0:02 Who are you? And where are you going? What do you want? [Music] Hello and welcome to People Making Money. I'm your host, Kevin Bemmel, and I'm here every Wednesday at 10:00 a.m. Pacific time to talk about job hunting, uh, starting and running a business and building wealth. So the whole financial side of of life and uh look it
0:40 that we were all you know independently wealthy I suppose and and and the wealth would be self self-generating you know we we could spend our our time on the beach eating bon bonss and drinking uh you know beer or whatever but of course that that is not the reality of life and so we we need to spend a significant part of our waking hours uh handling these things and not not just or maybe even primarily for our own sake but for the sake of our family, our loved ones. Uh we have a responsibility to them to
1:15 make sure that we make the best decisions possible uh when when it comes to our finances. So today is uh the uh monthly economic echoes show where I talk about the uh most recent economic data and what that means for us as individuals. But if you saw my show uh yesterday at the end I mentioned that I am going to talk for a few minutes about some of the current economic news. Uh I'm not going to get into the politics of it. Uh but I but there is so at least
1:51 if you're listening to other business podcasts there is so much being talked about and I think unfortunately it's being talked about in a very either simplistic or incomplete uh manner and candidly I think that's being done so because you know someone has a particular political axe to grind and so they want to sort of slant it one way or the other. Unfortunately, and the reality is that doesn't do us any good. Um that that somebody
2:26 believes with the current administration's policies or disagrees with them or, you know, you know, h has has a a bone to pick with any particular individual I is of no moment when for us when it comes to making decisions about our financial lives. So the the of course the the big issue I I'll I'll talk about inflation uh in in when we when I start looking through the statistics with you. So I'm going to set that one aside. The big issue of course is the issue of
3:01 tariffs. Okay. and and I did a show I think a few months ago now actually I did two or three shows talking about the different ways that governments uh impose taxes on us and if you happen to see that show and I'll I'll I'll I'll do my best to remember to put a link in the show notes to the particular episode one of the types of taxes I talked about is tariffs so while we we have different names for taxes. Um whether it's property taxes,
3:37 income taxes, excise taxes, tariffs, although they don't we don't actually say the word taxes in them, tariffs are a tax for all intents and purposes. Okay? It's money the government is collecting uh based on a a certain mechanism. Okay? Now, it has a different name, but it it is in fact attacks. And so, you know, we we in order to understand the the first step in order to understanding how tariffs are going to
4:12 or are and and and will presumably continue to impact the economy is to understand they're just another form of tax. Okay. So, it's it's it's it's interesting because I've talked to people over the last couple of weeks who and and I've I make my bias clear. I'm I'm very anti- taxes. Okay? Um I've said that before on this show. Uh you know, for for most of us, um most of the taxes we pay, we we we don't even realize. It's things like sales
4:47 taxes. Um and it's the ta the component of the price of the things we buy that that is taxes. Okay. So for example in terms of the rent that we pay for an apartment or a house. So one of the costs to the landlord is property taxes. There's also business license fees which again is just another type of tax. Okay. So that gets priced into the overall market in terms of rental rates. Okay? So PE,
5:24 you know, people people will say things like, well, if if an owner's taxes went down, he's not going to lower his rents. Well, that may be true for an individual owner, right? He may not have to even if his tax his property taxes go down, okay? because the general level of rents is wherever it's at. If his taxes go down, he's not necessarily going to have to lower his rents. However, if property taxes in general w were lower, okay, so then the cost structure to provide housing is lower and therefore the costs
5:59 will will be lower, right? That that's just, you know, economics buying and selling 101. Okay? So one way or another in any kind of business situation and the renting of an apartment is really a business situation. Okay? Any business that's that's that has to pay a tax in essence that tax they're not paying it. It's being passed through to their customers or clients. Okay? And so that's fundamentally why
6:35 I'm I'm so anti- taxes. But what I find interesting is is that people who are uh who are philosophically anti- taxes have told me that they're protariffs. It's like well you can't square that circle. To be pro tariffs is to be pro taxes. Okay? So, you can't say now that you're you're you're you have a principle of being for low taxes. Okay? I shouldn't say I'm anti- taxes. Obviously, we need to collect some taxes, okay? But I'm I'm in favor of low taxes, letting, you know, keeping the taxes as low as
7:11 possible uh and and and letting people keep as much of their money as possible to use how how they choose. Okay. So, um, it's it's a it's a um um it's a philosophical conflict to say that to say that I'm I'm in favor of low taxes and I'm in favor of of higher tariffs. Okay, th those two concepts are at odds. Okay. And and I speaking to one person about this. I won't say who it is. Don't want to embarrass the person, but the par person said, "Well, businesses
7:47 should have to pay their way." Okay. And that's why I mentioned a couple minutes ago, businesses just deal within the cost structure. Okay? So, if we if if we raise if we increase the taxes on business, inevitably that causes prices to go up. and and we'll I'll talk about that more when we talk about the consumer price index and and where inflation is going. Okay? But but the bottom line is that tariffs are a tax. And look, if you're in favor of higher taxes, then
8:22 then higher tariffs presumably, at least philosophically, don't bother you. Okay? Uh and and you know we can go if if we want to debate this we can go someplace have a couple of bourbons and we can talk about why lower taxes or higher taxes are better right that's that's a bourbon conversation as as I not really jokingly suggest uh because you know these kind of kind of conversations can get you know very heated and and uh at least for me
8:57 bourbon makes me mellow. Okay. All right. So, so that's that's number one. Okay. Number two is um and I I meant to look this up before I um before I started the show and I I I just got out of a court uh court hearing uh you know, right before uh the show had to start. So, um, so I'm I I meant to look up the percentage of goods sub subject to tariffs. Uh, because I think it's a Yeah.
