Lots of talking heads in the media are now talking about a “softening” economy. We like plenty of soft things – butter, towels, jazz – but what does it really mean in terms of an economy?
Here’s Five Fast Facts about our softening economy:
- ❓ What Does This Mean? - When the bean counters say the economy is “softening”, they’re referring to a combination of things like stock prices, interest rates, housing permits, manufacturing, unemployment, and more. It’s basically a giant mashup of the biggest economic factors that paints an overall picture of what direction we’re heading. At this particular moment, most of them are negative. Doh!
- 🔑 Keys To The Kingdom - Two of the key indicators are inflation and jobs. Inflation is around 6%, which isn’t what it was a few months ago but is still triple the “normal” rate of 2%. Unemployment is actually close to a historic low (3.5%), so that’s great! Job growth, however, is slowing down a lot. Combined with inflation that won’t go away, it seems very likely we’re heading into a recession in the near future. We’d give it three sarcastic cheers, but we can only afford two!
- 😮💨 No Collapse…Yet - The good news is that wages are still on a (very!) slight rise, up 0.3% in March. But, as financial strain pulls more people back into working, the pressure to pay better wages goes down. For jobs numbers, leisure and hospitality did the best along with government employment; profession and business services, healthcare, transportation, and warehousing all gained jobs, too. Manufacturing, retail, and construction all lost jobs. If you’re thinking of getting a new job in the next few months, you might as well do it now before the wages go more negative than a political campaign ad.
- 👍 What’s The Goal? - Everyone wants to see lower inflation! It would be ideal if the recent interest rate hikes slow it down without throwing us off the cliff into a recession, but only time will tell. What are the odds the government knows what it’s doing in walking that line? (Yeah, that’s what we’re afraid of, too…)
- 💵 Effects On Paychecks - As is usually the case, how all this impacts your Paycheck depends on your specific scenario. If you’re in a good sector, you’re probably doing well. If not, then there's an opportunity to shift and potentially fill a hole for someone while making more money. Inflation is up to the feds rather than us normal folks, but a recession is going to cause major problems for everyone. Ultimately, stability is what sets a current that everything can swim along with, and that’s what we haven’t had for a while. Here’s hoping we don’t drown!
🔥Bottom line: America’s economy is HUGE. Sitting atop the world at $23 trillion, it’s pretty much impossible to understand how much money there is flowing around here! That also means it’s super complex, and that’s why it’s so hard to predict. At any given time, some areas are getting better while others are getting worse. Still, the whole “rising tide lifts all boats” thing is true. So is the opposite: when the tide goes down, we all go with it. Let’s hope the feds can balance things well enough to avoid an actual recession, and let’s do our best to be productive members of society.
How is the current economy impacting you and those around you?
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