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This week we are providing a weekly economic update, plus the return of our weekly quiz.

Before we get started, we want to thank our sponsor this week, Betterment. Betterment is a robo/digital advisor made to make investing easier. If you’d like some help investing and managing your money but are not quite ready for a full-on financial advisor, then Betterment may be the right fit for you. If interested, check out their link below. A click also provides us with income to help keep this newsletter running.

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Help Wanted?

Jobs may hold the key to the health of the US economy. Two years ago, there were nearly two job openings for every unemployed person. In April, that number returned to 1.24 jobs for every unemployed person—roughly around pre pandemic levels. So what does this tell us? Well let’s get some additional context. The US participation rate remains nearly a whole percentage point below pre-pandemic levels, so clearly there isn’t a large number of additional people taking on full or part time jobs. The most logical conclusion is that companies are trimming their help wanted positions.

Recent retail shopping data may explain why companies are trimming down their open positions. Target’s earning report shows consumers are pulling back on discretionary spending. Lowe’s, Macy’s, and Under Armor also reported declines in sales as well. Meanwhile, more price efficient stores such as Walmart and Costco are seeing positive sales. The takeaway here is that consumers are looking to make less discretionary purchases, while getting the most bang for their buck at stores like Walmart and Costco.

Returning to the job numbers, the next few months may be an important barometer to the future of the US economy and inflation. With a contraction in open jobs, Americans will have fewer employment options and less money to spend in general. We have already seen price declines at stores like Target as consumers slow their spending. Further difficulty finding new jobs may accelerate price declines as stores become more desperate to get consumers to spend. Job numbers are a leading economic indicator, so the real impact of fewer job openings may be a story that plays out through the back half of the year. However, May’s job report posted strong numbers with 272,000 new jobs added in the month of May. Still, one month doesn’t tell a full story. We saw relative weakness in April, where jobs came at a 175,000. Therefore, we will have to wait for next month’s non-farm payroll numbers to tell if May happened to be an above trend month for hiring.

A Quick Quiz

By popular demand, we are bringing back the quiz this week. Here are two questions to test your financial acumen.

Answers

Question 1

B. False. When calculating how much rent you can afford, you use your gross income. For example, if you make $6,000 in gross income you would multiple that number by .3 to get the maximum amount of rent you should be paying, which in this example would be $1800.

Question 2

B. Roth IRA. Both 401(k) and Traditional IRA accounts mandate RMDs starting at age 73. Remember that contributions must be in your Roth IRA account for 5 years before you are able to withdraw them. If you’d like more info on Roth and Traditional IRA accounts, check out our article here.

Let us help you

If you’re a HENRY (High Earner, Not Rich Yet) and looking for some financial direction, take the time to schedule a discovery meeting with us. In this meeting we can explore your financial goals and see if Hoskin is a fit for you.