9:36 Okay. Now, okay. Uh, percentage of goods imported is what I want. Okay. So, and my my I meant to look this up because I had heard somewhere what? Oh my gosh. Okay. Uh perplexity is not helping me out here. My recollection is that um only about somewhere between 10% to I've heard 10% I think I've heard 30% of of goods are imported which means only
10:13 those percentages are subject to tariffs. Anything manufactured sourced and manufactured in the United States is not going to be impacted by tariffs. Okay. Now, it's important. This is an important issue. Uh yesterday, I was looking to buy uh a knife for cutting something called form foam core. It's a it's a type of material that has it's kind of foam in the middle with thin cardboard on either side. And and there's something called a utility knife. Okay? And I was looking for a utility knife that was made in the
10:49 United States. Could not find one. Okay? The best I could find was made in the United States, materials sourced from outside the United States. Okay, that's different than something that's made and sourced in the United States. And it's an important distinction because for goods that are made with materials sourced in the United States, tariffs will not impact them at all in terms of in terms of their, you know, their cost structure. For goods that are made in
11:25 the United States with materials sourced outside of the United States. So when those materials are brought into the United States, those materials may be subject to tariffs. Okay. So, if they're made from steel and that steel w is made in Japan. Okay. So, I I don't know the specifics of the the the trade deal that evidently was agreed to yesterday between the United States and Japan. Uh but if if part of that agreement is that steel imported to the
12:02 United States from Japan ha h has you know is is liable to a tariff. So then that raw material steel okay the cost of acquiring that raw material for a US manufacturer is going to go up. Okay. now. And then for something that is both manufactured and ma that's manufactured outside the United States and sourced from material and and made from materials sourced outside of the United States. Okay. Very likely that that item is is subject to
12:38 tariffs. Okay. So those are the three categories of goods that we we would potentially buy. uh manufactured in the United States from materials sourced in the United States, not going to be tariffed. Made in the United States from materials sourced outside of the United States, probably going to be subject to tariffs on some on some level. Made outside of the United States from materials sourced from outside the United States almost for sure going to be tariffed. Okay, those are the three categories.
13:14 Now um why is it important? Because the degree to which tariffs will impact the cost structure is going to vary based on which of the three categories particular product is in. Okay. And so, um, we're we're talking, for example, um, as I recall, Japanese automobiles, uh, that are made in Japan, okay, and imported to the United States. So, I think they're going to be subject to a, if I remember correctly, a 15% tariff,
13:50 okay? Now, the US automakers are upset because the tariffs on vehicles they make in Canada or Mexico are going to be subject to a 25% tariff coming in from Canada or Mexico. Okay. Now, we haven't concluded trade deals which with either one of those countries yet or revised trade deals, right? There is the the you know sort of North American trade agreement that we have. It has a different name now. It
14:25 was it was negotiated when President Trump was in office the first time. Okay. But that agreement is is for all intents and purposes up for renegotiation. Okay. So depending on how that works out, you know, domestic so-called domestic automobile companies which are essentially Ford and GM, okay? because Chrysler, which used to be domestic, is now owned by Stalantis, which is a a European company. Okay? So, they're concerned that they're going to end up paying higher tariffs than
15:02 Japanese automakers do, right? So, what you know, what is all of this about? Well, in theory, it's about bringing manufacturing back to the United States. Okay? So rather than manufacturing cars rather than domestic car car companies manufacturing cars in Canada or or Mexico, in theory, it would be less costly for them to do so in the United States because then they wouldn't have to pay tariffs on the cars that they're importing from Canada and Mexico. Uh but but it's not that simple,
15:38 okay? because the wage the wage levels are different in Mexico, Canada, and the United States. There's not one global labor contract for say Ford or for General Motors. Their labor contracts, they have separate labor contracts for each country. Okay? So, their labor costs are probably lower in Mexico than they are in the United States. and they're probably lower in Canada also than they are in the United States. So if they bring
16:14 manufacturing back from Canada or Mexico to avoid the tariffs, it it may not make economic sense because they're going to end up paying higher labor costs and so they're still going to be faced with a higher cost structure. Okay. So, when the automobile companies complain about the the 15% tariff for Japan being unfair, I mean, maybe it is, but the reality is their cost structures are what their cost structures are. and and the fact that they're paying uh a higher tariff rate to bring in cars from Canada or
16:51 Mexico. That's just one of many many factors that affects the cost at that the cost for them to manufacture a car. Okay? And so that's what I'm saying about it's oversimplified. you know, when when when you know, I hear these reports about Ford and GM complaining, my first thought is, well, but that's just one issue. What are the other factors that affect your cost of manufacturing, right? And and that that could very well be one of the reasons why
17:27 Japan was content to pay a 15% tariff. Okay? because they may think that whether the US whether Ford and GM bring manufacturing back to the United States or not, they may be calculating we can still undercut them either way, right? Because as a car company, they probably have a pretty good idea of the broader cost structure faced by GM and Ford. And so they're not, you know, they're negotiating with them and within with that broad view. Whereas in the news,
18:02 we're only we're only hearing about a narrow aspect of this. And like I said, I've been listening to numerous business podcasts for the last few weeks and I don't hear these issues discussed with any kind of complex any kind of like the complexity that that's actually involved. Okay. So that's a second issue is tariffs don't exist in isolation. They're part of the overall cost structure faced by a business. Okay? And they need to be viewed within that.
