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Unemployment Factors that Affect the Economy

Updated: Aug 16, 2022

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Today I wanted to kind of hit on unemployment and the reason why I wanted to hit on unemployment as I'm doing an interview next week with the lady name I hope it's next week Tiffany Wallace and Tiffany is the president and the CEO of Dagen personnel and so I'm going to have her in here and we're going to kind of do a deep dive on employment numbers and what people are looking for in a jobs and why we think that there's this kind of extraordinary time that set up right now where there are literally more jobs than employees to fill them that's it's very different and so we're going to talk about that so a few things that I just kind of picked up on that just to kind of lead into the unemployment or the employment talk if you will is we reached a record high unemployment just not that long ago remember it was back in April of 2020 nearly 15% of the people who wanted to work were out of work 15 I mean it's a big number and we just reported at about a 5.9 unemployment rate so the record low all time is 2.5 so and that was in May of 1953 so if you think the record low is 2.5 word not too far off that at about a 6% so I think the economy is in really good shape.

The Federal Reserve is estimating that the unemployment rate by the end of 22 will be at a 3.8 so if it's tough for employers to find employees now just hold on and they think by the end of 2023 it'll be 3.5 now if businesses are hiring that many people that fast it must mean that business is good now where the employment has been coming from recently again going back to the last federal report fed reserve report in leisure and hospitality is leading the way which makes sense when you think about coming out of COVID we still have a lot of restaurants and uh hospitality jobs available leisure jobs available there they're all still out there trying to hire as many as they can.

There are some other factors that I think are keeping people out of that besides COVID we're going to get into that with Tiffany the education sector is the second fastest growing and then finally this where I am in professional business services it's tough to find people it's tough to find people so right now out of the total unemployed it's about 9.5 million people and out of that add at 9.5 million those who have been unemployed for more than 27 weeks is local it I'm going to round it up it's 4,000,000 so 4,000,000 have been looking for work for over 27 weeks there was one other factor I thought or one of her note that I thought was very interesting the term was discouraged workers so I had to kind of look into that and what does it discourage worker is someone who is looking not kind of actively not actively but just kind of sitting there they would take a job if it was given to him and I kind of thought about that I was like OK so they're not really looking for work but if a job was offered they might take it I think these are the people that are getting checks from the government but it's about 600,000 people were qualified under that particular scenario UM other thing I wanted to talk about a little bit today emerging markets over that same time period 7 they're up 7%.

So let's keep comparing apples to apples, Japan just so we'll kind of knows other in that in that region I looked at Japan so Japan over the last ten years is up 184% South Korea is up 130 Europe 37% so it's just barely outpaced China over the last 10 years and so we have to look at why is this because there has been so much growth in China and a lot of the analysts out there are guessing that one of the reasons may be that there is a natural bias that people have towards investing in their home markets and that made perfect sense to me so if you are a U.S. citizen you know U.S. companies it is more likely that you're going to have more U.S. companies in your allocation one of I happen to look over at Ireland and it's the same in I'll they have more Irish based companies in their own portfolios for citizens of Ireland then they do have other countries so it does make sense to where you would always have more of where you're domesticated those companies in those stocks in your portfolio.

But back to China a little bit China scares me a little bit to be frank and so when people ask me about investing in China it's just I get a little bit nervous and one of the reasons why I get nervous is something that we're seeing the government do now remember in China it is a communist country as much as they're trying to move more towards capitalism at the end of the day it is a it is a communist country and the party can decide at any time that we're going to no longer let this company trade public or we're going to shut this company down or whatever they want they are in charge not the companies we've seen this with a lot of the finance and banking companies in China right now and being the biggest example of that they were going to IPO and the government just you know what I don't think so this we're just going to shut it down uhm we think there's a problem blah blah blah blah blah they can do that and they can do that with the snap of the finger so that Spooks me up I'll give you a real life example of when I got spooked out of the out of a stock in a company and many of you end have been with him for a while.

We own shares of Starbucks for a long time and come as you know with my investment philosophy I really love big brand names that are growing globally and Starbucks is a great brand name it's I mean it's the little icon of the mermaid you see it you know you know who it is and you know what's going on uhm Howard Schultz was the brainchild behind Starbucks so that was that was you know he it was a small Seattle based company that was mostly into roasting beans and then he changed it into what it is today by the way he wrote a book called poor your heart into it strongly suggest you read it is an outstanding read not just on Starbucks in the history of Starbucks but on brand development and what they were looking for when they were developing that brand is it's a tremendous story, but in June of 2018 the he stepped down as the CEO and chairman of the board and Kevin Johnson took over so this was like a summer of 2018 the stock is around $54 and sometimes what tends to happen is when the visionary and CEO steps down CEO steps down the stocks underperform and because I think I'm smarter than the market I was like well this is the time to get out well what a brilliant mistake that was since then the stock is up only 120 part of exiting a fantastic company but to kind of bri