With the March jobs report coming in hot last week we wanted to take a look at the effect of the Fed Funds rate against the JOLTS reports for the past year so let’s take a look.
The Fed’s 500 basis point increase (500%) has resulted in roughly a decline of 18% of job openings according to JOLTS. If the current trends hold then another 500 basis point hike would possibly cut the job openings by another 20 percent resulting in job openings of 5 million which would be back to normalized standards.
The other factor to consider however, is that social security continues to add 150,000 new enrolls every month and the projections we’ve run thru to 2030 would indicate 70 million people on social security.
The Fed is trying to keep inflation down but one of the key drivers for inflation is labor. If millions of retiring boomers are leaving the labor force but enrolling in social security and medicare causing demand for goods and services and not enough replacements inbound from younger generations because they don’t exist then it will become increasingly difficult to contain the labor factor of inflation.
Boomers are the cohort generation born between 1946 thru 1964 and during the high inflationary period from 1965 thru 1981, it was the boomers coming into prime family formation ages that caused massive demand on goods and services. We have that situation now with millenials as they have been coming into family formation age over the past decade also causing huge demand.
The key difference between 1970’s and now is that in the 70’s we didn’t have 70 million people on social security and medicare. Inflation began spiking in 1970s when the youngest boomers turned age 24 and began marrying and having children. We will likely have an inflation chart like the one below for 2023 thru 2034.
Stay tuned, stay profitable and stay solvent…