18:37 Okay? Now, by the way, that's an argument against my principle, which is that I want to see, you know, low taxes, especially I mean, I want to see low taxes for people and businesses, right? But the reality but the truth is what the truth is. Okay? So although it doesn't support my position, it wouldn't be right for me to hide this from you. Uh you need to know about this so that you can make an informed decision about it. Okay. And then the third point I want to cover is
19:12 in the end who pays the tariffs. Okay. So the tariffs are paid by the importer, the company that's importing the good from overseas. That's who is legally obligated to pay whatever it is, the 15% tariff or 25 or whatever it is. Okay? However, just because the the importer is paying the tariff, that doesn't mean that they're bearing that expense. Okay? Part of the cost of the tariff may be in
19:49 essence offset by the exporter lowering the price at which he's selling his export in order to reduce the impact of the tariff. Okay, that can happen. Now, is that happening? If so, how much? Don't know. And again, I'm I I mean, I I I I I think I heard one person talk about this a little bit, but you know, some companies are absorbing the tariffs, okay? Because um when you
20:24 listen to reports about we're in earnings seasons for for large companies, large publicly traded companies. When you hear the earnings reports, some of them are announcing that their earnings declined because they absorbed the impact of tariffs. What that means is they drop their prices enough to offset the tariff that the importer pays so that the the the cost to that importer essentially stayed unchanged even at unchanged even after paying the tariff. Now that that may be
21:02 fine for now, but what's going to happen in the long term? Okay. So just because exporters some exporters for sure not all but some evidently right just because some exporters are absorbing or partially absorbing the cost of tariffs right now doesn't mean they will continue to do so. Okay. So there's the shortterm effect and there is the long-term effect. And longer term as as tariffs as all these
21:38 trade agreements get worked out and all that kind of all that you know all that sort of you know I don't want to call it noise that seems to be you know minimizing it but as all of the um turmoil uh of of the of the trade negotiations starts working itself out right companies will see a new cost structure Okay. And the fact of the matter is as as things level out in terms of what the what the new rules of the game are,
22:14 okay, companies will be less willing, I should say exporters will be less willing to absorb those costs because the bottom line is they won't have to. they'll start passing those costs through to their customers, okay, the importers. And the importers won't necessarily absorb those costs either. So in the end, those costs will get reflected in the prices that consumers, we consumers pay. That's
22:49 inevitable. They'll get they'll all get worked in. Okay. Now, will we see permanent lower earnings for businesses as a result of tariffs? Probably not. Because the incentive is always for a business to maximize its earnings. Right? Now, we as consumers, we want to maximize our wealth, right? And in theory, we want to do that by limiting our costs. Okay? But the the difference is that for
23:27 any given product, there may be, you know, there's a fixed number of suppliers of that product. Even for something like a utility knife where it may seem like there's, you know, 50 different suppliers of utility knives, in reality, there's probably one or two factories in China that make those utility knives that they then brand for all the different companies that sell utility knives. But if you were to buy all of them and look at them, you would you would clearly see that there's
24:02 there's no difference between, you know, most of them. Okay? And we see this here in the United States, like with food products. So it used to be that um, you know, any food product you saw was manufactured by a specific manufacturer. Now a lot of food manufacturers even well-known food manufacturers they will do what are called white label products where their manufact
24:40 and and it'll be sold for less than the name brand but it actually is the same product. Okay. So these are the kind so there's a limited number of manufacturers and and so for anyone who wants to sell those um you know those particular goods it's going to be one of whatever the handful is. Okay. And and what why that's important is because there's, you know, hundreds of millions of consumers and we all act in our own individual self-interest but which but that doesn't give us the
25:18 kind of purchasing power. Okay, that that can necessarily offset the manufacturers's incentive to maximize their earnings or maximize their profit. Okay. Only when it typ not not I shouldn't say only when but it typically where you see uh um uh sellers you know sellers of goods pinched is during a recession when consumers are having to tighten their belts and they just can't afford a lot
25:54 of they can't afford what they used to be able to buy before. And so now uh manufacturers and sellers they have to tighten their belts as well. Okay. But as the economy you know as as an economy recovers and goes into expansion so consumers end up having more money to spend and so manufacturers and sellers raise prices um and they they regain their margins their profit margins again. Okay. So that's not to say that we're powerless. We're not. Um we can
26:31 always, you know, look around for a a a better deal in buying a particular product or or in buying a particular service. We can just not buy it and conclude that it we don't need it. I know I' I've done that a lot this year. There's several things I was thinking about this last night. I used to pay for Sling and some other uh service and I cancelled it the beginning of this year. Don't miss it. There's so much streaming material for free. Uh you know, as long as you're okay with watching a few commercials now
27:07 and then and I just tune them out, frankly. So I, you know, I just I I don't I'm don't care what streaming services cost. I don't pay for any of them and I won't. none of them are producing anything I want to see badly enough that I'll that I'll pay for a streaming service. Now, that's me, right? You you may have a different perspective. You may really love sports and so you you know the only way to see sports these days is through streaming services, right? That's whether it's the NFL or the NBA or whatever it is, right? So then, you know, that's a decision, you know, that that that you'll make.
