Everyone Gets a Trophy, But Maybe Not a Job

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The unemployment rate has slowly improved in line with economic growth; recent reports and news of job growth and payrolls have continued the favorable trend.

Today the market is anxiously awaiting the Trump/Iranian deal decision and investors may have missed the latest economic good news, which contrary to investor sentiment, has been plentiful. The U.S. economy now has a record high number of 6.55 million job openings, according to the March JOLTS survey and this economy is poised for acceleration, not deceleration. The unemployment rate is at an 18-year low of 3.9%. However, the more comprehensive U6 rate, which includes discouraged and reluctant part time workers, is a 7.8% indicating there is still some slack in the labor pool. In addition, the overall labor participation rate slipped to 62.8%. These factors are holding back higher wage pressures and hence Fed fears of an overheating economy. Wages are up only 2.6% year-over-year. Sluggish productivity is also a factor holding back wage gains. This falls squarely on the business sector which until recently was skimping on business investment and capital spending. So with 6.55 million job openings, it means that for every opening, there is only 1.01 unemployed person out there seeking a position. If you are seeking a job, how can you lose? But before you start planning your office décor, companies are reporting that many job openings are going unfilled because of a skills mismatch. These skills are particularly lacking in the fields of tech, healthcare and manufacturing. Please see page 64 of the Global Perspectives Book where you can watch the steady decline in the unemployment rate from 10.0% in October 2009 to its current ultra-low levels.

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