Shortages, Job Hopping, and a Bottom?

It has been far too long since I’ve been able to say the markets finished higher this week.  To be exact, it’s been eight weeks of consecutive downside we’ve just endured.  Fortunately, it appears people’s fingers have begun cramping from pushing the sell button and they had to take a break this week.  While I cannot say with any certainty that the slide is over, I can say that the process of bottoming involves some up days, followed by some down days, followed by some up days.  This week showed some signs of relief.

Part of last week’s selloff was due to Walmart and Target reporting weakening consumer spending patterns.  Since consumer spending makes up 67% of the U.S. Gross Domestic Product (GDP), a slowdown as per Walmart’s report would be problematic.  However, this week we heard from Nordstrom, Dick’s, Best Buy, Macy’s, Dollar Tree, and Dollar General and they all shot down rumors that the American consumer is washed up.  Fortunately, these companies changed the mood for the better this week.  Additionally, the hawkishness of the Fed has subdued with analysts now expecting smaller interest rate hikes with the potential for a pause later this year.  Investors loved this idea and started hitting the buy button vigorously.

We all know there are shortages due to supply chains issues primarily in China.  First it was semiconductor chips that go into cars, then it was fertilizer coming out of Eastern Europe, then it was baby formula manufactured right here in the United States.  The latest to cross my news feed is a serious shortage of helium.  So, what… no more balloons?  Well, it seems helium is used for more than just balloons and making funny voices.  The gas is used in rocket fuel, MRI machines, and objectively more important balloons – weather balloons.  The National Weather Service warned that it would need to reduce the frequency of weather balloon launches this year.  It is so critical to national security that the government decided to create a national stockpile of the gas in the ‘60s.  In 1996, Congress voted to start selling off the stockpile, but in 2013 they slowed the sales.  Let’s hope helium prices don’t get carried away.

Here’s an interesting tidbit I came across this week.  You’ve probably heard that “the grass isn’t always greener on the other side.”  New research into the American job market shows that many people who recently quit their job for another one are pretty quickly itching to quit the new job, too.  According to a survey of 5,000 employees conducted by Grant Thornton, 21% of American workers took a new job in the last year.  But 40% of that group is actively looking for another job, suggesting some buyer’s remorse among job hoppers.  I’ve often wondered about the trend of job hopping these past couple decades and whether it is the best way to progress in one’s career.  To be fair, per the Grant Thornton survey, 40% of workers who took a new job reported a pay increase of at least 10%, and according to the Federal Reserve Bank of Atlanta, hourly wages for job jumpers did grow faster than those who opted to keep their current jobs.  However, I wonder how much time and effort is lost in training new employees only to watch them leave for a relatively small pay increase.  I don’t have an answer to this conundrum but it seems counterproductive for employers.

In closing, I turn to a story I came across this week that might be considered clickbait but was still an interesting statistic nonetheless.  Oxfam International has a new report out that highlights the rapidly widening gap between the few ultra-rich and the world’s poorest.  The report, titled “Profiting from Pain,” found that during the first two years of the pandemic, a new billionaire was minted every 30 hours, with a total of 573 of the world’s richest becoming billionaires during that time frame.  On the flip side, in 2022, Oxfam expects a million people to fall into extreme poverty every 33 hours, nearly the same rate a new billionaire was minted.  The rate that people are expected to fall into poverty – 263 million in 2022 alone – is primarily attributed to the rapidly rising cost of living, including everything from the cost of energy to food.  I understand numbers can be manipulated, agencies have agendas, and “studies” should always be taken with a grain of salt.  Nevertheless, I thought this was in interesting way of looking at world today.  Now you know.  I hope everyone has a safe and happy Memorial Day weekend! 

Bruce J. Mason, MBA