27:42 But, you know, there's a lot of there's a lot of pricing power on the streaming services, for example. Um, because if they're if they're the, you know, if they have the NBA contract or the NFL contract, right, they're one, they may have, you know, Monday Night Football, um, and they may have Thursday Night Football as well. And so, where else are you going to go to see football, right? I mean there are other contracts but there's a limited number of places where you can go to see professional football right it's it's it's not like me I'll I'll watch something that interests me it doesn't you know I'm I'm not wed to
28:19 you know a particular thing okay so eventually um manufacturers sellers service providers they regain purchasing power and so the the cost of tariffs will get built into their cost structure and passed on to us their customers. Okay? So, all of this is to say that anyone who's telling you they know how tariffs are affecting the economy and they know what you should do as a result
28:55 of the tariffs, I would argue is is foolish or they're just not telling you the truth. The whole situation is way too dispersed and it's not clear at all yet where all of this is going to end up and what the eventual impact will be. Probably the only thing we can say is to the extent that tariffs become a permanent way for the federal government to collect taxes.
29:32 Okay. It will raise the cost of goods and services in the United States. However, because the the the big the so-called big beautiful bill was passed um whatever it was a couple three weeks ago now, right? So, income tax rates aren't going to go up, right? So, uh, you know, in in the end, are we as consumers actually going to experience a
30:08 large increase in the cost of living? Well, may maybe not. Maybe not. Now, the government has, you know, record deficits, over a trillion dollars every year, right? That can't go on forever. uh you know eventually we will we will not be able to finance our debt. People will be unwilling to to buy US government debt. And so you know right now tariffs are evidently collecting about $30 billion a month. That's about $360 mill billion dollar a year. Now that in no way um reduces the
30:46 deficit to zero but it reduces it by I don't know 15% maybe 20% something like that. So you know maybe this will turn out to be uh a better way to tax us as Americans than you know raising the income tax rate. Okay. My concern is, you know, who ends up paying the tariff taxes, right? Is it, you know, because people at at the lower end of the economic scale,
31:21 if if the costs of things like um food, you know, the sort of basics of life go up, it's harder for them to absorb those higher costs. you know, if the costs of of, you know, luxury cars and super yachts go up, I I you know, who cares? I mean, the people who are buying that, they can afford higher prices. What does it really matter? Or they can just not buy them. If it's too expensive, they just won't buy them. And and and that's that, right? Now, for the people who manufacture those things, of course, that's a problem. If demand for them goes down, right? So you can see right away my even my indifference to
31:58 something like super yachts, it it it doesn't happen in isolation, right? Those yachts get built somewhere by probably skilled craftsmen and and if if you know the wealthy the super wealthy stop buying them, then the jobs for building them will decrease or go away, right? So then how is that what's going to happen about that? You see what I'm saying? So, you know, people say things like, "Well, the wealthy ought to pay more taxes." Well, okay, maybe they should, but that doesn't happen in
32:33 isolation, right? If they're paying more in taxes, what are they not buying, right? What are they not doing with the money? What are they and what are they not investing any longer? Right? So when we hear these sort of simplistic solutions to economic challenges, we need to look more deeply into them to really understand what's going on. Okay. So I a longer intro than I meant to give, but I think it's very important we understand these underlying economic
33:08 issues uh you know as as we now look at the data. Okay. So, let's let's take a look at first of all the consumer price index. Okay, I'm going to have to go through this more quickly than than than normal to make sure we get it. So, here we Oh, we're going to increase this. Okay, so the um the CPI for all items went up 3% in in June um reflecting uh an increase in the cost of housing. Okay. So, um uh and and year and that was month over month um year-over-year
33:45 um prices went up 2.7%. Now, food went up 3%, energy went down8% and all items minus food and energy went up 2.9% year-over-year. This is higher than the Federal Reserve's target of 2%. And it's also um it's also higher um than it has been. And and so this is what people are pointing to say see uh you know tariffs are causing inflation. Well maybe maybe they are but it could be other things as well. And and when we
34:21 when we keep in mind that tariffs are affecting just you know only a certain percentage of what we buy. Okay. And you know, so for example, tariffs are impacting uh the price of cars presumably, but if we didn't, you know, if you didn't buy a car, so then tariffs didn't affect you. At least tariffs on cars didn't affect you, right? And so um it's, you know, it's it's difficult to say yet um whether tariffs are working themselves into um
34:56 inflation. Although um look it would be better um if if um inflation less food and energy was you know at two two.5% or 2.4% that would clearly be better for the economy. Okay. But but but it it's not so it's by but 2.9% is is not horrible by any stretch of the imagination. Okay. So in terms of major Oh, I'm sorry. Wait. Uh in terms of food. So, you know, we've been seeing this trend all along. Food at home went up by less, 2.4% than food away from
35:33 home 3.8%. Okay? And um you can see full service meals went up 4%, limited meals went up 3.5%. And food at home, you know, again, the biggest increase is in proteins and uh non-alcoholic beverage uh materials. Okay, those those are the two those are perennially the two that go up the most. Okay, energy once again we see energy commodities going down. Gas prices, gasoline prices have been uh hitting, you know, lows of late and they were down almost 8%.
