the uncomfortable position of potentially igniting a nasty round of inflation if it continues its QE stimulus in the face of a strengthening economy.

To avoid turmoil during the transition to new leadership, the Fed had hoped to wait to "taper" down the amount of bonds it purchases every month until after the Congressional confirmation of Janet Yellen as its new Chairman. But this months' employment and trade reports reveal the Fed is "behind the curve" on causing inflation.

The domestic energy and manufacturing sectors are perfectly positioned to continue to lead American economic expansion and job growth in 2014. The Obama Administration stimulus and the Federal Reserve quantitative easing have been ineffective and now threaten to unleash inflation. Perhaps after five years of failed public policy stimulus and massive new deficits, the public will begin to appreciate that only the private sector can create good jobs at good wages.