Employment – Wages – Inflation
Guest writer Andy Fanter tackles the topic of economics in his blog post for this week: Employment – Wages – Inflation.
A little over halfway through construction machine unit deliveries by state, Ron messaged me about another blog. I have done the big states, and the numbers are up!! The topic for this blog: employment, wages, and inflation—most know general economic stuff is not my favorite, but this will be fun.
Employment: We are in the 3s, unlikely to get much lower, and unlikely to go much higher for years. The construction industry needs people, and if you think Gen Y and Z will suddenly want to operate machinery or tools you will be mistaken. Immigration, we need it for construction, food processing and the restaurant business. If the banks would tighten the lending requirements for restaurants, like they did for housing after the GFC, it would help a little. People from all over the world would enjoy working our “dirty jobs” so they can have a good roof, water, sewer, and low chances for tanks in the streets. Friendly reminder, most of us do not have roots dating back to early America—it is a melting pot. Even agriculture is back up, so getting people from rural America just got tougher!
Wages: Choice is simple: pay people well, treat people well, have some meals and snacks at work or they will leave. Looking back over the last 20 years, you needed to make 3 to 5% to stay ahead of inflation. I know the companies that overwork, underpay, and have more respect for laptop computers. There are ex-employees from those dealers all over the US working at other dealers.
Inflation: Oh yay, natural gas and eggs are way down. Housing and autos, no easier way to say it welcome to “screwedville”. Home prices are not going to make a big drop, not enough inventory. Builders are trying—but back to employment issue. Autos: new inventory is increasing but nowhere near 2019 levels. Used auto prices are dropping some, but how much of that was post-graduation, post wedding season? High interest rates making auto payments $1000+ a month, but this is the 1980s mentality again and new auto sales are on track for 8% to 10% growth. Next few years expect the CPI to be in high 2s, FED would like low 2s, so back to interest rates sitting around 5%. The consumer can make a bigger dent with inflation by going back to the smart phone and shopping for a better price! It worked from 2010 to 2019; it drove the FED and Phillip’s Curve people nuts, good employment, low inflation. Big ticket items, not much change but builders have incentives and so do auto manufacturers.
Tune in later for more.