36:09 Whereas energy services went up almost se went up 7 and a half%. So, and here you'll see it. See, gasoline went down another 8.3%, fuel oil went down 4.7%. It's it's the summer, it's warmer, people don't need fuel oil as much. That will likely change as we head into the uh mid to late fall and and and winter. Okay. And then uh electric uh energy services, sorry, electricity went up almost 6%, natural gas went up over 14.2%.
36:44 Right? Again, this is this is a trend we've been seeing for a long time now. And then in terms of all items, less food and energy. So commodities went up 7%. Not a whole lot. Now see, here's the thing. Okay, commodities, many of which may be subject to tariffs, only went up by 7%. So the increase in inflation uh for all items less food and energy is really being driven by services. Okay. So, shelter, medical care and transportation services. Now,
37:19 there may be some aspects of of um materials that are necessary to provide these services that are that are a part of you know their increased costs. Okay. But, um it it you know it's it's hard to say. Okay. And then commodities less food. So, medical care commodities right went up. 2%. Now, one of the areas that's really at issue is, for example, pharmaceuticals because most of our pharmaceuticals are not made here in the United States. So, we're not seeing uh
37:54 increases there. Where are we seeing them? Tobacco prices went up again, right? And and by the way, tobacco prices going up, one of the reasons is because they pay a lot of taxes. Okay. And then used cars and trucks went up, which is what uh wait. Yeah. One, two, three. Yeah, used cars and trucks prices went up quite a bit. Um gosh, it doesn't want to let me see. It looks like it went up about 2.8%. Okay, almost 3%. But presumably, you know, that's not because of tariffs. So, I I I don't think we're really seeing um
38:31 what's happening on the inflation side. I think we it's going to take longer for us to see really how tariffs are are impacting that. Oops, sorry. I hit the wrong button. Okay, now let's real quickly we'll look at I always look at Los Angeles in terms of a local inflation rate. So, uh let me open this up again. Come on. There we go. Okay. So, um you know, looking at the Los Angeles, so inflation in Los Angeles, uh was up 3.2%. Again, this is this is we see that we've been seeing this now for quite a
39:06 while. Inflation in LA in the LA area is higher than it is nationally. Okay. Uh the food index actually uh declined 2.2%. Energy fell uh uh 2.1%. Um gas gasoline prices went down 2.7%. Okay. Um it was really in um all items less food and energy. Those went up.3%. Um, and so that's it's with the core in so-called core inflation that that keeps the uh consumer price index for the LA
39:41 area going up higher. You can look at this for for your area just by searching CPI and and you know the city or town you live in. Okay, let's now let's let's look at uh let's look at let's look at earnings. Okay, so uh earnings for June 2025 went down a penny from 1130 last month to I'm sorry to 1129 last month from $11.30 the previous month and and that translated into a decrease in real
40:17 average weekly earnings as well of about 5762. Okay. uh and um average weekly hours worked also went down which is probably what uh accounted for a drop in in real earnings. Okay. So um you know even as prices are still going up uh earnings are essentially staying flat or or decreasing slightly. Uh and and so uh you know again this is for you know for
40:52 for those regular people like you and I um this is unfortunately not not a great trend. Okay. Um we we really need and and hopefully uh you know when the the dust settles on the trade negotiations we'll start to see uh earnings turn around and we'll start to see increase in earnings. Okay. Next let's look at unemployment. Okay. So the unemployment rate for June ticked down slightly to 4.1%
41:27 from 4.2%. 2%. Okay. For men over the age of 20, uh the unemployment rate is 3.9% even with with the previous month. For women, okay, the uh unemployment rate went down to 3.6%. I'm sorry. Uh wait, here we go. And where's May? Yeah, it went down to 3.6% from 3.9% uh the previous month. So, the trend has been good for women. And then for teenagers, you can see that it went from
42:04 uh where's May? Yeah, it went up an a full 1% from May from 13.4 to 14.4%. Now, um that I suspect and we'll see this when we look at uh labor participation rates, but as we head into the summer, it could be more teens are coming into the workforce, which is creating an increase in uh in uh in unemployment among teens. Okay. Uh I normally cover demographics, but we're short on time. So, um I'm going to I'm going to move on to the labor force
42:40 participation rate. And here we go. Civilian civilian labor force participation rate. Okay. So the labor force participation rate uh overall went down a tenth of a percent from uh May to June. Okay. From from 62.4 to 62.3. That's not a good trend overall. And you can see historically that it's lower than it you know it's it's it's very low compared to well not very low but it's s it's significantly lower than it was 20 years ago. This this is
