Although the unemployment rate is down, you could say we have the most well-educated bartenders and busboys in history. The World Economic Forum found that most college-educated workers took jobs in low-earning industries between 2000 and 2014, and wages of young college graduates are 2.5 percent lower than they were in 2000.
This has an impact on more than just graduates and the parents they may be moving back in with. Unemployed and underemployed people spend less on consumables. In turn, low demand for goods and services leads to lower growth, and companies that aren’t growing don’t create more jobs.
As a whole, the nation’s unemployment rate dropped to 5.1 percent in August, but it was at 7.2 percent for recent college graduates and 19.5 percent for those fresh out of high school. This means that more than a quarter of this teenage generation is unable to buy a new car, house or other perks that come with being in the job market.
All of this is just part of the reason the Federal Reserve’s Open Market Committee decided against raising interest rates in September — also citing global issues and their impact on the U.S. stock market.
Please contact us if you wish to discuss how this may impact your current financial strategy.
The lack of jobs and a stalemate in the real estate market have contributed to slow recovery in many areas of the country. Six years after the recession ended, many cities in the Southwest have the lowest recovery rates based on 17 economic indicators, such as home-price appreciation and wage growth. Nine of the 15 cities in the worst shape are located in Arizona and Nevada.
As you might have guessed, those faring best in the post-recovery stage are people who already possessed a substantial amount of wealth. Earnings have increased among households ranked in the 90th and 95th percentiles of wealth in the U.S. since the recession, but on average, income levels for all other groups are still below 2006 levels. Today, the median household income is 6.5 percent lower than it was in 2007, the year the recession started.
One of the best lessons we can extract from the recession is that we can’t control what will happen with the economy, but we can be proactive about what we do with our assets. Regardless of where you stand in the recovery spectrum, please give us a call to discuss potential strategies for positioning your assets that can help ensure your family’s financial future.