OmniDivitia Wealth Management, Inc. - ODWM Blog #jobsOmniDivitia Wealth Management, Inc. - ODWM Blog #jobshttps://www.omnidivitia.com/blogs/tag/jobsSun, 12 Apr 2026 15:55:59 -0700http://zoho.com/sites/<![CDATA[5 Warning Signs]]>https://www.omnidivitia.com/blogs/post/5-warning-signs

Wall Street Markets vs. Main Street Consumers: Who will Win?

5 Economic Warning Signs You Might Be Missing

Navigating the modern economy feels like deciphering a code, with stock market rallies often masking deeper signs of a slowdown. To understand the true direction of the economy, it's often more revealing to look beyond the daily headlines at a few key underlying indicators. The following five points, drawn from recent economic data, reveal a consistent and cautionary story about where the economy may be heading.


1. Consumer Confidence Has Fallen Off a Cliff

A major survey of consumer sentiment revealed a sharp decline in November 2025, a worrying sign for an economy driven by spending. The Conference Board Consumer Confidence Index® declined by 6.8 points to 88.7, its lowest level since April.  A critical component of that report, the Expectations Index, which measures the short-term outlook for income, business, and labor conditions, has been particularly weak. This index has now tracked below the recession-signaling threshold of 80 for ten consecutive months.


"Consumer confidence tumbled in November to its lowest level since April after moving sideways for several months." - Dana M Peterson, Chief Economist at The Conference Board


This matters because consumer sentiment is a key driver of spending. Such deep pessimism signals that households may be preparing to pull back, posing a significant headwind for economic growth.

2. A Key Recession Predictor Is Flashing Red

The Conference Board Leading Economic Index® (LEI) is a composite index designed to signal turning points in the business cycle before they happen. In August 2025, the LEI for the US declined by 0.5% and fell by a total of 2.8% over the preceding six months.  Crucially, the report notes that this widespread weakness across its components triggered a "recession signal" in August.


“In August, the US LEI registered its largest monthly decline since April 2025, signaling more headwinds ahead.” - Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board


Because this single indicator combines ten different data points—from manufacturing orders to stock prices and unemployment claims—its unified negative signal is particularly impactful.

3. America's Factories Have Room to Spare

Capacity utilization is a key measure of economic health that shows how much of the nation's industrial potential is actually being used. In August 2025, the total capacity utilization rate for the U.S. industrial sector was 77.4 percent. This rate is significant because it is 2.2 percentage points below its long-run average from 1972–2024, indicating that the country's industrial sector—comprising manufacturing, mining, and utilities—is operating with significant slack, suggesting a lack of robust demand in the economy.

4. The Job Market Shows Subtle Signs of Strain

To get a nuanced view of the labor market, it's important to distinguish between the two main types of weekly unemployment claims.

First, "initial claims" represent new applications for unemployment benefits, giving us a real-time look at the pace of recent layoffs. As of November 15, 2025, the 4-week moving average for these new claims was a relatively stable 224,250.

Second, "continued claims" represent the total number of individuals already receiving unemployment benefits. As of November 8, 2025, the 4-week moving average for continued claims was 1,960,250.  While new layoffs are not spiking, the number of people remaining on unemployment is nearly 2 million and has been rising. This divergence signals a cooling hiring environment, where finding a new job is becoming a prolonged struggle for nearly two million Americans.

5. Wall Street's Optimism Isn't Reaching Main Street

There is often a sharp contrast between financial market performance and the economic reality for average households. On November 25, 2025, the S&P 500 Index provided a dose of good news, closing at 6,765.88, up 0.91% for the day.

However, that optimism is not reflected in how most Americans feel about their finances. According to the University of Michigan Surveys of Consumers, the Index of Consumer Sentiment fell to just 51.0 in November, a staggering 29.0% drop from the previous year.


"...consumers remain frustrated about the persistence of high prices and weakening incomes."

Joanne Hsu, Surveys of Consumers Director


This highlights a significant disconnect between the performance of financial markets and the persistent anxieties—driven by high prices and stagnant incomes—that define the economic reality for millions of households.

Conclusion: The Bigger Picture

While no single indicator can predict the future with certainty, the consistent pattern across consumer confidence, leading economic indexes, industrial output, and the job market points toward significant economic headwinds. The data tells a cohesive story of a slowing economy, even when the daily headlines seem contradictory. As these cautionary signals grow louder, the key question becomes not if the economy is slowing, but by how much?


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]]>Wed, 26 Nov 2025 14:38:41 -0600<![CDATA[2025 Federal Reserve Outlook]]>https://www.omnidivitia.com/blogs/post/2025-federal-reserve-outlookThe Federal Open Market Committee (FOMC) consists of 12 members:  the seven members of the Board of Governors of the Federal Reserve System; the ]]>

Walking an Economic Tightrope

The Federal Open Market Committee (FOMC) consists of 12 members:  the seven members of the Board of Governors of the Federal Reserve System; the president of the Federal Reserve Bank of New York; and four of the remaining eleven Reserve Bank presidents, who serve one-year terms on a rotating basis.  A major part of this committee's job is to review economic data & discuss their outlooks in order to establish monetary policy.  The challenge they will have in 2025 is how to balance the fight against stubborn inflation against the desire to maintain low unemployment.  Below are 4 graphs explaining their outlook, taken from the December 2024 Summary of Economic Projections.

