One big problem post-pandemic was our outlook on the American job market. Let’s be honest; we took a massive hit on unemployment and inevitably fell into a recession. I don’t mean to send you into cardiac arrest by bringing up that word, but I think it’s important for you to know I am not trying to make the facts look better by avoiding them at all cost. That’s the mainstream media’s job, not mine. The reality is: we entered a recession. But here is a neat other reality nobody likes to pay attention to: we have entered a recession before. Actually, we’ve entered a recession plenty of times. Fifty times, to be exact, since America first became a country and gave birth to the baby version of our now grown-up, free-market economy. It turns out the process of an economy growing up is a lot similar to the process of people growing up - we both float in and out of long-term unemployment...a lot. The good news is, the same way you end up getting back on your feet is the same way the economy gets back on its feet as well. Like I’ve said before, panic is people's favorite pastime. Recessions are two things: inevitable and essential. Believe it or not, those two words don’t contradict each other. People love to look at our most recent unemployment rates as something straight out of a scary movie. We automatically assume that job growth has plummeted to the depths of hell, and so we will all be visiting there for the time being. But if we look closely at the numbers, you realize that you can save you those visits for when you watch the news. In February 2021,we saw a 379,000 gain in the job market. Again, I know you’re thinking this was only because the country finally began to reopen, but that’s not necessarily true. This was the highest monthly total in more than a decade. And without the 69,000 losses in state government and education jobs, that number would have surpassed 450,000. The overall gain in our job market looks more like a half a million if we don’t count the jobs in construction that were lost due to weather conditions. That’s huge, and that’s new. That’s something we haven’t experienced since 2010. And it is something we did not experience solely as part of our healing post-pandemic. In reality, job growth has been exceptional. While recent recessions may have put the brakes on it for a little bit, nothing stops the economy from continuously revving its engine as we return to normal. Speaking of new jobs, I have one for you: remain optimistic. It’s important to me that you seek out perspective in a world where pessimism is always easier. And don’t lie and tell me that you already do that because I can think of plenty of examples where we all fail a little bit at practicing what I just preached. Don’t believe me? Here are two little words: housing market. I bet that boosted a few heart rates, especially for those of you thinking of buying, restoring, or adding to a home right now. The cost of materials, manufacturing, and shipping is through the roof - literally. And that's scary for a lot of us who relate these increased housing prices with rising inflation. Again, it would be easy to look at these figures and resort to fear. But if you do your research, you’ll see that there’s a good explanation hiding behind the boogeyman. The price of homes is higher because more people have the money to start buying them. An increase in the average family's spending ability means the demand for goods goes up, their supply is too slow to meet it at first, and prices rise to compensate for our fresh desire to buy, buy, buy. Unemployment is decreasing, the average family is gaining wealth, and they’re looking for a place to put it. See? There’s always a bright side. That is the most significant truth I hope you take away from this month's series. Ironically, that brightside can be a little harder to look at, and I get it. It’s the same reason we squint our eyes when we look at the sun - a fear of being blinded. People love to panic, remember? That’s because panic feels like being prepared. Our instincts tell us, “If I accept the worst, I’m comfortable when it comes.” We don’t want the bright side to blindside us. But the biggest benefit of the bright side is that it sheds light, and usually, that light lets us see the bigger picture. A lot of great information gets lost when we spend all of our time at panic parties. So come over to the bright side; I promise our parties are more fun. Next week, we’ll be talking about things like GDP, S&P 500, compounding dividends, and why there is a silver lining in each of them. Until next time!
Optimism is the Only Realism Part 3- Job Growth
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August 18, 2021