OmniDivitia Wealth Management, Inc. - ODWM Blog #unemploymentOmniDivitia Wealth Management, Inc. - ODWM Blog #unemploymenthttps://www.omnidivitia.com/blogs/tag/unemploymentSun, 12 Apr 2026 16:05:51 -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[Navigating the Markets & Economy Through the PEST Lens]]>https://www.omnidivitia.com/blogs/post/navigating-the-noise-with-a-pest 1. Political Escala ]]>

A Thank You to Richard Bernstein

I recently decided to break out my copy of "Navigate the Noise" by Richard Bernstein, a book he wrote in 2001.  The first thing that struck me was the full title, and how it seems so appropriate today.  The full title is: "Navigate the Noise: Investing in the New Age of Media and Hype", which 


For context, Richard Bernstein is the CEO & Chief Investment Officer of Richard Bernstein Advisors.  He was formerly the Chief Investment Strategist at Merrill Lynch, where I became familiar with his work, as he would often be heard on the daily market calls, providing insight and guidance for advisors.  What stands out in my memory is that there were some people in our office who were not his biggest fans. Perhaps it was because he wasn't always an equity market "cheerleader", as some are, or because he suggested caution in an approach rather than to "back the truck up and buy as much as you can." (That's another actual quote that I heard from a different analyst - WOW!).  However, I liked his style, and always appreciated the independent, well-thought out logic as well as how he articulated his opinion.  


With that in mind, in this era of seemingly overvalued markets and an uncertain economy, I think it could be helpful to step back, take a breath, and evaluate what is going on with a well-known framework, the PEST Analysis.  PEST stands for "Political; Economic; Social; Technological".  (Some choose to use PESTLE, adding "Legal & Environmental" as additional factors to consider.

1. Political

  • Escalating Tariff Tensions & Trade Policy Shockwaves

    The U.S. has imposed sweeping tariffs—the highest since the 1930s—averaging almost 20%, impacting imports from more than 60 countries and pressuring trade flows, inflation, and consumer costs (The Tax Foundation).

  • Temporary Relief via Trade Truce

    A fresh 90-day truce between the U.S. and China offers short-term calm, though significant diplomatic and trade hurdles remain unresolved (AP News).

  • Federal Reserve Policy Amid Uncertainty

    Amid persistent inflation and slowing growth, Kansas City Fed President Schmid supports holding rates steady around 4.25–4.50%, calling the policy “modestly restrictive” (Reuters). In contrast, economist Jeremy Siegel argues that a rate cut is “inevitable,” forecasting up to a 50-basis-point cut in September and further easing into 2026 (MarketWatch).

2. Economic

  • Mixed Growth Signals
    The U.S. economy rebounded in Q2 2025 with annualized GDP growth of +3.0%, after a Q1 contraction of –0.5% (Bureau of Economic Analysis, Gallagher).

  • Global Growth Outlook—Tempered but Steady
    The IMF raised its global growth forecast to 3.0% for 2025, buoyed by pre-tariff spending and easing effective U.S. tariffs. Still, downside risks remain high (Reuters). The OECD paints a bleaker picture, warning of the weakest global expansion since the pandemic, citing trade barriers and policy uncertainty as key drags (Financial Times).

  • Inflation Pressures Persist
    U.S. headline CPI held at 2.7% while core CPI rose to 3.1%—indicating stickier inflation driven in part by tariffs (New York Post, The Guardian). The re-emergence of stagflation—a troubling combo of slowed growth and high inflation—is increasingly discussed by economists (Financial Times).

3. Social

  • Softening Labor Market & Job Data Shifts
    Job growth slowed markedly—July added just 73,000 jobs, the weakest performance since the COVID-19 downturn. Revisions also showed May and June estimates were overstated by 258,000 jobs collectively (The Times of India).

  • Shifting Investor Sentiment
    Markets are rapidly digesting inflation trends, Fed signals, and tariff impacts. Record highs in some indices reflect optimism, but stagflation concerns are sowing caution (Business Insider, The Times).

  • Skepticism in Real Estate Investments
    Ray Dalio calls real estate a risky bet in the current environment—pointing to its rate sensitivity, tax burden, and illiquidity—and recommends hedging via gold or Bitcoin instead (Business Insider).

4. Technological

  • Market Preferences Favoring Tech & AI
    Technology and AI-related sectors continue to outperform, reflecting investors’ preference for scalable, less tariff-sensitive businesses (Quotient Wealth, Schroders).

  • AI as a Growth Engine
    AI and cloud services delivered strong earnings from major firms like Microsoft and Alphabet, reinforcing optimism about AI’s long-term profitability (Schroders).

  • Supply Chain Resilience & Reconfiguration
    Global supply chains are recalibrating amid layered crises—geopolitical fragmentation, pandemic remnants, and Russia-Ukraine fallout. While China remains deeply embedded upstream, importers are increasingly diversifying toward ASEAN partners (arXiv).


