Seems everywhere I go these days there are people…lots of people…everywhere. I can’t remember the last flight I took that had an open seat. Can you? I’ve been doing a fair amount of driving lately and getting stuck in traffic, regardless of the time of day, is the norm. I pop over to the mall sometimes for a quick lunch and it’s getting harder and harder to find a parking spot.
So what gives and why should you love it? These observations are anecdotal evidence of a bustling economy with near full employment. It seems like everyone who wants a job has one. In fact, according to the Labor Department’s latest monthly Job Openings and Labor Turnover Summary (JOLTS) report there are now more job openings (6.698 million) than unemployed persons (6.346 million).
“Never before have we had an economy where the number of open jobs exceeds the number of job seekers” Labor Secretary Alexander Acosta said.1 The unemployment rate currently sits at 3.8% and this means people are driving to and from work as well as driving from home to different destinations to spend the money they’re making from their jobs. We are a consumer society and with a savings rate that currently sits at just 2.3%2, there is plenty of money to spread around the malls, airports, resorts, and restaurants.
As Liz Ann Sonders, Chief Investment Strategist at Charles Schwab and Co. points out here, leading economic indicators (LEI) are still signaling a low risk of recession. While not always a perfect indicator because of the lag in data, LEI is improving at an accelerated pace.
Sadly, nothing lasts forever and risks to our current (second longest in history) expansion include a less accommodative Federal Reserve and the threat of a trade war.
For now, try to enjoy the congestion of people and cars. Tell yourself that all these people are out spending money with the companies you are invested in. These companies should then be able to return these profits to you either in the form of dividends, stock buy-backs, or stock price appreciation. Meditate on how much you love this traffic because these dollars are returning to you. Much respect if you can think of all this while stuck in the middle seat on your next transatlantic flight.
Happy Planning,
Brian
1. http://www.latimes.com/business/la-fi-job-openings-workers-20180605-story.html
2. JP Morgan Asset Management- Savings Rate as of December 31. 2017