Jerry speaks and Wall St. listens, 818,000 jobs, the longevity economy, world demographics, and the Boys of Riverside
When Jerry Talks…
Everyone listened, and Wall St. liked what they heard. If you wish, you can read the transcript here.
Mr. Powell’s quotes:
“My confidence has grown that inflation is on a sustainable path back to 2 percent.”
“…the cooling in labor market conditions is unmistakable. Job gains remain solid but have slowed this year.”
“The upside risks to inflation have diminished. And the downside risks to employment have increased.”
“The time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”
The general feeling is that at the September meeting, the Federal Funds Rate, the rate that the Fed charges banks to borrow from the Fed, will drop by 0.25 percentage points. This will have the effect of dropping the Prime rate from 8.5% to 8.25%. It might even be more, but don’t bank on it… LOL!! Or not.
The effect will be to start reducing the amount of interest businesses pay to banks on their loans.
And that’s a good thing for the business borrower.
Oh, and one more thing… it turns out that instead of creating 2.9 million jobs in the year ending March 2024, the number was revised. Down. Just a bit. To 2.1 million jobs.
What’s 818,000 jobs between friends…
To be fair, the jobs number is often revised; I just don’t know to what degree. If only I had a teaching assistant that I could assign that project to… but here is the Reader’s Digest version:
The initial jobs number is based on surveys sent to 119,000 non-farm businesses throughout the U.S. Like many surveys, not all are filled out. Still, the responses form a statistical probability of what the jobs number is for the U.S.
The adjusted job numbers are based on actual reporting of unemployment insurance filings.
And yes, this year was higher than normal, but there you are.
The Longevity Economy
Oh, boy, another subject created by economists, but it’s driving a lot of activity, so what is it?
Depending on who you are talking to, it’s the economics of the baby boomers, although AARP would include 50-year-olds in its membership.
And the baby boomers are the ones that are starting to spend the most money.
Except now, they are called Seniors. And…?
By the end of this year, 20% of the population will be 60 or older.
Of the age groups between 25 and 65:
In 2005, the 65 and up crowd had the lowest share of consumer spending at just under 14%.
The largest share? The 45-54 age group has 25%.
Today, the 65-age group makes up 22% of consumer spending.
What I’m saying is, don’t ignore the seniors – many have the money to buy your product or service.
It’s the demographics.
Speaking of Demographics
All the discussions over interest rates, jobs, and inflation are short-term measuring points. Over the long term, demographics drive economic results. Keep this in mind as I talk about the latest projections for population growth. Shrinkage may be more appropriate.
The United Nations has updated numbers, so let’s start with China.
To bring you up to speed, China has had a population problem for a while. In 1980, they rolled out a one-child policy to stem their population growth, thinking they could not afford a population boom.
The result is stunning; I have discussed it in this Report before. China’s population is currently 1.4 billion; that’s 1,400,000,000 if you like to see zeros. Also known as a rounding error in the California state budget, but I digress…
In 75 years, it is estimated it will be 639,000,000.
Now, that’s a drop. If they thought they had a lot of empty apartment buildings now…
And the Australians have it pegged at 525,000,000.
Globally, each woman must have 2.1 children to keep the population static. The birth rate in the US is 1.66. India’s is 2.03, and S. Korea is down to 0.81.
As a society grows wealthier, it has fewer children. This is happening to the entire world, so the world population will stop growing in 2084. That’s not me making stuff up; that’s the United Nations. Not that they are the best forecasters in the world, but someone has to put something down on paper.
If you are curious about deflation, stick around. There will be less demand for pretty much everything. Except maybe adult diapers.
The good news? Less humans, less carbon footprint – problem solved. However, that will be the least of our problems by then. I won’t be around, but many children I know will.
On to a better story…
The Boys of Riverside
Riverside, California, that is.
This is the title of a new book that has made the press rounds lately. It was covered extensively this past week by the Inland Valley Daily Bulletin and other publications in southern California, but it was also mentioned in the weekend edition of the Wall Street Journal.
It’s about 8-man high school football, usually a faster-paced, more chaotic version of the usual 11-man roster.
The 8-man roster is played at smaller schools that would have trouble fielding the roster necessary for an 11-player team.
The book chronicles the path of CSD in Riverside to the 2022 California State Championships for their division, the first in school history.
Side stories include the coach’s shy son and the player who had soured on football after being berated by a previous coach.
And the head coach who is deaf.
The book expands on what it means to communicate in a way that your opponent can’t understand: by using American Sign Language.
Because CSD stands for California School for the Deaf.
That’s right. The entire coaching staff and all the players are deaf. And they won the Championship again in 2023.
Quotes from Coach Adams to his players:
“There is no woe is me. Going out there in the real world, life is tough. We are going to have a little more adversity, but those are the cards that we were dealt. And you just have to work harder.”
Or put in a simpler way: “You’re deaf. There’s no excuses. Just watch the ball.”
I think I’m putting that book on my reading list.
Think about that. Do you think you can’t compete because of something you don’t have that many others have? Ask the boys from CSD Riverside if their lack of hearing prevented them from winning championships. What’s preventing you from winning in your business? Think about that and tackle it head-on.
September starts next week. Start planning for next year, but don’t forget to put the icing on the cake for 2024.
