Wealthy AF Podcast

Exploring Positive Economic Outlook and Migration Trends Amid Rising Unemployment | Weekly Business Briefs w/ Martin Perdomo

November 15, 2023 Martin Perdomo "The Elite Strategist" Season 2 Episode 326
Wealthy AF Podcast
Exploring Positive Economic Outlook and Migration Trends Amid Rising Unemployment | Weekly Business Briefs w/ Martin Perdomo
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Show Notes Transcript

Dare to imagine a future where American optimism shapes economic trends and impacts your financial decisions. Join us as we peel back the layers on the Federal Reserve Bank of New York's survey which reveals a positive outlook on the economy, despite the rising unemployment rate and looming recession fears. We dive into the intricacies of inflation expectations, consumer spending habits and the potential self-fulfilling prophecy that could ensue. Plus, we delve into the trends of middle-class migration, and why cities like Las Vegas, Phoenix, and San Antonio are becoming desirable destinations.

Keeping our fingers on the pulse of Wall Street, we take a look at its fluctuations following a recent rally and discuss the keen anticipation surrounding upcoming inflation data. Tune in for insightful perspectives on investor reaction and the potential implications for the Federal Reserve's decisions on interest rates. We don’t just discuss the trends, we also invite you to share your thoughts on how these economic shifts are influencing your financial decisions. So, get comfortable, put on your headphones and let's navigate these economic landscapes together. Prepare to be enlightened.

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Speaker 1:

Most Americans think the economy should be in fairly good shape this time next year. Middle class movers are heading to these three cities in search of affordability and Wall Street waivers. After rally, focus on inflation data. These are the top three headlines in this week's weekly business briefs. First up, a majority of Americans hold an optimistic outlook regarding the economic landscape. According to CNN Business, a new survey data released Monday by the Federal Reserve Bank of New York showed that US consumers believe inflation will continue to ease, the labor market will remain strong and they will continue to spend more than they did pre-pandemic. The October survey of consumer expectations printed a largely more positive picture than the New York Fed's survey a month before, when the consumers were as apprehensive of not making a minimum debt payment as they were in the early stages of the COVID-19 pandemic. In October, the average perceived probability of missing a minimum debt payment dropped to 11.99 percent, matching the measurement in June and sitting well within pre-pandemic ranges. Consumer expectations for inflation one year and five years from now both dropped 0.1 percentage points from the month before to land at 3.6 percent and 2.7 percent respectively. However, median inflation expectations at the three-year horizon remained unchanged at 3 percent a yearly high. The Federal Reserve closely watches consumers' inflation expectations as they can be a self-fulfilling prophecy. If consumers anticipate the prices will remain high, they might spend more now and demand higher wages, and businesses might raise prices to accommodate higher demand and wages. Lately, fed officials have grown nervous about expectations worsening. On Friday, the University of Michigan's closely watched consumer survey showed sentiment was warning about the current economic state and that inflation expectations ticked up over the long run. So it's interesting. As unemployment is going up, guys, unemployment went from 3.4 percent to 3.9 percent and just as an economist general rule when interest rates go up more than half ofa percentage point I'm sorry, not when interest rates, when the unemployment rate goes up more than half of a percentage point the rule that economists use and measure is that a recession is either past us or is right around the corner. And we went. We jumped from 3.4 percent to 3.9 percent unemployment just from September to October. So we'll have to wait and see. What the future tells us is just again. I've been saying we're in a weird space, but I agree that it is a self-fulfilling prophecy. When it comes to consumer sentiments and the market sentiments, like I always say, the market is very sentimental and emotional. Next up. Middle-class movers are choosing Las Vegas, phoenix and San Antonio as top destinations. Reported by the insider, middle-class Americans are increasingly moving out of the state to achieve an affordable lifestyle. They're heading into cities in Arizona, nevada, florida and Texas. Florida Florida is expensive, so that's interesting. Florida is not affordable these days. According to a new H&R Block report, using 2020 tax data, the most surprising location on the list is Sin City. It was the second most popular destination for middle class movers coming from out of state and the reported state said excuse me, a Realtor on the ground said it's an open secret that Las Vegas is an up and coming destination for movers seeking affordable homes and low taxes. It's weird to say this out loud, but I feel like Las Vegas is the new Colorado. The registered agent, andrew Areveallo, who is licensed in Nevada, colorado, told the insider it has shifted from Denver, getting a lot of people from out of town, to Vegas. It's now officially taken over. H&r Block defined middle class Americans as those with an adjusted median household income between $45,000 and $145,000. That's a big spread. That is a really big spread Between $45,000 and $145,000, that's really weird. Based on Pew Research Center guidelines and use anonymized data from the 4.6 million people who filed taxes with them in that income bracket. That's a really big spread. Interesting article. Lastly, wall Street displays fluctuations following a recent rally, with attention now pivoting towards forthcoming inflation data. According to Rutter, the main US stock indexes were mixed on Monday as investors awaited a crucial inflation reading this week that could shape expectations around how long the Federal Reserve will keep interest rates elevated. That's a big problem right now. Interest rates. The cautious mood followed a strong session on Wall Street on Friday when a rally in mega-gap stocks lifted the tech-heavy NASDAQ to a two-month peak and benchmark S&P 500 to a near eight-week closing high. Wow, investors will focus on the slew of economic data and speeches from Fed officials this week for clues on trajectory of US interest rates, amid growing expectations that the Fed has done hiking borrowing costs. Given the healthy state of retail earnings that we have this week, along with the CPI data that's coming out this week as well, there's clearly risk to rally strength, and quote the major US stocks indexes has rebounded strongly this month, fueled by a stronger than expected earnings season. In hopes that US interest rates are near their peak, investors have priced in a nearly 86% chance that the Fed will hold interest rates in December, according to CME Group's Fed Watch Tool. So interesting. I'm hoping that they hold and they don't spike again. And this has been your weekly market update. What are your thoughts on Americans thinking on this research that was done, with Americans thinking that inflation is going to be better and that they're spending more than they did before? Do you think that's reasonable? What are you doing? Are you spending more? Are you spending less? What are you seeing in the economy? Are you seeing the effects of this half of a percent go up on unemployment or not? Let me know your thoughts as discussed in the chat or drop your thoughts here. Let me know what you think. Appreciate you guys.