GDP Growth

The FOMC projects real GDP growth to average 2.1% in 2025, down from 2.5% in 2024.  The committee expects growth to slow in the first half of 2025, followed by a modest pickup in the second half of the year.

Inflation

The FOMC forecasts the personal consumption expenditures (PCE) price index, their preferred inflation measure, to rise to 2.5% in 2025, up from 2.4% in 2024.  The committee expects inflation to remain above its 2% target through the first half of 2025, before gradually declining.


In addition to the FOMC analysis, we also should consider the potential o=impact of the new administration's fiscal policy regarding tariffs. On one hand, it could be argued that the positions could be used simply to establish a bargaining position.  On the other hand, if they were to be implemented as they have been described so far, they could lead to even higher inflation as either the additional cost due to tariffs would be passed on to US consumers, or because domestic producers might have higher labor costs than overseas producers.

Unemployment

The FOMC projects the median unemployment rate to increase to 4.3% in 2025, up from 4.2% in 2024.  The committee expects the labor market to remain strong, with a relatively low unemployment rate, from a historical perspective.

Interest Rates

The FOMC projects the federal funds target rate to decline to 3.9-4.0% by the end of 2025, down from 4.4-4.5% at the end of 2024.  The committee expects to manage interest rates in a data-dependent manner to combat inflation and maintain a healthy economy.


IMPLICATION FOR MARKETS

In summary, the FOMC data for 2025 projects slowing GDP, slightly higher inflation, rising unemployment, and potential Fed Funds cuts in order to support the economy.  However, several major banks/brokerage firms have placed targets on the S&P 500 reflecting high single-digit to low double-digit percentage growth.  Given the gap in the current fundamental valuations and current levels, coupled with the above FOMC projections, it seems logical that both could occur, but a correction may be needed to provide more attractive entry points in the short term.  Long-term investors should review their goals, timeline, & asset allocation, as well as having a thorough understanding of the risks that yo may be taking on.


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]]>Fri, 24 Jan 2025 13:41:16 -0600<![CDATA[Jobs and Inflation]]>https://www.omnidivitia.com/blogs/post/Jobs-and-Inflation


Recently, a friend asked me how inflation and jobs are connected. My response is included below. Let me know what your thoughts are.
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"Short answer: More jobs = More Aggregate Wages = Greater Consumer Demand & Lower Unemployment/Tighter Job Market = More demand for qualified talent = wage growth ...which eventually could lead to inflation.

Long answer:  Forgive me for this, but I think it will help to expound a bit.  Also note that these comments are generalities, and are affected by a myriad of factors not mentioned here.

Inflation is essentially having more money for something than there are of that thing to consume at a given time (which leads to a price increase).  In other words, too much money for too few goods.  Companies produce goods or acquire resources for services, in part, based on projected consumer demand.  Consumer demand (in aggregate) is affected by many factors, including the job market and how much those jobs may pay (wage growth).

If unemployment is high, consumers as a whole won't have as much money to spend on goods & services.  The Federal Reserve (Fed), through its Open Market Committee (FOMC), implements monetary policy to manage interest rates & the supply of money in circulation.  Specifically, when the economy slows down & demand is reduced, they'll lower interest rates to make it easier for consumers (& corporations) to borrow money to consume (or produce) goods.  During the current recovery, as the article suggests, while the headline unemployment rate has come down to 6.1%, there are many who are still unemployed, underemployed, or are "discouraged"/have given up looking (roughly 12% as of August 2014).

At the same time, corporations slow the production of new goods in order to work off current inventory.  Because they aren't producing as much, and don't forecast consumer demand improving sufficiently in a given time frame, they seek to be as cost-conscious as possible.  Reducing their headcount is often where that effort leads.  Households, in turn, reduce their spending, and recently have also improved their savings rates & personal balance sheets by paying down debt.  This is good for the household, though it does also take money out of circulation and reduces demand.

At some point, a balance is reached.  Unemployment begins to decline, consumers slowly begin to spend a little more, and companies begin to hire again. This is the proverbial game of "Chicken", because they are somewhat interdependent.  When jobs return at a level where there is increased competition for talent, not only are more people working as a whole, but they are also making more money.  Household disposable income increases, spending likely increases, and inflation slowly becomes more of a threat.  The Fed's challenge is to make sure they don't raise rates too soon - derailing the recovery - but also keep inflation in control.

We are not at the point where inflation is a concern."


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

The economic forecasts set forth in this article may not develop as predicted.

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