Capitalist Investor

Normalizing Employment Figures: What Does This Mean for Inflation? Ep. 246

• Strategic Wealth Partners • Episode 246

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Join us on this week's episode of the Capitalist Investor as hosts Derek Gabrielson (aka Diamond Hands D), Tony Zabigala (Tony the Tiger), and Luke dive into the latest data from the job market and its implications for the economy. With U.S. job openings dropping to 8.1 million from 8.35 million, the hosts debate whether this signals a cause for concern or a much-needed normalization. We also discuss the broader impact on small businesses, the rise of government jobs, and potential long-term economic ramifications. Whether you're an investor, a business owner, or just interested in the economic landscape, this episode is packed with insights and expert opinions. Don't miss out—subscribe for more thoughtful discussions on the Capitalist Investor!

Hello and welcome to this week's episode of the Capitalist Investor. As always, you have me, diamond hands D. Derek Gabrielson, and we got Tony. The tiger and Tony Zabigala. How are we doing, guys? Good. Introduce, look. Did you invite? I did, yeah. Okay. You were just talking over. Hi. Hi. I'm here. All right, guys. Well, for this episode, something, you know, we're always looking for interesting articles, but this is a number that I've always kind of paid attention to because it's always seems so crazy to me, honestly. But basically, the US job openings, it was the April reading, it sank down to 8.1 million job openings, and that was a decrease down from the 8.35. So it was a revision down, basically. So we're down to 8.1 million. And if you guys remember, this was the number when, you know, no one was, you know, looking to work or whatever, it got up to as high as 12 million, I believe, 1112 million, something like that. Job openings. So, you know, it's, it obviously is showing finally some, some signs that maybe the economy isn't as strong as we thought it thought it is. So. And we thought that would be a good topic to kick around for a little bit. So. So what do you guys think? Um, does this number cause for concern, kind of the direction that it's headed? You want me to go first? Yeah, you rock. Let's rock. All right, man. So I don't think it is concerning. Is it a good thing? Actually, I think it is, and here's why. So the jolt number came out, and jolt stands for job openings and labor turnover survey, which you alluded to here, that there's 8 million jobs available. But when we take a look at the people looking for jobs, there's basically 1.2 jobs available for every one person looking. There's still more openings than people looking. Is it as high as it used to be? No, but that's a good thing because when you got one and a half people, you know, one and a half job openings, you have to overpay that employee to work for you. Then if you have to over employ, if you have to overpay for an employee, you have to raise your prices. Guess what that's called? Inflation. Yes, this is actually a good thing. Things are starting to normalize, stabilize, and this is what we've been looking for, in my opinion. And is the economy slowing? No, I think it's just normalizing. And this is where that, that heated conversation about the Fed cutting rates, this is the soft landing part. We are coming into the soft areas. Right. And this is where things are going to start getting interesting. Do they cut? Do they not cut? You know, is, is still having over 100% jobs available for people looking 1.2 versus for everyone. Is that, is that bad? No, like, I don't, I, in my view it's not. No. You know, so I think this is good for the economy. I think this is good for normalization, and I think this is good for inflation. And could this eventually get us to that 2% level that the Fed's looking for? I don't know, but I think it's a, I think it's, I don't think it's something to overreact. I go back to where are the job openings declining? And I don't necessarily have data to back this, but what I think is happening, we talk about a lot, is the bigger getting bigger, the smaller getting smaller. I think job openings aren't necessarily decreasing from the large corporation side. I think they're decreasing from the small business side. If you look, before COVID small business was like 50% of the economy. They employed 50% of the economy. Now it's down to like 45%. And I think that market share is going lower and lower and lower to where large corporations are basically eating the small businesses lunch and are able to hire people at higher prices, higher salaries, whatever it be compared to the small business owners that are just like, hey, we're just gonna shut down our shop because we aren't making enough money to even stay open at this point in time. So that's my only long term concern is, you know, does this support more data that small businesses are closing up and the bigger getting bigger, which isn't a great long term solution, it stifles american innovation when you have a few large corporations controlling everything. Right. So that's my only long term concern. So I think this is somewhat concerning to some extent, especially in smaller areas. You know, a lot of the not, not everywhere that employees people is New York City, you know, Chicago, LA, all these big cities. I'm more concerned about the rural areas like where I grew up in that are continuing just to get slammed and people are moving into the cities. It's like we're almost being forced into cities where these large corporations operate. Yeah. So, yeah, you don't have much to add on to what you both said. You know, both spot on there. I