Economic news: The first Friday of the month we always get the previous month’s employment data.
The Federal Reserve is putting a lot of weight on this data in their assessment of the overall economy. Think of it this way: if they don’t feel the employment numbers are good enough, which would be a good assessment, then they will keep rates down.
If they keep rates down, the stock prices will stay up (because their debt is cheap, which makes their bottom line look better for attracting investors).
So what did we learn this week? After July job creation was down 55,000 from June, now August job creation was down another 70,000. Economists were expecting 225,000 jobs to be created in August and the number came in at 142,000.
We have a downward trend at a time when we need to create jobs, so people will spend money to get the economic engine going. The consensus is that we need to see 250-300,000 jobs created per month to get back to where we were, and therefore towards a healthy economy.
Something I find interesting is how the news touts the lower unemployment of 6.1%, down from 6.2% last month, as progress. What the talking heads on TV or radio leave out often is that this apparent good news does not include those who have stopped looking for a job .
The Labor Participation Rate tells us what percentage of eligible workers are working. This number is now 62.7%, the lowest since 1978. Think about that: more than 32% of people who could work are not. And this number is is growing.
What does this mean to you?
If we have more people unemployed, then more people need help with basic needs. That means those working will have to contribute more to those social services, and therefore pay more taxes. If people are paying more in taxes, they can afford less towards rent.
We have a gift right now with interest rates so low along with lower taxes. I encourage everyone, while properties are affordable through low interest rates, to act now.
To learn more, and my source for data here, go to the Bureau of Labor Statistics www.BLS.gov. Never miss an update. Like “Investor’s Corner” on Facebook today!