Broker Check

Understanding the Numbers

| May 14, 2018
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Judging how strong the economy is at any given time is no simple task.  There are thousands of economists and researchers who make a living by studying, writing, and talking about the economy and why it is doing one thing or another.  Watch any business news network and you can’t make it through the morning without hearing from up to 20 of them.  Which ones do you believe? They all have facts to with their opinions, or at least so it seems.  My suggestion, take it all with a grain of salt.  Numbers don’t lie, as they say; however, they can be manipulated, and or reported in limited fashion leading you to believe one path or another.  Apply some common sense, use your experience, and educate yourself.  Even a little learning is a great inoculation against the dreaded “partial truth” disease.

 The US Labor Department released March unemployment number of 6.585 million people.  That sounds like a lot, and it is.  It is also an unemployment rate of about 3.9%, which is historically low.  Also released by the Labor Department was the job openings number, which was 6.550 million openings.  That is a difference of only 35,000 more workers than openings.  You could say we are on the cusp of 100% employment, yet that is not and never will be true.  There are those who are working part-time while looking for full-time, and also those who are “under-employed” looking for a better job (and yes some of them are qualified for a better job.)  Our friends at First Trust put this into perspective when they point out these numbers, and then remind us that during the “crazy go-go” housing fueled economy of 2006-7 the jobs and unemployment numbers were never closer together than 2 million. 

 There is no perfect system, we all know someone looking for a job or a better job.  Yet the economists we listen to are calling for unemployment to stay under 4% at least until 2020.  That sounds good, and it is.  It also can be a predictor for inflation as wages start to increase and thus what we as consumers pay increases in the cost of goods.  It can show companies are nervous about hiring too many employees and they keep the hiring low, although we don’t feel that is the case.  The bottom line is when you take relatively accurate data and apply some research and filters it helps to better define what is actually going on.  It is not a crystal ball, but it might help pull the curtain back and let a little light shine on what we do know. 

 Have a great week.

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