·
Job openings at new highs…..Labor Dept out this morning
with report that number of job openings at end of July were at a 13-year high
and that companies have stepped up hiring to the fastest pace in seven years.
What’s the point? Obviously this is positive news for the economy and suggests the economic
recovery remains on track. One problem noted is that while job openings are up
22% in the past 12 months, actual hiring is only up 8%, which suggests
companies are still having problems finding workers with appropriate skills.
The “skills gap” has been one of the reasons for the unusual slowness of
employment growth we’ve seen in this recovery. Other reasons for slowness in
jobs growth have been demographic factors, decline in labor force
participation, and technology advancements which have accelerated the
substitution of capital for labor.
·
Survey detects global gloom…..A newly published Pew
Research survey of 46,000 people worldwide reflects downbeat assessment of
economic prospects, with 60% of those surveyed saying their country is
performing poorly.
What’s the point? Not to focus on the negative, but what is disconcerting about this
survey is the pervasiveness of it across virtually all regions. The study notes
that only in low-income developing economies, such as China, is there a slight
majority (51%) calling economic conditions “good”. Is this a new version of a “depression”?
One could call it that. The only “good news” in this is generally consumer
sentiment is behind the actual curve of the economy. Our assessment is global
growth will remain sub-par for the foreseeable future due to moderate growth (2-3%)
in U.S., slower growth in China, and essentially no growth in Europe. The implications
for investments and financial planning are: 1) continued low interest rates
resulting in poor returns on bonds; 2) continued emphasis on stocks for both
growth and income; 3) continued emphasis on sectors of the markets that can
grow at an above average rate, such as health care, technology, and certain
financial and industrial sectors.
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