Everyone knows by now that low unemployment is bad for employers that are looking to hire and a balanced labor market works best. I wonder what you’d consider the optimum unemployment percentage range would be that would meet demand without slowing the economy too much. With all the lagging indicators it’s difficult to predict with certainty where we will land, only will it be a soft or hard landing or no recession at all. I’m guessing an unemployment rate somewhere between 4 and 4 1/2% would be an huge improvement for contractors but perhaps I’m simplifying the issue too much. I know you’re on it, how would you best answer that question today? Thanks in advance, Rob
I wonder if we'll see more seniors back in the work force after a period with inflationary pressures, the waning of covid fears, and once boredom sets in.
You mention healthcare costs are concerning you. Question-- if we could get vaccination rates for covid and flu up so the 85% or more of the population was vaxxed each year (including kids), how would this affect healthcare costs? What about labor shortages? when older parents and kids are sick-- someone has to stay home to take care of them. and when workers are sick they not only affect others, but they also have to stay home (and/or clog up doctors offices/hospitals)-- wouldn't that put a dent in the labor shortages?
Rising Average Hourly Wages seems like a good thing for the housing affordability crisis, maybe it would be better overall for the economy to accept 2.5%+ as the inflation target.
Except that rising wages are included in all of the inputs in home building and we still have a home shortage where people want to live. Not a factor in existing homes, of course.
Everyone knows by now that low unemployment is bad for employers that are looking to hire and a balanced labor market works best. I wonder what you’d consider the optimum unemployment percentage range would be that would meet demand without slowing the economy too much. With all the lagging indicators it’s difficult to predict with certainty where we will land, only will it be a soft or hard landing or no recession at all. I’m guessing an unemployment rate somewhere between 4 and 4 1/2% would be an huge improvement for contractors but perhaps I’m simplifying the issue too much. I know you’re on it, how would you best answer that question today? Thanks in advance, Rob
Tough question! The ideal rate of unemployment is a bit arbitrary; if you're an employer, your ideal rate is higher than an employee's, obviously. I don't have a firm answer to this, but the natural rate of unemployment (you can see the definition of that in the link below the chart) is about 4.5% right now. https://fred.stlouisfed.org/series/NROU#:~:text=The%20natural%20rate%20of%20unemployment,the%20long%2Dterm%20natural%20rate.
I wonder if we'll see more seniors back in the work force after a period with inflationary pressures, the waning of covid fears, and once boredom sets in.
I wonder the same thing, but unfortunately we don't have great (or easily accessible) data on retirements. I wrote a little more about it in this post, if you're interested: https://basu.substack.com/p/where-have-all-the-workers-gone
You mention healthcare costs are concerning you. Question-- if we could get vaccination rates for covid and flu up so the 85% or more of the population was vaxxed each year (including kids), how would this affect healthcare costs? What about labor shortages? when older parents and kids are sick-- someone has to stay home to take care of them. and when workers are sick they not only affect others, but they also have to stay home (and/or clog up doctors offices/hospitals)-- wouldn't that put a dent in the labor shortages?
Rising Average Hourly Wages seems like a good thing for the housing affordability crisis, maybe it would be better overall for the economy to accept 2.5%+ as the inflation target.
Except that rising wages are included in all of the inputs in home building and we still have a home shortage where people want to live. Not a factor in existing homes, of course.