Brandy:
It’s now time for, 4 Your Money. We’re joined by John Nelson, financial advisor at Nelson Corp Wealth Management. Welcome back, John.

John:
Thanks for having me Brandy.

Brandy:
So part of the Federal Reserve Chairman Jerome Powell’s justification for the economy, being able to handle the interest rate hikes they are implementing is the strong labor market. Talk to us a little bit about what this really means.

John:
Yeah. That is a fine line that Jerome Powell and the Fed are walking right now is trying to get inflation under control without pushing interest rates too high, where they hurt the overall economy. I’ve got a graphic that we’ve created and brought with me today, and this is just showing that the dark blue line on the top is unemployment. And we really see two large spikes there, ’08, ’09 financial crisis, as well as the first quarter of 2020, when the COVID 19 pandemic struck. And whether you call it a strong labor market or a tight labor market, what it’s basically illustrating here is that there are only just over 6 million jobs available or unemployed… I should say 6 million people unemployed and 12 million in the lighter blue that are jobs available. The red line is just the ratio illustrating that there’s about 1.7 job openings for every unemployed person here in the U.S. So it is definitely an employee’s market, and a lot of businesses that we see firsthand are really fighting for the same people.

Brandy:
So what might this mean for the economy and financial markets going forward?

John:
Yeah, it’s a fine line we’re seeing, in most parts it’s a very positive thing, but there are a few things that if businesses are not getting the employees, the productivity drops, revenue drops, profit could potentially follow, that’s something we’re watching very closely. That takes time for it to set in, but something we’re watching closely right now.