A Healthy Recipe For Growth Is Simmering

Published Friday, August 4, 2023 at: 7:27 PM EDT

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The U.S. economy created 187,000 new jobs in July. That’s slightly less than the 200,000 expected but more importantly it is in line with the last two expansion cycles. 

The dotted gray line highlights the monthly job creation rate through July 2023 is now settling at the rate averaged through the past two economic expansions.    

This is a recipe for healthy growth slowing to a simmer.  

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The unemployment rate in July ticked down to 3.5%, remaining near the all-time low. Recessions are not known to occur when a nation’s labor force is fully employed. Rather, full employment sets off booms.   

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Normally, job seekers outnumber openings, as they did from 2000 to 2016. Not now. 

The massive jobs openings gap shown in this chart is very unusual and ensures growth in the months ahead. 

After the pandemic, job openings soared before peaking in March 2022, when two job openings were available for every unemployed person in the U.S. labor force.  

The job openings gap has narrowed in the last 16 months. About 1.6 jobs are open for every job seeker. That’s still a substantial gap and ensures growth is ahead as the U.S. fills that gap. 

According to an article in The Wall Street Journal on Friday, August 4, the Labor Department in February adjusted its population estimates higher, making an addition of 871,000 people to its labor force estimate — that is, the number of people who are employed or actively looking for a job. “It upped its population estimate”, according to The Journal. “If immigration continues at its recent pace, it might be releasing upward adjustments again next February.” 

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The Standard & Poor’s 500 stock index closed Friday at 4478.03, down -0.53% from Thursday, and -2.42% lower than a week ago. The index is up +100.14% from the March 23, 2020 bear market low and down -6.64% from its January 3, 2022, all-time high.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is a market-value weighted index with each stock's weight proportionate to its market value. Index returns do not include fees or expenses. Investing involves risk, including the loss of principal, and past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted.   ​​​​​​​​


Nothing contained herein is to be considered a solicitation, research material, an investment recommendation, or advice of any kind, and it is subject to change without notice. Any investments or strategies referenced herein do not take into account the investment objectives, financial situation or particular needs of any specific person. Product suitability must be independently determined for each individual investor. Tax advice always depends on your particular personal situation and preferences. You should consult the appropriate financial professional regarding your specific circumstances. The material represents an assessment of financial, economic and tax law at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete, and is not intended to be used as a primary basis for investment decisions. This article was written by a professional financial journalist for Advisor Products and is not intended as legal or investment advice.

This article was written by a veteran financial journalist based on data compiled and analyzed by independent economist, Fritz Meyer. While these are sources we believe to be reliable, the information is not intended to be used as financial advice without consulting a professional about your personal situation.

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