Catching Up; Economic Update, Europe, Labor Day, and an Ordinary Banker
The Numbers
In terms of employment, we are finally more or less back to pre-pandemic levels; that took a while. The unemployment rate nationally is 3.5%, identical to February 2020, and the number of folks looking for work totals 5.9 million, compared to 5.0 million in February 2020 so that is still materially higher than early 2020. There are 10.7 million job openings, but this is down by 500,000 over the previous month; we’ll see if that continues. Just in case you are curious, there were 6.9 million job openings in February 2020. Some other stats…
The labor force participation rate is 62.1% vs. 63.4% pre-pandemic – people are still checked out.
National Unemployment Rate – 3.5%. This is super low.
California Unemployment Rate – 3.9%. Also low.
The Counties:
San Francisco – 2.6% - that’s really full employment.
Los Angeles – 4.6%. Still good.
Riverside/San Bernardino – 4.0%. Also good, and better than L.A.
The slowdown the Fed is looking for is happening.
Home sales are slowing, mortgage rates are going up and home prices have stopped increasing and in some cases are dropping – but not by much. Yet.
Time to start forming your forecasts and plans for next year. Seriously. But we’ll talk about that next week.
And what’s going on with Europe? And why do we care?
Well, we import a LOT of stuff from Europe.
$84B in pharmaceuticals
$77B in machinery
$44B in vehicles
$34B in electronic equipment
… and much, much more.
And that affects us how…?
Well, finances are all interconnected. Some weeks ago, I talked about the weakening Euro (or the strengthening dollar, depending on how you look at it), and how that is affecting businesses that import from Europe as well as individuals travelling there.
Just like our Federal Reserve, they have a European Central Bank. They just started to raise interest rates.
Some commonalities:
Inflation is at a 40 year high – check.
Energy prices are high – check.
For Europe, it’s because they get most of their natural gas from Russia and that is driving energy prices up.
In the US, oil and gas energy producers feel constrained from opening wells due to vacillating energy policies.
For both, wind and solar have become a bigger share of energy.
Coal and gas become expensive alternatives, particularly when you have to restart a coal or gas power plant.
United Kingdom utilities are charging 80% more for electricity. I promise that will flow through to the products we import.
Oddly enough, hydroelectric is not deemed to be green by California. Of course, if those reservoirs don’t fill up, that’s a moot point since there won’t be any water to drive the turbines.
Food prices are high – check.
Europe gets much of its grain from Ukraine and Russia – oh, wait, there’s a bit of jam on the interstate there, so that grain may not get to where it needs to be.
Food costs in the US are driven by the increase in grain prices worldwide as well as the cost of diesel to deliver food.
So the good news and bad news on all of this.
The bad news: the costs to manufacture stuff in Europe in Euros will increase significantly.
The good news: the Euro is so much weaker that prices for goods in the European Union can go up 20% and it would basically stay the same in US dollars as it was about a year ago. However, if the Euro gets stronger, you’ll be paying a bit more for that English Earl Grey Tea.
Some facts about Labor Day:
It became a federal holiday in 1894. That’s a while back.
It was promoted, not surprisingly, by the Central Labor Union and the Knights of Labor.
Oregon was the first state to make it an official public holiday.
It marks the unofficial end of summer. Of course, your outdoor thermometer will tell a different story next Monday, with high temperatures forecast around the southwest.
Finally… An Ordinary Banker
He started with Bank of America in 1948 right out of high school. By happenstance, he was assigned a position in the international department at headquarters in San Francisco. This was a good thing because that is where he met his future wife – a pistol of a Peruvian whose skillsets were wicked typing skills and, as it turned out, executive quality social graces. They married in 1954 but it wasn’t until 1968, 20 years after his start date, that he received an operations assignment in Korea, then Okinawa, then Hong Kong, then Taiwan, and finally the Philippines in 1981. And their son went with them for the entire ride.
His superpower was doing his job consistently well and playing office politics just enough to let people know he was there. He was never a threat to the college and graduate school bankers nor did he want to be. He never thirsted for promotion but welcomed it when it came. He survived staff reductions and restructurings, and when the bank was reducing its international presence, he even made it back to California in 1985 because of his reputation for reliability, low maintenance, and operational excellence.
He retired from Bank of America in 1990 after 42 years of service, and two years after his son started with that same bank in 1988.
Who was that high school educated banker that was with BofA for 42 years, worked side by side with Stanford MBA’s and outlasted many of his peers? William A. Russell. My dad.
He passed away Friday morning at the age of 92. He was an ordinary banker that led an extraordinary life.
Why do I mention this? First, to celebrate my father with you, my readers.
Second, as Labor Day approaches, I am willing to bet a six pack of Bud (my dad’s choice) that many of you had parents just like him. The occupation doesn’t matter: truck driver, soldier, engineer, government worker, office clerk, factory worker, attorney, steel mill worker, cook, server, manager and yes, banker, but what does matter is that they worked every day at a job (or two or three) that they were good at, with little fanfare and not much recognition. They did it to support their families and put food on the table, and they left the world a better place because of it.
On this Labor Day, I ask that you honor the folks that through their labor, put you where you are today. Whether they are your parents, grandparents, aunts and uncles, a mentor or whoever, it was their effort that created a base that helped get you where you are today. Now that’s worth a Labor Day toast and a cold one.
