Podcast Summary
BLS job growth revision: The BLS revised down its estimate of U.S. job growth between March 2021 and March 2022 by almost 30%, impacting the Federal Reserve's decision-making on interest rates.
The Bureau of Labor Statistics (BLS) recently revised down its estimate of job growth in the U.S. economy between March 2021 and March 2022, revealing that actual job growth was almost 30% less than originally reported. This revision, which is a normal part of the BLS process, was larger than usual and has implications for the Federal Reserve's decision-making regarding interest rates. The jobs numbers reported by the BLS are based on surveys of businesses and households, and revisions occur when responses are not received or when companies change their hiring plans. The revision does not necessarily mean that fewer jobs were created, but rather that the initial estimate was inaccurate. Despite this revision, the U.S. economy is still adding jobs, with 114,000 jobs added in July. The Federal Reserve's dual mandate includes both maximum employment and stable prices, and the most recent inflation rate of 2.9% is still above the Fed's target of 2%. The revision may make the Fed's next move, which is expected to be a rate cut, more predictable.
Inflation persistence: Initially seen as transitory, inflation persisted due to supply chain disruptions, geopolitical tensions, and other factors, reaching 8.5% by the end of 2022, leading to the Fed raising interest rates.
The economic recovery from the pandemic was fueled by pent-up demand and stimulus measures, leading to unexpectedly high inflation. Economists had initially believed inflation was transitory, but it persisted due to various factors including supply chain disruptions and geopolitical tensions. By the end of 2022, inflation reached 8.5%, and the Fed eventually raised interest rates to combat it. However, the debate continues among economists over whether inflation was truly transitory or not. Meanwhile, in the agriculture sector, farmers like Brian Duncan in Illinois are experiencing good weather and market conditions, but face challenges in the market.
Farming Challenges: Farmers face significant challenges including inflation, trade policy uncertainties, high input costs, and decreased commodity prices, leading to financial strain and profitability issues.
Farmers, represented by the Illinois Farm Bureau's President Brian Duncan, are currently facing significant challenges including inflation, trade policy uncertainties, and high input costs. These issues have led to a 40-60% drop in prices for major commodities like corn and soybeans, hogs, making it difficult for farmers to cover their expenses and remain profitable. The uncertainty surrounding trade policies, particularly with major markets like Mexico and China, is a major concern for farmers, regardless of the outcome of the upcoming election. Additionally, the cost of borrowing money for farming operations has doubled in the last four years, adding to the financial strain. Despite being an optimist, Duncan expresses concerns about the future of the Farm Bill in 2024 and the potential extension of the 2018 Farm Bill, which may not provide adequate economic relief due to increased costs and decreased commodity prices.
Retail newness strategy: Retailers like Target focus on new products to excite shoppers, attract price-weary consumers, and keep up with trends. Better online promotion helps retailers reach consumers effectively.
Retailers, specifically Target, are focusing on offering new products to entice shoppers and boost sales. The allure of newness can make shopping feel more exciting and rewarding for consumers, who have a natural craving for trying out new things. Retailers are also getting better at promoting these new products online, providing better search results and recommendations. This strategy taps into the human tendency to collect things and desire variations on familiar themes. The use of the word "newness" on earnings calls is a way for companies to signal that they are introducing something new and not relying on old products. This can be particularly effective for retailers, as it helps them attract price-weary shoppers and keep up with consumer demand for the latest trends. According to the Bureau of Labor Statistics, employment growth varies significantly from region to region, with Monterey County, California experiencing one of the highest annual growth rates at 4.8%.
US Housing Market and Economic Recovery: While some areas of the US, particularly in the Northeast and parts of Florida, are experiencing employment growth and a resurgence of ranch-style houses, others, like the Midwest and areas with high unemployment rates, are still struggling. The housing market remains dominated by ranch-style homes, which gained popularity post-depression for their affordability and continue to be relevant today.
While some areas in the US, like St. John's County in Northeast Florida, are experiencing strong employment growth, others, such as Cook County in Chicago, are still struggling. The Midwest, being the country's manufacturing hub, continues to see slow growth post-pandemic. Meanwhile, the housing market is dominated by ranch-style homes, which became popular during the 1930s depression due to their affordability. Cliff May, known as the father of the ranch house, made it popular through magazine commissions. By 1955, 8 out of 10 houses built in the US were ranch houses. Despite the passage of time, the ranch house style remains relevant and can be adapted for various uses. Meanwhile, economic recovery varies across the country, with some industries like RV manufacturing experiencing post-pandemic demand drops.
Financial Education: Learn essential money lessons through the Financial Inclined podcast, covering topics like credit scores, avoiding scams, savings accounts, and financial psychology.
Understanding personal finance doesn't have to be a daunting task. With the right guidance, anyone can learn essential money lessons to improve their financial future. The APM media production team, including Brian Allison, Jake Cherry, Gessen Dooler, Drew Jostett, Gary O'Keefe-Trelton, Thorpe 1, Carlos Toretto, Becca Weinman, and Jeff Peters, are here to help. In the Financial Inclined podcast, host Janelia Spinal breaks down complex topics into simple terms. Listeners can learn about credit scores, avoiding scams, and the importance of savings accounts. Additionally, Janelia explores the psychology behind financial decisions, such as fear of missing out (FOMO), and provides strategies to make smarter money choices. Tune in to Financial Inclined wherever you get your podcasts to start your financial education journey.