Be Well: What the May Jobs Report Says About U.S. Economy

<div class="block">Marty Cantor, CPA and economic development consultant, joined Cheddar News to talk about the May jobs report. He said that despite numerous jobs being created, the economy is still slow growing because &quot;the jobs we&#39;re creating are really filling the jobs that are retired so its being a superheated economy.&quot; Cantor noted that 3.5 million people have retired since the start of the pandemic. </div>

beWell

Welcome back to be. Well, it's time now for your money with Marty and you know, the labor market continued to show resilience in May adding more jobs than expected despite all of the efforts of the Federal Reserve to really cool the economy. So I guess taking a look at the latest numbers, what stood out to you? Well, what, what's odd is the fact that we keep on creating jobs and the economy and the gross domestic product goes down. Uh So what, so when you take a look underneath the numbers, we find that between this last year, we have lost, actually beginning after the pandemic, we have lost 3.5 million people from the workforce due to retirees. They have gone up from 18 to 20% of the population. So what means, what that means is that the jobs we're creating are really filling the jobs that are so it's not being the superheated economy and that's why productivity is going down and the costs are going up because we're not getting new people in. Uh we're just filling what was lost. So people decided to retire and leave the workforce. So the numbers that we're seeing are really people just filling that same position. That's exactly right. That's why you job growth. Uh, when the president talks about job growth, it's not new jobs we're growing from the depths of the recession when businesses were closed down during the pandemic. And that's what we have. The workforce partici participation rate has remained constant, about 62%. The percent of the population that's working has remained constant at 60% of the population. So no new jobs and no new workers. We're just, you know, as new people are retired, the younger workforce comes in. And the other hidden danger is that in the last 20 years, we have seen those over 55 increase from 15% of the population to 20. So we're getting older in the United States and that's impacting our workforce. So is that also impacting productivity? Well, it impacts productivity because we're paying more and the output is less. Remember, we have a recession right now, we have too many dollars chasing too few goods. So manufacturing output has pretty much remained where it is and we're not producing more, we're producing the same amount and we have our wages going up about 4.6%. So we have more money chasing fewer production. So that's, that's really what's causing the, you know, the big problem with inflation. So we take a look at, you know, some of those big retailers, you know, your target, your Macy's Costco and they're not really hitting those earnings figures, those sales numbers. Um, but then you take a look at what's happening with how much money people are spending. How does that equal out? Well, remember the, uh, the last time we chatted, we, we saw that consumer debt went up 17 trillion and that was about 18%. People are using their credit card debt because the reality is that businesses are almost in a business recession, we might say, because the, the business revenues dropped by 2.6% in the fourth quarter. They're down 1.3% now in the first quarter. And they're expected to drop another 6% in the third quarter in the second quarter of 2020 three if that happens. Uh That's why we have lack of productivity and that's why the costs are going up and that's not good for businesses because once they start losing money, then we'll start seeing, we should see, uh, further layoffs. All right. So what do you think is gonna happen with the Federal Reserve? Next? That's really interesting. Uh, the Federal Reserve are looking at all these numbers which are really not presenting a road map. Uh And, uh, you know, my sense is they just might pause for this and to see what the latest data is for the second quarter of 2023. If, if businesses decline the gross revenues decline by 6.4% as it projected, uh, after, uh, two other quarters of reduced corporate income, then, then I think the Federal Reserve just might let this thing ride a bit, uh, without increasing rates because they don't want, they don't want to throw the country. Businesses might be in a recession. They, they don't want to throw the country in recession and have really big layoffs. And that's what I, that's what they're trying to avoid. All right. One thing that was like a bright spot is this milestone really for women in the workforce. The share of women 25 to 54 in the job market hit an all time high right now. Two possible reasons. And one is one of them is that hybrid work. Well, the hybrid work gives uh people all caregivers but especially women a chance to stay at home and take care of the kids because work because uh child care is now averaging 15,000 year, which is an awful lot of money to pay if you have a median income of $60,000 70,000. Uh so they, you know, they're staying home is helping them. The other thing is because of inflation. They need, they need more household income. So they have to go back to work and, and those two things are driving more women in the workforce, right? One more thing just before you go, I know that the student loan repayment process is, you know, going to resume at the end of summer now, September, uh, all those, uh, uh, uh, abatements are coming back in. So you, those who have not paid student loans during this pandemic, uh, emergency, you're gonna have to start paying, it's gonna be very hurtful for those household budgets. Yeah, because a lot of people were hoping there's gonna be another pause, but that is absolutely not going to happen. And in this budget bill that, uh the deficit reduction that we signed, uh they took it out. So, so it's not gonna be forgiven. All right, thank you so much, Marty Can as always.