Jim O'Neill: Key Narrative on Economy is Employment, Not Oil Prices

Jim O'Neill, the chairman of Goldman Sachs

Asset Management believes a good print on this week's employment reports will be a far more prevalent indicator on the health of the economy rather than rising oil prices. O'Neill spoke to CNBC's Squawk Box this morning, where he said rising oil prices are the most biggest concern he has, far more than Greece, given the damages it brings the economy every time it ticks up. That said, he thought there is not as much to be concerned currently as people seem to think. He believes a strong print on this Friday's employment report would be a far better indicator on the health of the recovery than the rising oil prices. Having delivered upside surprise in the last two reports, a third one would ease investor concerns and caution about the US. Also, O'Neill believe, it would fuel another material rally on the equity markets, before getting into the spring and summer issues related to rising oil prices. He concluded this morning's appearance stating that, while it is tempting to compare current market bullishness with a similar move in early 2011--which did not materialize into a stronger recovery--this one is significantly bigger. More importantly, it is backed by strong job creation, which was not the case a year ago. O'Neill sees further evidence in the strengthening of confidence in US equity markets on several fundamental turnarounds. He sees the US focus on natural gas a huge structural development in the US. In addition, the weakness of the dollar coupled with wage developments in China should provide some upside to US manufacturing jobs. Finally, a turnaround on the US housing rounds up the big positive tailwind in the offing.