43:17 not a good trend for uh for employment overall. Now among men 20 years and older the labor force participation rate is 70.2% in June from 70.1%. So a slight change. Um but again it's a slight change down which which hopefully that won't continue for women. Okay. The labor force participation rate in June is 58.5% versus May 58.6%. So again we're seeing a a a pattern of the labor force
43:53 participation rate declining a tenth of a percent. And then for teens. Okay. Okay. Well, so this is here it it went looks like it went down. In May it was 36.2%. In June it's 35.1%. So at the same time that unemployment for teens went up 1% the their labor force participation rate went down a percent. Very bad trend for teens. That means that teen despite um 1% of teens
44:29 leaving the workforce, they're still increasing unemployment. Okay, this this is this is not good. And you can see, by the way, that teens are at 35% whereas uh 20 years ago they were at 43%. That's an 8% uh change. And let me get rid of teens now. And you can see women have held a little steadier, 58.5, whereas 20 years ago they were at 60.3. So only about a 2% difference. But men were at almost 76%
45:04 and they're down at 70%. Right? So the trends in labor force participation overall are not good. All right, let's go on now and let's look at employment by industry. Okay, so monthly employment changes. Okay. Uh what we're seeing is uh in June we see 73,000 net more government sector jobs and
45:39 we're seeing 51,000 uh net uh health and education jobs which is primarily driven by government spending. So the so by far the two largest gainers in employment are really driven by government spending. The other two big winners are uh leisure and hospitality, 20,000 new jobs and construction, 15,000 new jobs. Now, the losers are manufacturing, right? So, even as the the tariffs presumably are going to expand manufacturing here in
46:15 the United States, uh we're seeing, you know, manufacturing jobs decline overall. Wholesale trade is down. That shouldn't be so surprising. Okay. Uh but transportation and warehousing is is is up. Okay. But these other ones, you know, fairly smaller amounts. Okay. So, let's look where are government jobs increasing? Well, this is following the trend that we've seen. Federal government jobs are decreasing, but they're being far more offset by state and local government jobs. Now, if government jobs have to increase and and
46:50 maybe they do or maybe they don't, that's that's a bourbon discussion. it's better for them to increase on the state and local level closer to where their constituents are, right? And that's kind of the point of of shrinking the federal government is is to in essence force government services closer to the people receiving those services. So the idea is there's no point in sending money to Washington DC essentially to then have Washington DC send that money back to the states from which it came. Okay. So that's where you're seeing job
47:26 increases. Um and you're seeing them in state government education. That's that's really the big gainer in terms of of that. And then local governments again it's education you're seeing um the the larger gains. Okay. in terms of private education and health services. So, private education declined, which is which is what we've seen for quite a while now, but health care and social assistance have increased and those are both uh driven by uh by government spending frankly. So, um you can see
48:01 across all sectors uh they're increasing. And then finally, construction. So, um it's specialty trades. This is the second or third month in a row where job increases have been in specialty trades whereas construction of buildings and heavy uh and civil engineering have decreased. Okay. And then um oops uh wrong one. And then uh okay and then leisure and hospitality. So arts, entertainment and recreation and accommodation food services both increased. And again this is the trend we've been seeing. Performing arts, spectator sports, etc.
48:38 increased. Museums, historical sites unchang almost unchanged, little small decrease. Amusement, gambling and recreation increased. Okay. Where and then food and services. So, accommodations decreased while food services and drinking places increased. Okay. So, um the these have been trends we've been seeing now for quite a number of months. on the decrease side manufacturing. So durable goods and non-durable goods manufacturing decreased. Uh now interestingly enough uh furniture manufacturing increased so
49:14 did transportation equipment and electrical equipment and appliances those increase as did non-mater non- metallic mineral products. Okay, but computers decreased, machinery, fabricated metal, wood products, all of those decreased. Okay, now let's uh let's look at and then non-durable goods. So food manufacturing and plastics and rubbers decreased pretty much all the rest were little changed or increased. Paper manufacturing increased um etc. But it's these two major ones,
49:49 food and plastics and rubber decreasing that caused an overall decrease in uh non-durable goods manufacturing employment. Okay. Professional and business services also went down. So professional scientific and technical services that's that's where I am. Those decreased. So I guess my you know my competitors are leaving although not my competitors legal services accounting um those those increased. Uh I don't know. and and then more of the sort of computer and and and uh advertising. Those are the ones more that decrease.
