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Satori Fund founder and portfolio manager Dan Bills weighed in on the economic outlook as the S&P 500 and NASDAQ posted their longest weekly winning streak since November in ‘Maria Bartiromo’s Wall Street’.
The number of workers in the U.S. continues to decline as businesses struggle to find workers for their openings.
“The hope for many to reach a soft landing is that you’re meeting in the middle, with demand slowing and labor supply increasing, so we’ve reached a healthy balance between the two,” Wells Fargo economist Michael Pugliese said. The Wall Street Journal Sunday. But if labor supply continues to flatline or fall, you’ll need to reduce demand further to slow wage growth.
According to Labor Department data, the number of workers in the U.S. has fallen by 400,000 since March, a worrisome sign after the number of workers was close to pre-pandemic levels earlier this year. The total labor force is now about 600,000 lower than it was at the start of 2020, before widespread Covid-19 restrictions plunged the economy into recession.
The labor shortage has raised concerns that the economy may not reach the “soft landing” that many had hoped for with the lifting of the ban, with some economists saying the imbalance between labor supply and demand is the biggest threat to the US economy.
US robot orders rise 40% as labor shortages, inflation
Construction workers are seen at a new construction site in Silver Spring, Maryland. (Reuters/Gary Cameron – RTX2FCR6/Reuters Photos)
The labor force participation rate, which measures the percentage of Americans age 16 and older who are working or looking for work, fell to 62.1 percent in July after peaking at 62.4 percent earlier this year. The number is significantly lower than the 63.4% rate recorded before the pandemic, according to the Labor Department.
The shortage has contributed to the highest inflation in nearly four decades, which was 8.5 percent in July. While energy shortages and supply chain issues that fueled inflation last year have begun to ease, the pressures have been offset by a tight labor market, with private sector wages and salaries up 5.7 percent from a year ago.
The Fed has tried to slow inflation by raising interest rates, something economists say could dampen demand for labor. Meanwhile, the role of workers currently participating in the labor market is expanding as businesses struggle to fill gaps in their organizations.
Workers erect a building under construction in Philadelphia. (AP)
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“Wages have gone up, maybe they haven’t risen enough to compensate for the fact that when everyone is short-staffed it means you have to do more work,” Peter Berezin, chief global strategist at BCA Research, told Wall Street. Journal. “Employers should increase wages significantly [inflation-adjusted] terms, which makes the life of the Federation more difficult.
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