did notice, you know, in looking for this article though, that the GDP in Q two, it keeps getting revised downward. It started at 4.1% two weeks ago, and it's now down to 1.8%. And that came out of the Atlanta fed. So, yeah, these are data points that we have to continue to track and monitor and see which direction they're headed. Yeah, I'm almost positive, too. The big long term concern also I have is government jobs replacing the private sector. I don't think this jobs report necessarily shows openings for the public sector, but. There'S been a lot more government jobs helping these numbers. Almost 50% of new jobs created or added or government jobs. So it's like, I got one word for you, two words. Socialism and communism. That's the world we're going into, guys. Yeah. And, you know, on, on X and Twitter, you know, like, there's a guy I follow, Colin Rugg, and he's been beefing with Mark Cuban. And, you know, you know, Colin came out and said, like, you know, there's this coastal grill is a taco place in California that had to close 48 locations because Gavin Newsom raised the minimum wage from like sixteen dollars to twenty dollars and this company couldn't sustain that. You know, and he goes, how is the economy getting better when you got jobs being permanently destroyed? You just closed a store, a chain, and Dirk, those jobs are gone. Yeah, right. You know, and Mark Cuban said, well, everyone needs to make a fair living. And because if they're not, they're gonna be on government services. I'm like, they don't have a job now. They are now are definitely on government services called unemployment. Dude. He goes, well, if they're making $16, they still not making enough money. And I'm like, I understand that, but now they're making $0. Well, either your government assistance or government job. I mean, that's the path we're heading down is maybe the$20 an hour private sector job doesn't exist, but the $20 government job does exist, and it's coming from our tax dollars. Remember, government jobs don't create anything. They don't actually add GDP, productivity to the system. You have to have the private sector fund the government jobs. Yeah, I mean, but when, you know, I read that again, the title of the whole article, job unexpectedly fall in April. Lowest level in three years. My immediate thought pattern was, oh, my God. You know, that's the definition of stagflation. The economy's going down, inflation's still going up. Like, energy prices are whatever. You know, like, I keep on thinking of the stagflation thing, but when you really look at the numbers, in my opinion, they're normalizing. They are not. They are, they're just coming off the all time highs, basically. They're just normalizing. They're not, they're not down in the dumpster by any means. No, no. But it's also not necessarily the number, it's the pace of the number yet to watch out for. And I don't think there's anything like crazy we got to watch out for from what you said, 8.4 to 8.1, right. There's not a huge decline there. But if you see go from 8.1 to 7.1 quickly, right. Like that should be the cause for concern. Even the 7.1 number probably wouldn't be extremely concerning in itself. But if you see that pace accelerating, that's when you got to be good. I mean, I mean, I would figure that, you know, for the rest of the year, jobs are going to be fine because you're going to have, you know, the vacation, you know, you got the vacation season coming, you know, through, during summertime. So people are going to be traveling, there's going to be house and, you know, hospitality, jobs created, things like that. People are spending money on travel. And then you got the holiday season again. People are going to be spending money for the holidays. And it's more about maybe next January, maybe the first quarter of next year, we should be really watching for jobs. I actually have the opposite take, I think when people are out traveling and less productive during the summer, I mean, generally, I know it's the joke around the financial sector. Like all Wall Street's taking a vacation during the summer. They're all in the Hamptons or whatever it be. People are less productive in the summertime. This actually gives more of a reason for companies to get rid of people if they need to get rid of people because they're less productive. I'm interested, seeing how. Is that why you never take a vacation, Louis? I don't ever take it. I'm taking a honeymoon in December. All right. She booked that twelve day cruise. Oh, nice. ABC Islands, like Aruba Carousel, St. Martin's from the Virgin Islands. So twelve days. Sweet. Nice. Yeah. What boat? It's called, it's on a carnival cruise line. It's like the Venetia or whatever it's called. It's like an italian boat. It's like a new italian boat they have. So I'll be getting my italian food and groove on. Nice pizza, unlimited pieces. And I do plan on losing 20 pounds before that. So you can gain it back in those twelve days. All right. Yeah. My honeymoon is where my weight gain started and hasn't stopped since then. You're comfortable, man. It's part of marriage, right? You get comfortable. All right, let's. Let's get out of here today. Thanks for listening. If you guys have any questions, questions, comments, show ideas, hit us up at info connect.com and we'll talk to you next time. The opinions expressed in the podcast are for general informational purposes only and are not intended to provide specific advice or recommendations for any investment, legal, financial, or tax strategy. It is only intended to provide education about the financial industry. Please consult a qualified professional about your individual needs.