Summary Table: PEST Snapshot

PEST FactorKey Developments
PoliticalTariff turbulence; Temporary U.S.–China truce; Diverging Fed outlook
EconomicU.S. GDP rebounds; Inflation resilient; Global growth modest
SocialLabor market cooling; Real estate skepticism; Market sentiment mixed
TechnologicalTech/AI outperforming; Supply chain realignment in progress


Concluding Thoughts

The emerging economic narrative for mid-2025 is one of fragile resilience amid growing uncertainty. Markets are balancing optimism—rooted in tech gains and a potential Fed pivot—with geopolitical risks, inflation pressures, and softening fundamentals. A rate cut could provide relief, but reliance on policy lightening is fraught amid stagflation fears.  From a PEST standpoint, navigating this period requires vigilance across domains: watch tariff developments, inflation and labor indicators, investor confidence shifts, and the adaptive power of tech and supply chains.


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Disclaimer: This content has been generated with AI assistance and is for informational purposes only. It should not be considered professional, legal, or financial advice. Please consult a qualified expert for specific guidance.

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]]>Tue, 12 Aug 2025 13:50:10 -0500<![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[The Stubborn Soft Landing]]>https://www.omnidivitia.com/blogs/post/the-stubborn-soft-landingAre we actually on track for a "soft landing"?]]>

The Battle Against Inflation is Not Over

The S&P 500 is up just roughly 25% since late October, and the other benchmarks have also continued their momentum. The improvement in forward earnings estimates would appear to justify the growth. Other styles have also performed well. The underlying sentiment seems to be that a soft landing was likely, and the Fed would cut rates numerous times this year to keep the economy from slowing too much.


However, hopes for rates cuts by the Federal Reserve have been premature as the fight against inflation continues. The Consumer Price index not only remains above 3%, but it also ticked upwards slightly in February. Even the Personal Consumption Expenditures Index, the Federal Reserve's preferred measurement of inflation, was up over 2.5% from February 2023 (2.8% excluding food and energy). With inflation being so stubborn, and remaining above their long-term goal, it is likely that "higher for longer" will be the case (i.e., a higher interest rate environment will last for longer than people previously thought).  

This excerpt from a recent Federal Open Market Committee (FOMC) report, known as the "Dot Plot", reflects how views on the economy have changed. While some market analysts have anticipated as many as seven rate cuts in 2024, this shows that the FOMC members anticipate that there will likely only be three cuts in 2024, leading to a Fed Funds rate ranging from 4.50% to 4.75%, from the current range of 5.25%-5.50%.

This would also explain the recent bond market performance, since a lack of anticipated rate cuts would lead to investors searching elsewhere for more attractive return prospects.

A "soft landing" is - unofficially - when monetary policymakers both slow the pace of economic growth and reduce inflation without causing a recession. So far, that appears to be the most likely scenario. I think even a mild recession, or a "soft-ish" landing, could be understandable at this point. One factor I have been monitoring has been the unemployment rate, which is beginning to rise slightly despite being at near historic lows.

Unemployment was measured at 3.9% as of February 2024, the most recent reading as of publication. If actions by policymakers cause consumer demand to slow too much, companies may begin to slow production &/or reduce headcount as an attempt to maintain progress toward their financial goals. This could lead to an increase in unemployment, causing consumers to spend less, and continuing the cycle. 


2023 was all about AI-related stock "FOMO" (fear of missing out), resulting in a few stocks with outsized gains & dragging the market along with it. I believe 2024 will be all about the FOMC's focus on managing inflation. If inflation remains stubbornly above the long-term goal of 2%, interest rates will be "higher for longer" and will dominate the conversation all year (up to & possibly during the election).

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]]>Fri, 05 Apr 2024 13:34:38 -0500<![CDATA[No New Surprises]]>https://www.omnidivitia.com/blogs/post/no-new-surprises

Fed Funds rate now at 3.00%

Today's move by the Federal Reserve is no surprise. In fact, it is largely a stated continuation of its recent moves. The only surprise is a slightly higher target for the "terminal rate", which is the peak rate before they would start cutting (not that cuts would occur immediately). The median terminal rate is 4.60% sometime in mid-2023. It wouldn't surprise me to see that go slightly higher if inflation doesn't slow down further; 4.60% is only essentially 2 more increases of 75 basis points.

Jerome Powell is being extremely clear. There will be some pain; there is no easy solution to this. I believe the likelihood of a "soft landing" is much less than what I think many believe it is. Be patient, manage your risk, and focus on fundamentals. Govern yourself accordingly.

One of my recent commentaries goes a little more in depth on this topic.  Click here for more details.  Registration is required.


