#010 - Forecasting inflation - The Jobs Report!

The monthly Jobs report from the BLS is the most time-efficient way of forecasting inflation.

Let's keep it short and sweet; it's simple Macro 101.

The more jobs there are, the more demand there is for employees.
The more demand there is for employees, the more competitive employers have to be to hire the best talent.

How do employers become more competitive?

They offer more incentives, and the top incentive they offer is a higher Salary. The average American does not tend to save with the more money they make; they tend to spend the same percentage of their pay as their income increases. The market knows this, so sellers of consumer goods raise their prices accordingly and use basic supply and demand statistics to incrementally raise the price of consumer goods to generate more revenue while selling the same number of units (Cost-Push Effect). Except for some goods that depend on other factors, such as the supply chain.

This pattern occurs in every sector when interest rates are down; I covered this in an earlier post. Then, slowly but surely, the price of goods increase and the actual inflation number is the average of the rise of certain goods such as: rent, gas, cars, homes, certain produce such as apples, TV fees, Medical Care, Commuter Transportation, and other services and goods.

As a Trader or Fund Manager, the most time-efficient way of gauging inflation and factoring it in real-time for live trading is the BLS monthly jobs report.


Bonus:
You know who the real winner is in the end, everyone spends because they have to and most people spend because they're bored, the Shareholders and the Residential Real Estate Owners who own duplexes, triplexes, and multifamilies.

Follow for more content, see below a couple of cool relevant resources.

https://www.investopedia.com/terms/i/inflation.asp

https://www.bls.gov/news.release/pdf/empsit.pdf