Unemployment falls back to its lowest level in decades…3.5%

If you look back in the last 60 to 70 years, every time unemployment peaks (in a good way) like this, it's always immediately followed by a recession. This is about as good as it gets with unemployment and the market knows that. Couple it with the Fed Reserve stomping on the brake pedal and yeah, the market is reacting accordingly.

 

This is not great. People aren’t looking for work

 

because inept joe paid them so stay home with all the stimulus money

 

Yeah, that 1200 bucks went really far

 

Apparently you are independently wealthy and never have to work again with that $1200, according to the geniuses in the GOP.

 

Can’t you try even a little bit to put forth a rational argument?

 

Federal Reserve has killed and continues to evaporate all liquidity in the market. Investors well know what a lack of liquidity leads to and are already feeling it. Even strong consumer spending, wages and employment can't defeat a market void of liquidity. Equities are always the first to get crushed. Then within 6 to 12 months, companies begin laying off. People talking of a "soft landing" are the same people who said inflation was "transitory".

 

well then, what is your reason why they are not looking forb jobs?

 

I’ll bite. Something isn’t right. Can u explain it to me? GDP in decline, inflation can’t be stopped, and don’t look at the Dow.

 

because they have been led to believe they are worth 20 dollars a hour at McDonalds.

 

And therein lies the problem. Tight labor market continues to result in wage inflation. As a business owner, I see this first hand. Having to increase my prices to my customers accordingly. Until UE goes back up, inflation will persist even if COGS remains in check.

 

Because everyone is employed.

 

Funny because last report that came out, the participation rate was at its highest since before the pandemic. This new one dropped ever so slightly. Since the middle of 2020, it's gone up a full percent to now and sits about a percent shy of what it was Jan 2020. It's only about a half percent short of what it was in the middle of 2019.

What do you think the rate should be at?

 

We have a structural/demographic labor shortage. Partly caused by demographics (a generally aging boomer population). Partly caused by COVID (deaths, people leaving labor force early). Partly caused by destructive immigration policy of the last admin (less than normal immigration = less legally eligible workers entering labor force).

Wage labor inflation is only half the puzzle though, it’s something like 5%. I think we’d be dealing with that 5% pretty well if it were all about wage inflation. Unfortunately we got hit with some crazy supply related stuff which has added another layer to it, pushing the total over 8% and meaning despite that high wage inflation, real wages have been negative (and not by a small amount, a full 3% in the negative). The China lockdowns (supply chain) seems to be abating, Russia’s actions still messing with some commodities markets which is totally out of our control. Unfortunately the feds only real move is to raise rates and try to slow demand by intentionally stalling the economy.

By all accounts, these low wage service industry companies are having difficulty finding workers. By definition, if McD can barely hire workers at $15/hr and is having trouble finding enough, then the employees they do have must be worth that $15/hr. They might even give you a chance! If not, then there are some Venezuelans i know of who would likely be eternally grateful for the chance to work at McDonalds.

 

The fed actually wants companies laying off workers, probably wants to see employment tick off these record highs and back to a more neutral 4% or 4.5% U-3. That’s why the market took this good/strong jobs report as bad news. They think it means more future rate hikes by the fed, that the fed has more “work” to do to slow the economy and slow hiring. When the risk free rate of return is higher, it generally causes stocks and risk assets to be price adjusted lower, especially those who may now see more realistic borrowing costs going forward. A lot of these valuations were priced for ZIRP.

 

You are preaching to the choir. The Fed wants 4 to 5 percent unemployment, but they’ll likely get 7 to 8 percent or worse in the end. You don’t raise rates this quickly and not feel some real pain from it. The piper must be paid. And the Fed is perfectly ok with 7 to 8 percent unemployment if it means avoiding endemic inflation.

 

Unemployment is at a historical low. What exactly are you asking? If you know.