The Institute of Supply Management reported that the service sector shrank in November. The reading of 48.7 was down from 50.6 in October and much lower than the median of 51.5 expected by analysts.

Why is this number so important? The reason is that the service sector accounts for 80% of US economic activity. A reading below 50 indicates shrinkage in 80% of our economic activity.That is not good news. Dan Cook of IG Markets said: "Seeing the number below 50 there, that to me is pretty harsh."

The lowdown on the July 24 increase in the the federal minimum wage? It will be net positive for the U.S. economy.

From the rhetoric of the supply side theorists --- the same people who advocated more than $1 trillion in 2001-2008 upper-income-favoring tax cuts that created the fewest jobs in any eight-year presidency since World War II --- increasing the minimum wage by 10.7 percent to $7.25 per hour will mark the end of the free enterprise system in the United States, or something close to it.

Register a mild, positive data point for the U.S. economy. In May, the U.S. service sector slowed at a pace less than economists had expected.

The Institute for Supply Management announced Wednesday that its non-manufacturing or service index nudged lower to 51.7% in May from 52.0 in April. Readings above 50 indicate an expansion; below 50, a contraction. Hence, because the index remained above 50 in May, the expansion in the service sector continued for a second straight month, the ISM said. Economists surveyed by Bloomberg News had expected the services index to decline to 51.0 in May.

Thirteen of the ISM's service industries grew in May. The ISM added that members' comments in May reflected concern about business conditions, including rising costs, and the overall sluggish U.S. economy.

Economic Analysis: Many economists tend to place less emphasis on the ISM services index, compared to the capital-intensive manufacturing index. Still, the services index does provide helpful clues regarding the economy and the May statistic further confirmed that the U.S. at mid-year is experiencing very sluggish, region-specific growth, but not a contraction -- at least not yet. Credit conditions are tight, but credit availability has not been totally shut down. Corporations large and small are tightening their belts, but some business-to-business spending is occurring. Lay-offs are occurring, but so far, there is no tidal wave of layoffs.