The U.S. labor shortage is hitting the public education sector hard. Yes, COVID-19 and its mutations have had a lot to do with the lack of teachers, but the problem predates the pandemic. In just the last two months, 65,000 public education employees left the industry. Across the United States, in October 2021, there were 575,000 fewer state and local education employees than in February 2020, according to the latest employment report of the Bureau of Labor Statistics. The pandemic, in some ways, was simply the straw that broke this camel’s back. Stagnant wages, or worse, falling wages, have beset…
Insights & Advice
Tag: COVID-19
Disappointing job gains in leisure and hospitality sectors
The most recent jobs report was disappointing. Only 235,000 jobs were created in August 2021, versus an expectation of 720,000. Leisure and hospitality jobs had led the way this year — until August. For the six months before August 2021, those industries had averaged 350,000 new jobs per month. Last month there were no job gains in the sectors. The drop-off in leisure and hospitality resulted in August’s jobs gains being the weakest monthly gain since January 2021. The weakness was attributed to rising COVID-19 cases. Consumer demand ticked down as the uncertainty regarding new infections went up. U.S. infection…
The higher stocks climb, the cheaper they get
As stocks hit record high after record high, it might be normal to expect that equities will just get too expensive and collapse under their own weight. Not necessarily. One of the investor’s favorite valuation metrics is called the forward price/earnings (P/E) ratio. The concept is quite simple: compute the market value of any stock and divide it by what the company is projected to earn over the next 12 months. If the ratio is higher than the long-term average, consider it expensive. It is considered cheap (generally) when the stock trades below that average. The P/E ratio you can…
Our hospitals are in trouble
COVID-19 effectively put a halt to most elective surgeries. As the nation gets vaccinated, however, medical authorities have given the all-clear to a resume those surgeries. But will patients come back? The answer to that question is important to the nation’s hospitals, whose bottom line has suffered as much as, or even more than, most of their patients. Last year, hospitals were forced to shut down surgery in order to create capacity for skyrocketing cases of the coronavirus. But even after beds opened up again (as a result of the reduction in new, serious Covid-19 cases), most patients are still…
Selling dirty
According to a survey performed by AlixPartners (AP), U.S. consumers are the “most anxious” about their health and finances. Chinese consumers rank the lowest in terms of anxiety pertaining to those issues. AP’s April 2021 survey concluded that “half of all global consumers say their spending habits have changed permanently due to the pandemic.” Whether you are a business owner or an investor, it is essential to understand where consumer spending will be directed. To figure out the “where,” we have to understand the “why.” According to the AP survey, nearly one out of every three U.S. consumers identified as being very…
CAPITAL IDEAS: What a year
“It was the best of times, it was the worst of times … it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair.” — Charles Dickens The year 2020 was dreadful. Our neighbors, friends, and family lost jobs as the economy struggled with COVID-19. Tragically, some of us lost loved ones to the virus. I keep those losses in mind as I review the year for the stock market. My intention isn’t to spike the ball in celebration of how well the stock market performed. Instead, it…
CAPITAL IDEAS: Do you have excess savings?
