Economic Influences

September 2018

Unemployment holds at under 4% in August. Labor supply problems continue, yet participation rate continues to hold steady at 64%.  We continue to point to labor issues as a supply side problem and one that will take some time to work through.

Employment growth continues across all major segments, as do underlying issues with labor supply. Construction unemployment at 3.4% is the lowest it’s been this millennium. The struggle to find the right employees continues and employers are lowering criteria for employment to find need labor.  Labor costs for both sectors continue to rise and continues to add upward pressure on prices.

Our outlook is for durable sectors to slow their rates of growth as supply factors and pricing headwinds gain strength and hold back potential.

If you want to learn more about what we are seeing and our forecasts, then click here to talk to us today.

Civilian Unemployment


Not much change in the story with August economic indicators.  Rate of decline in the unemployment percentage can’t go lower. Commodity prices increasing, labor supply issues continue unabated, tariffs doing what they do – raise prices.  Durable manufacturing, housing, consumer-related goods all are being impacted.

Construction Unemployment


Unemployment remained at its lowest point of the 2000’s again, holding at 3.4% in August.   Seems that the sky must be falling in the new housing sector if you read the popular financial prognosticators, but builders are telling us they can’t keep up and are seeing timeframes stretch because of so much demand.  Yet, their struggles continue.  Lack of quality labor is driving wages up, as well as delaying orders, resulting in timeframes for completions stretching out.

High School Unemployment


Unemployment continues to decline in those cohorts most severely hit by poor economic conditions.  Rates under 4.0% have not been seen since 2007 – 2008.

College Graduate Unemployment Rate


Market for college graduates continues to remain strong.  At 2%, unemployment is virtually non-existent for this segment.  Trend in this rate will continue to be low as more jobs pull college educated people into categories where college education hasn’t traditionally been needed.   Building sector is a prime example of opportunities where what used to be considered blue-collar workers are resembling white-collar workers.

Number not in the Labor ForceCivilian Labor Force Participation20-24 year old Participation Rate25-54 year old Participation Rate55+ year old Participation Rate


Despite all the draw from jobs, only 63% of the civilian labor force are participating.  Changing U.S. demographics driving this as 55+ segment becomes a larger percentage overall.  Younger age cohorts are experiencing increasing participation rates as more opportunities present themselves and wages also increasing.  However, the overall rate will continue to be dominated by the older age segment and will keep participation rates hover in the low 60%’s.

Treasury Bills YieldsFederal Funds RateInflation


Rising consumer prices, wages and commodity prices are increasing the probability of another rate hike before the year’s out.   Hope not, it’s too soon to ruin the fun.

Let’s hope they keep the rate at 2.0% or below for the rest of the year.  Fueling their fears of inflation are rising prices and wages, which means rate increases likely follow.  With August releases, it’s becoming more likely they will raise rates as they look at rising wages and prices, two of the most-wanted criminals on the FED’s list.

Builder SentimentConsumer Sentiment


Despite rising prices and other issues related to housing, consumer and builder sentiment are at some of their highest points since 2000.  Builders continue to tell us this past year is the best they have ever had, even better than the mid-2000’s and in some areas, they are saying it’s at an unsustainable pace of growth.