#federalreserve #FOMC #economy #jeromepowell

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]]>Wed, 21 Sep 2022 15:15:40 -0500<![CDATA[Two Steps Forward, One Step Back]]>https://www.omnidivitia.com/blogs/post/two-steps-forward-one-step-back

We've Made Progress, but We're Not Out of the Woods Yet

COVID-19 variants slowing growth

The mass distribution of an effective vaccine in 4Q20 (see chart) began the return to normal. While the rate of total cases slowed as vaccines were initially being taken, the variants that occurred in 3Q21 have caused an increase in the number of cases. This uncertainty could prevent the economy from continuing its recovery at the same pace, though it is only one of a few potential risks

2021 has been a great lesson in perspective for investors.  As a whole , it has been mostly a positive year.  The economic recovery, fueled by favorable fiscal & monetary policies had been strong in the first half of the year.  However, when we examine 3Q21 performance alone, we get a slightly more concerning picture.  The

S&P 500 (large cap/black line) and and the MSCI EAFE (international/blue line) were flat, decreasing about 5% in September alone, and the Russell 2000 (small cap/beige line) declined about 5% for the quarter.

Valuation Still Matters

By some measures, the S&P could be considered overvalued in both the short- and long-term.  The long-term implication of being overvalued is that we may have an extended period of sub-par returns in order to revert to the historical average.  The Cyclically adjusted P/E Ratio (also called the Shiller CAPE Ratio or P/E 10) takes inflation into consideration over a 10-year period and adjusts earnings accordingly.  The PE 10 for the S&P 500 ended the quarter around 38.3, the highest reading since the tech bubble of the early 2000s.




Inflation & the Supply Chain

Both the Consumer Confidence Index and the Chicago Business Barometer retreated in September.  While the US economy continues to display resilience, the pullback may last until the pandemic-related supply chain issues can be rectified.  Click here for a six-minute video on the issue.  The bottom line:  the demand of the coronavirus recovery overwhelmed the system, & goods can't get delivered quickly enough to free up those trucks & ships for more deliveries.  


It's a type of economic perfect storm:  High Demand + A Lot of Money in Circulation + A Restricted Supply of Goods = Higher Prices (Inflation). 


With the holiday season approaching quickly approaching and both consumer and corporate confidence already slowing, supply shortages and shipping delays could have a major impact on earnings, not only in 4Q21but also for any potential capital expenditures in 2022 and beyond.



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]]>Thu, 14 Oct 2021 14:06:29 -0500<![CDATA[The Godfather Market]]>https://www.omnidivitia.com/blogs/post/the-godfather-market In my last post, the market had just pulled back about 10% within a few days.  Since then, the market not only declined about 34% fr ]]>

In my last post, the market had just pulled back about 10% within a few days.  Since then, the market not only declined about 34% from its late February peak, it also recovered just over 30% from the bottom.  This market reminds me of two very famous lines from "The Godfather".  First, in the original, Marlon Brando's Don Corleone is discussing how he can help his godson, Hollywood singer Johnny Fontane, with a problem.  He simply says, "I'm gonna make him an offer he can't refuse."  The Fed has tried to do the same thing by promising to pump unlimited amounts of money into the economy so support consumers and corporations, as well as give confidence to investors.  So far, it appears to have worked.  But...


The problem is the second quote, uttered by Michael Corleone in Godfather 3:  "Just when I thought I was out, they pull me back in."  This is where I believe the market is now.  We are probably due for another pullback, but hopefully not as deep as the initial one.  The recovery off the March lows initially made some sense in the context of some technical measures and a short-covering rally.  (Short selling occurs when a security is sold first, thinking the market will fall; a rally sometimes occurs as investors buy it back later at lower prices).  Only some of the 30% bounce makes sense to me, but the rest of the bounce is -in my opinion- too optimistic for just a few reasons.

  • The market was overvalued prior to the late February pullback.  Even a reasonable recovery (assuming that earnings and profits would be at pre-virus levels) should mean that the stock market would pull back to a lower value than the previously "overvalued" peak.
  • Reopening states does not solve the main issue (the virus), it only helps with some of the residual effects (economic shutdown).  As I've said previously, it will take a vaccine (or effective treatment) for consumers and corporations to see a clear end to the crisis and confidence in its sustainability.
  • Consumer demand must also return, and could be much more measured.  Some spending will return as unemployment drops, but it would also make sense that people may want to pay down debt or that has been incurred, or to increase savings.
  • Corporations would also want to have some visibility regarding consumer demand before increasing their workforce or investing in capital expenditures.  Manufacturers will likely work off inventory first before ramping up their production significantly.
In closing, while many of the posts here focus on technical issues related to investing and the economy, I fully realize that it means nothing without understanding and appreciating the people that truly matter ... our clients, who often turn to us to make sense of all the noise.  Thank you for the trust you have placed in us, and for the relationships grown over the years.   Looking forward to many more. - Alex


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]]>Mon, 11 May 2020 16:29:40 -0500<![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.
-------------------------------------------------
"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.

]]>Thu, 18 Sep 2014 13:58:29 -0500