Some issues I’ve been occupied with these days:
1. I feel that is the strongest labor market we’ll see in my lifetime. Because the Fed started elevating charges in March 2022, the U.S. economic system has added greater than 6 million new jobs. This 12 months we’ve added 2.5 million jobs.
The entire thought of price will increase was to sluggish client demand which might trigger firms to chop again which might result in job cuts which might sluggish inflation.
And but…
We’ve now skilled 22 months straight with the unemployment price beneath 4%.
That hasn’t occurred because the Sixties. The unemployment price was by no means beneath 4% even as soon as throughout the Seventies, Nineteen Eighties or Nineties.
We’d by no means see a labor market like this once more for a very long time.
Take pleasure in it whereas it lasts.
2. I feel we might see a lot larger client sentiment numbers in 2024. Economists have been closely debating why client sentiment is so wretched regardless of a resilient economic system.
As enjoyable as this debate has been, I’m hopeful 2024 will see a spike in client sentiment in the direction of the economic system.
Gasoline costs are falling. The inflation price is steadying. Mortgage charges are falling (and can hopefully fall additional). The Fed might be going to chop charges within the first half of 2024. Wages are rising sooner than inflation once more.
Assuming we avert a recession but once more, I’m bullish on client sentiment in 2024.
3. I feel the proper variety of beers in a single night time is 3. Only a random thought I had on Twitter:
Deep ideas with Ben.
4. I feel nobody might have predicted a pandemic would scale back inequality. The Economist shared the outcomes of a brand new analysis paper that exhibits an unintended consequence of the robust labor market from the pandemic is a discount in earnings inequality:
In a current paper, Mr Autor and colleagues exhibit that tight American labour markets are resulting in quick wage progress, as staff swap jobs for higher pay, and that poorer staff are benefiting most of all (see chart 3). The researchers reckon that, since 2020, some two-fifths of the rise in wage inequality over the previous 4 many years has been undone.
Right here’s the chart talked about:
Wage progress for the underside 10% has outpaced wage progress from the highest 10% since 2020 by a wholesome margin.
I do know issues aren’t excellent however this can be a good factor!
5. I feel pizza is an excellent hedge towards inflation. One in all my favourite elements of getting children is introducing them to household traditions and beginning new ones.
We watch House Alone collectively yearly now.
I’ve seen it so many instances now that I’m all the time in search of minor particulars to maintain me entertained.
There’s this interplay in the beginning of the film when the Little Nero’s supply man exhibits up with 10 pies for the McCallisters:
Peter McCallister: Honey, the pizza boy wants $122.50 plus a tip.
Kate McCallister: For pizza?
Uncle Frank: Ten pizzas instances 12 bucks.
This film got here out in 1990. A good pizza was 12 bucks greater than 30 years in the past. Adjusted for inflation, that’s practically $30.
You will get a high-quality pizza for one thing like $15-20 today. Dominos nonetheless sells a high quality pizza for $7.99.
How is pizza nonetheless so comparatively cheap?
An enormous win for the buyer.
6. I feel we purchase too many vans and SUVs on this nation. Take a look at this chart:
The loopy factor right here is individuals had extra children again within the Seventies and Nineteen Eighties than we do now. By some means they survived with out a kind of big boats with three rows and a large trunk.
The most important SUVs and vans can run $70k or $80k. It’s ridiculous!
I do know I’m a damaged document on this matter however I feel individuals are crushing their funds to finance automobiles they don’t want.
Some individuals clearly want a truck or large SUV however far too many shoppers are paying approach an excessive amount of for his or her automobiles.
Full disclosure: I drive an SUV! I’m (sort of) a hypocrite.1
7. I feel now just isn’t a foul time to purchase a home (when you can afford it). I’m not a fan of timing the housing market.
If you happen to can afford the month-to-month cost together with the ancillary prices and also you need/want to purchase a home it is best to do it. A home is not like some other monetary asset as a result of it’s the roof over your head.
However I’m positive many potential homebuyers are determining the very best time to purchase contemplating the terrible affordability numbers proper now.
It’s robust as a result of provide is so low, making it troublesome to search out the home you need. But when mortgage charges fall to five% or 6% we’re going to see a flood of exercise from pent-up demand and pent-up provide from those that didn’t wish to promote.
There are going to be a number of supply conditions once more.
If you happen to might purchase now and refinance later, you’re most likely in a greater negotiating place than you’d be in if/when charges fall.
The housing market continues to be very unhealthy however just a few meals for thought when you’re available in the market.
8. I feel now is a superb time to extend your charitable giving when you can afford it. Whatever the robust labor market and economic system, there are individuals on the market who’re hurting.
In case your internet value is at new all-time highs and inflation just isn’t placing a significant dent in your finances, the vacations are a beautiful time to offer again or rethink your charitable giving.
Various years in the past I automated my charitable giving to numerous organizations nevertheless it’s most likely time to extend these quantities.
I’m not in search of a pat on the again or something, but when your funds are in a very good place, now is an efficient time to offer to these much less lucky.
Additional Studying:
5 Questions I Have In regards to the Economic system
1To be truthful, I drive a Ford Explorer. That’s just like the Honda Accord of SUVs.