The U.S. Gross Domestic Product (GDP) has almost recovered from its pandemic loss. According to JP Morgan, the last GDP calculation was merely 1.3 percent less than its February 2020 peak. According to the Atlanta Fed’s GDPNow forecast, the U.S. economy will surpass its pre-COVID-19 peak this quarter. With the caveat that we’re only about two-thirds of the way through and anything can happen in a month (remember March 2020?), the Atlanta Fed’s model currently forecasts a 9.6 percent growth rate of GDP for the first quarter of 2021. Unfortunately, that sounds better than it is. The official unemployment rate of 6.3…
Small town America is in vogue
The on-going coronavirus pandemic has boosted consumer demand for small town real estate. Whether that trend will continue with a vaccine on the horizon is anyone’s guess. In the meantime, it could be a godsend for those looking to retire and possibly downsize during this period. The obvious driver in this trend change has been the safety factor. The devastating carnage that occurred in the nation’s large cities during the first surge of the coronavirus convinced many families to pull up stakes and find dwellings as far from the mayhem (and people) as possible. Home listings in small towns jumped…
Danger zone
Dalton — I don’t see a lot of upside for equities for the next few months. I mean, sure, if we get to a low in the market and you measure it from there, then that will probably be an excellent return. But let’s not play games. The stock market has gotten ahead of itself. Additionally, as I pointed out in early October, since September 8, the number of daily COVID-19 cases in the U.S. has been trending up and threatening the much-dreaded “second wave.” That doesn’t mean that businesses will necessarily get locked down more tightly. Still, it certainly doesn’t effectively…
Politicians play cat and mouse with investors
It was a week of will they or won’t they. Both parties claimed to want another stimulus deal done before the election, but the proof is in the pudding and as of Friday, the plate is empty. Investors may be coming to the conclusion that the latest negotiations between the Democrats, led by House Speaker Nancy Pelosi, and Republican U.S. Treasury Secretary Stephen Mnuchin, and White House Chief of Staff Mark Meadows, was simply an election ploy. A way to set up the other side for failure, while making their own position look both caring and, at the same time,…
Markets feel the heat
First, the good news: there is only one more week until the end of the month. The bad news, however, is that October may not treat investors any better than did September. As my swabbie friends would say, is it time to “batten down the hatches.” Let me say, I take no joy in being right. During the last few weeks of writing, the volatility I predicted has come home to roost. This kind of correction is especially painful because in these times of great uncertainty, we could have at least pointed to the stock market, and our investments accounts,…
Concern about mail-in ballots
Dalton — When I am wrong, I call myself out. I’m seemingly on the verge of being wrong. On July 15, I wrote, “For the rest of the year, I suspect the S&P 500 will live in a range between 2,700 and 3,450.” There is a chance the index will get above 3,450 by the end of the year. Currently, the S&P 500 is a hair away from its Feb. 19 pre-pandemic closing high of 3,386 (as you are reading this, the index may have broken above that level). The question is: How will the stock market perform if it does hit…
Bail out blues
Investors have been giving Congress the benefit of the doubt—until now. A long-promised second tranche of fiscal stimulus was supposed to be passed by the end of the month. The clock is ticking, but the horse-trading has just begun. On August 1, the rent is due for millions of Americans. The sunset of the $600 in additional weekly unemployment benefits legislation, which amounts to almost 60% of their benefit, will have expired unless Congress acts. The GOP has dragged its feet for almost two months, hoping that the economy would bounce back, and relieve them of their responsibilities. The GOP…
Vaccine-driven markets
Investors are caught in a tug of war. On one side are the growing cases of COVID-19 throughout the country. On the other, the expectations that a virus cure, or at least a vaccine, is just around the corner. The market remains in the middle. That’s all you need to know to understand what happened to stocks this week. Two different announcements concerning vaccine progress had traders bid up stocks. The daily toll of deaths and cases, the slowing of the re-opening process, and the controversy over the coming school plans, all had a dampening effect on markets as well….
Tic Tac market
Dalton — The stock market often does whatever it must to frustrate the most people possible. Remember the other day, on June 11, when the stock markets dropped more than 5%? Yeah, no. Nobody does. One day, the world is ending, the following week and half and nobody remembers nuthin’. Not only was there little follow-through selling to the June 11 crash, but buyers stepped in to gain control of the action. At the time, I thought that might be the first 5% of an 8-16% decline, but absent a resurgence of COVID-19 that could keep businesses closed, we…
Less bad, but still bad
Dalton — After months of a powerful rally, last week, the stock market corrected a bit, with major averages dropping below their 200-day moving averages. Given that the stock market could be considered “overbought” by a variety of metrics, further consolidation is likely required before stock prices can regain their footing and continue their advance. I do expect stock market averages to continue their advance over the intermediate term. Sure, in the short term there should be some consolidation in prices. However, over longer periods stocks will generally perform better a) when the economic data goes from “bad” to “less bad,”…