50:24 Okay. And then um Okay. So th those are the the the sort of losers and gainers. And then looking at the year-long picture, so we're six months into the current administration's uh time in office. And so we're starting to see a clearer picture of how um employment might be, you know, might change um under, you know, under their under their administration. Um and so we're starting to see the monthly figures in the 12-mon figure starting to
50:59 align, whereas, you know, four, five, six months ago, they weren't they weren't uh as closely in alignment. Okay? because how the previous administration was handling things resulted in different employment patterns. But you can see here that construction went up, private education health services went up, government went up, leisure went up monthly and yearly. Okay, and manufacturing has been uh down as have professional and business services. Okay, let's look at the next one which is okay. Let's look at how's the housing
51:34 market. Okay. So, um I always start out by looking at California. So, the median sales price of a home in California uh went up about 1% year-over-year. Median days on market increased eight uh up by eight days year-over-year. So, the market is softening. Okay. You can see that that the the graph here is is not as steep as it was at other times. Um it's it's leveling off. Okay. That's good news for people who want to buy a home. Okay. And the number of homes sold uh went up about 1.3% year-over-year.
52:11 Okay. Um the fastest growing sales prices are in San Marcos, California, Dana, Dana Point, Newport Beach. Look, you're looking at, you know, you know, doubledigit increases, you know, in all of these markets. To be honest with you, I don't even know where Lincoln, California is. I do know where Viceel is. It's beautiful in the Central Valley. Okay. And uh okay, so home supply is up 16% year-over-year. That's one of the reasons why we're seeing price increases slow down. Okay. Number of newly listed
52:48 homes though uh went down. So people are seeing the market is slowing down and so they're not necessarily listing their uh homes for sale. Okay. And then finally, okay, here we go. So, um, US migration trends, where are people moving from? Still, California, Illinois, California, and to a lesser extent, Washington, uh, North Dakota. The blue states are where they're moving from. The deeper the blue, the more people are moving.
53:23 And the darker the orange, the more people are moving there. So Florida still is the top destination with the Carolinas and Tennessee and Arizona following them, you know, uh, most closely. And then, you know, Texas is is not um as as hot a place to move to as as it as it was. So, um, the 10 areas people are moving to inbound. Okay, there Sacramento is the one place in California where people are moving to. But you'll notice 1 2 3 four of the others are Florida and then you've got
53:59 South Carolina, Maryland, uh Arizona, and uh Nevada. Okay. And where are they moving from? Top destinations, Los Angeles, New York, Seattle, San Francisco, Washington, Chicago, Philadelphia. You can see it's all almost all large cities. Hartford is not a large city, but other than that, it's all large cities where people are that people are leave were leaving um in in the latest survey. Okay. Normally, I go over another market, but we're we're I'm coming up on on on time here. So, I'm going to I'm going to take a quick look at uh rental rates.
54:37 Okay. All the links to these will be in the show notes so you can you can look at these things yourself. So, uh, you here's various markets. I'm going to look at Los Angeles. Okay. So, uh, month-over-month change in average rent up $25, but year-over-year change down $25. Okay. So, you can see that, um, basically, um, yeah, here we are. 2025 uh you know rents uh you know it's it's essentially um uh you know didn't I mean here they're
55:14 saying they didn't really change um so um so there's this is the same thing we saw before where um what's reported here and what's reported here don't quite align but the bottom line is is is rents are are relatively stable in Los Angeles right now. Okay. And the market is is warm but not hot or cold. Okay. And and you can look at some of the submarkets here. Okay. And I usually I I compare this with uh Omaha. Let's see if I can get Omaha here.
55:51 Omaha, Nebraska. Okay. So, Omaha, Nebraska 2. Uh average rent was up $2 month overmonth. $150 year-over-year change. Okay, not again not really reflected in this chart. The market is warm as well. Now, we are seeing the markets warm up because over the summertime people do move and so I think we're seeing that reflected um in these statistics. Okay, the last thing I want to cover is the um index of consumer or the survey of consumers consumer sentiment. Okay, these are done by the
56:27 University of Michigan. Now you can see the month-over-month changes are all positive. So they so in general consumers and this has been the trend for the last month or so a month or two it is improving although it is still the index of consumer expectations are still down almost 15% from a year earlier and almost 7% lower from a year earlier in terms of the index of current uh consumer sentime I mean just yeah current consumer sentiment Now, current
57:02 economic conditions are actually higher now uh by 6 1.5% than they were a year ago. So, so that's good. One would expect that we're going to see consumer sentiment continue to improve. Uh I I I would be willing to bet there's a partisan divide in this where people who you know voted for or are in favor of the current administration are much more uh have a much more positive sentiment than those who oppose
57:38 the current administration. Right? And then there's those people who are in the middle who don't have a strong partisan uh perspective and so their their sentiment is probably in the middle, right? And that's that's what we would expect. Uh that's how things are in in the country these days. So a little bit different uh u information on economic echoes this month. Um, hopefully it gave you some good food for thought and as you you you know work out what what do I need to do for my family, right? So, you
58:16 know, the tariffs do loom large. Uh so maybe, you know, maybe a reasonable decision is to say, well, until I know what's going to happen with them, I'm going to put off uh decisions that to buy things that would be impacted by the tariffs, like, you know, buying a car. Okay. On the other hand, if you think that tariffs are likely to end up higher in in the final uh situation than they are now, so then maybe now is a a good time to you know, buy a car. Okay? But the main thing is is don't buy into the the simplified rhetoric of uh you know,
