In January, an additional 517,000 jobs were added, almost three times the market’s estimate, bringing down unemployment to 3.4%. What’s more, he noted, the ratio of open positions to unemployed workers has risen to 1.9x.
“Technology companies may be laying off tens of thousands, but small businesses remain desperate for talent,” Rubin observed. “A recent Barron’s survey indicated that 93% of business owners seeking to hire in December had few or no qualifying applicants. The shortage of workers has been caused by many factors including the lack of immigration, the on-going and increasing rate of Boomer retirements, and a surprising number of Gen Z staying out of the work force, particularly less educated younger men.
“Making matters worse is the lack of mobility of the American workforce due to high housing costs and mortgage rates – many people won’t give up their current low mortgage rate and move to a new job opportunity when mortgage rates have doubled.”
What is the importance of consumption in the economy?
Consumption also is critical, Rubin noted. “American consumers are still spending, just a little bit less,” Rubin said. “They have jobs with higher salaries and about half of the pandemic stimulus checks are still in their bank accounts. Credit card balances, at $930 billion at the end of the third quarter of 2022, have returned to their pre-pandemic high after falling $150 billion during the lockdown.
“No doubt inflation has taken a bite out of the spending budget, especially due to volatile gas prices and groceries rising at an astonishing 11%. Inflation, the threat of a recession, and job cuts in the headlines are understandably making people nervous.”
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