⚡️ Cracks in the labor market

and stocks soar

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Good morning investors! The market is on fire and investors are once again gaining confidence.

Today we cover:

  • Cracks in the labor market

  • The stock market shines

  • People are poor

📊 Economy and News 

Fed survey shows cracks in the labor market

A survey by the New York Federal Reserve released on Monday revealed a decline in the number of people reporting employment, a significant increase in those actively seeking jobs, and growing dissatisfaction with wages.

About the survey: The survey, conducted three times a year to assess labor market activity, confidence, and satisfaction, showed rising concerns in July about job security and a greater number of people expecting to work beyond the usual retirement age. While workers are still seeking higher starting salaries, they are receiving lower offers.

Employment: These findings come as the unemployment rate ticks upward, prompting close scrutiny from Wall Street and Federal Reserve policymakers who are searching for signs about the future direction of the U.S. economy.

Among the key insights was that only 88% of those employed in March remained in their jobs by the time of the latest survey, the lowest figure since data collection began in 2014. Additionally, the percentage of people expecting to lose their jobs increased to 4.4%, a rise of 0.5 percentage points from the previous year and the highest level recorded by the survey.

Furthermore, the percentage of individuals who had searched for a new job in the past four weeks surged to 28.4%, a 9 percentage point increase from the previous year, marking another record high since March 2014.

Wages: Satisfaction with current pay dropped to 56.7%, a decline of more than 3 percentage points from the same period in 2023. Satisfaction with benefits also fell to 56.3%, down over 8 points from a year earlier, while satisfaction with promotion opportunities decreased to 44.2%, compared to 53.5% last year. This decline was most notable among women, those without a college degree, and respondents with household incomes below $60,000.

The average wage offer for full-time jobs in the past four months decreased slightly to $68,905, while the average "reservation wage," or the minimum amount workers would accept for a new job, rose to $81,147, up about $2,500 from the previous year but just below the record high from the last survey.

Lastly, the percentage of respondents expecting to work beyond age 62 increased to 48.3%, and the proportion anticipating working past age 67 rose to 34.2%, an increase of over 2 percentage points.

Although the unemployment rate of 4.3% is relatively low by historical standards, its recent rise has fueled concerns about a potential broader economic downturn. With July showing only a modest gain of 114,000 nonfarm payroll jobs, the August report, set to be released in early September, will be closely monitored.

Global hits:

Goldman Sachs turns positive: Goldman Sachs has cut its probability forecast for a U.S. recession to 20% from 25%, shortly after raising it from 15%.

Economists at Goldman — and elsewhere — were spooked by a weaker-than-expected July jobs report.

However, recent economic data, including retail sales numbers, have significantly eased concerns the world’s biggest economy is heading for a recession or is already in one.

📈 Stocks

S&P 500 5,608.25 (+0.97%)
DJIA 40,896.53 (+0.58%)
NASDAQ 17,876.77 (+1.39%)
BRENT CRUDE 77.66 (-2.54%)
* Prices as of Aug 20th, 12:20 AM UTC

Stocks continue to rise

Stocks climbed on Monday, continuing the market's rebound as investors geared up for the much-anticipated Federal Reserve symposium later this week.

Monday's gains extended the recent recovery rally, which has been the latest development in a volatile period for equities. Last week, in particular, saw the largest gains of the year for the three major indexes.

August started off rocky due to disappointing economic data that heightened recession fears and raised concerns that the Federal Reserve was slow to reduce interest rates. These worries triggered a global sell-off, with the S&P 500 experiencing its worst day since 2022 on August 5.

However, new data released last week appeared to calm the jittery market and raised hopes that the economy might achieve a soft landing. Investors were encouraged by strong retail sales figures, lower-than-expected initial jobless claims, and robust earnings from Walmart. Additionally, July's consumer price index revealed the lowest annualized inflation rate in over three years.

With this in mind, investors are now eagerly awaiting potential insights into the future of interest rates, as hopes for an imminent rate cut grow.

Another fall: Trump Media shares hit post-merger low as DJT slump continues.

GM surprises: GM lays off more than 1,000 salaried software and services employees. On the other hand, General Motors is adding a new GMC Yukon to the lineup for the 2025 model year: an “AT4 Ultimate” model.

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💵 Personal Finance

About 61% of Americans are living paycheck to paycheck

Despite inflation pressures cooling off, more than half of American adults are still struggling to meet financial demands.

Lower-income workers appear to be suffering the most.

  • About 66% of consumers earning less than $50,000 annually struggled in June

  • About 65% of consumers earning between $50,000 and $100,000 faced financial issues in June

  • Only 45% of consumers earning $100,000 or more reported living paycheck to paycheck

More than 50% of US consumers struggle on a daily basis, forcing them to turn to credit cards or savings. Reducing expenses and saving more can be an effective way to secure your future.

We know that the key lies in ‘earning’ more, but how is it achieved? How can you make more money when you have no savings to invest? You do so by thinking out of the box.

Work double shifts, get a side hustle or second job and if that isn’t enough then find ways to make money from what you have. And, most importantly, reduce your expenses. That Disney trip can wait. It’s more important to have an emergency fund.

Also, we’ll encourage you to consider these options:

  • Get insurance so you do not get into hot water in case of an accident. Health and vehicle insurance, we think, are a must. Moreover, they’re mandatory in most cases.

  • Ask your boss for a raise. Believe it or not, sometimes all you need to do to make more money is to ask someone to pay you more. It’s especially important it your salary isn’t keeping up with inflation. At least ask for a match with inflation. Many companies are agreeing.

  • Sell whatever you do not need and use this money wisely. Have an old TV? put it on eBay. Got Netflix subscription? Get rid of it. You can watch movies for free on YouTube.

I talk about this and more in this video:

💰 Be a Better Investor

“Do one thing every day that scares you.”

Eleanor Roosevelt

Resources:

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👩🏽‍⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.