58:54 I know what's going to happen and so here's what you need to do. All our circumstances are different and it's not at all clear how tariffs over the long term are going to impact the economy because there's too many working parts. Okay. I want to cover one more thing and I hope you'll you'll you'll stick with me on this. The other big economic news is the uh dispute, we'll call it, between President Trump and chairman of the Federal Reserve Board uh Jerome
59:30 Powell over whether interest rates should go down or not. So, this this has been what I'm going to tell you now. It has been discussed on some uh some of the business news that I've been listening to the last couple of weeks, but I think it's not emphasized nearly enough. The first thing is the chairman of the Federal Reserve Board does not have unilateral authority to control the federal funds rate. That rate is decided by the board of Fed governors. Okay? and
60:05 they look to reach consensus. Now of there there are times when one or two will dissent from the majority's decision but they do look to reach consensus among all governors. And so it's an oversimplification to suggest that it is uh Jerome Powell solely responsible for setting the federal funds rate as the chairman. He does have a lot of influence, but he's not the one who sets the rate all by himself. Okay, this isn't a comment on
60:42 whether he's doing a good job or a bad job. That's a bourbon discussion. It's just the way the Federal Reserve system works. The chairman of the Federal Reserve Board does not have unilateral authority to set the Federal Funds rate. It's set by the board of governors. That's number one. Number two, it is the board of governors who elects their chairman. Okay. So, if if Jerome Pal were to decide to resign early or to resign the chairmanship and just take his seat as a regular member of the
61:19 board, okay, President Trump can nominate a new chairman of the board, but that nomination can be overridden by the larger governing body itself. Okay? Now, it hasn't happened, as far as I know, in my lifetime, okay? But but given the sort of fraught uh uh situation going on right now, it's it's not outside of the realm of possibility that something like that could happen. Okay? And so, so again, we tend to think of these things
61:56 as being very this is how it happens, this is how it works. That that's not that's not the case. There's there's more complexity in all of this than than is generally discussed in the news. And the final thing is while the general economic impact of lower interest rates is to increase economic activity and that's why presumably President Trump is pushing for the Fed to lower interest rates. There's an there is another factor in
62:31 this whole thing and that is as I mentioned toward the beginning of the show. The federal government runs trillion dollar deficits. The way they do that is by selling government securities to fund that deficit. So the federal funds rate could drop. Okay. The board of governors could drop could vote to drop the federal funds rate, but that may not cause interest rates in the economy to drop because the deficit still needs to be financed. And a large part of our deficit is
63:07 bought by China and Europe. And if they decide that they're not, you know, they don't want to buy government debt at a lower interest rate, the interest rate on that government debt is going to have to be increased in order to get them to buy it. That's just how it works because we we have these essentially structural deficits. They've got to be covered and so the debt has to be sold. So to a certain extent the US the United States Treasury is at is at the mercy of markets in terms of the
63:43 interest rate they have to pay on the debt that's sold to finance the deficit. And so it's not outside of the realm of possibility that the federal funds rate could drop, but overall interest rates won't necessarily go down very much because the interest rates that need to be paid to finance the deficit have to stay at the levels they're at or maybe even increase. Okay. The federal funds rate is looked at as one indicator of what banks will charge, for example, consumers on loans and businesses on
64:18 loans, but it's not the only thing. It's not particularly relevant when it comes, for example, to setting mortgage rates for home purchases. Those are usually tied to more of the 10-year Treasury rate. Okay? And so just because the federal fund rate federal funds rate drops that does not mean you know in Latin ipso facto therefore that the 10-year treasury rate will drop. It may but it doesn't have to. There's there's no law that says federal funds rate went down 10-year Treasury rate goes down. These are complex pricing mechanisms
64:55 that are influenced by quite literally thousands or even tens of thousands or hundreds of thousands of purchasing decisions made worldwide. Okay? They are not nearly as they're not under the control nearly as firmly as as they're sometimes made to sound in the news. Okay? So, you know, get informed. Um, I I hope you'll look to me for your information. I hope you I hope you'll appreciate I'm trying to give you the the, you know, the most accurate information and with
65:32 all of the complexities. If you if you didn't understand some of the things that I talked about today, uh, post a question in my social media. All of the links will be in the show notes. Post your comments, your thoughts, you know, always happy to hear them. If it's something private, you can send me an email. My email address will be in the show notes as well. More so than I think maybe any show I've done in the last few weeks. If you like this show, I would really appreciate it if you would suggest it to a friend or relative. I think it's so important for
66:08 us to gain greater financial literacy. and what you hear in the main in in in just the sort of you know daily news they don't take the time to explain the complexities of what goes on in the economy and that's a shame because we need to understand that better in order to make good decisions for our families ourselves etc so I thank you very much for for watching thanks for hanging in a few extra minutes uh today uh to get to the end of the show great to see some live viewers here. And uh this is my
66:43 last show for this week. So I'm going to wish you a wonderful rest of the week. I'll see you next week on my regular schedule. And signing off as I always do. Marie darling, you are my bell. Courage.