The Low-Fire Economy Is Picking Winners

Debt Keeps Growing (Sponsored)

Elon Warns "America Will Go Bankrupt". Trump's Plan Inside.

America’s national debt has crossed $40 trillion, or roughly $117,000 for every person in the country.

You will never get a bill for it. But investors can still feel the pressure through higher borrowing costs, inflation, and the shrinking purchasing power of retirement savings.

That is one reason central banks have been adding gold while more retirement investors look for ways to diversify beyond stocks and dollars.

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What You're Really Looking At

If you want a simple picture, think of the job market as a room where the doors are almost locked in both directions. Few people are being shown out, and few are being let in. Continuing claims rose to 1.728 million, the highest since late August, which tells you that people who do lose a job are taking longer to land a new one.

For the roughly 159 million people on payrolls, though, job security is high. For your portfolio, that matters more for spending and credit than the monthly hiring count does. A worker who keeps a paycheck keeps paying the card bill, keeps traveling for work, and keeps showing up in a payroll system every two weeks.

How The Setup Built Itself

Employers spent 2021 and 2022 fighting over scarce workers, and many still remember how costly it was to rehire. So when growth cooled, they slowed hiring instead of cutting staff, which is exactly the pattern you see in the claims data. Payroll growth has averaged only about 45,000 a month over the past year, while the unemployment rate has held between 4.1% and 4.3% since March.

You can see the cost of that trade in paychecks. Average hourly earnings rose just 3% from a year earlier in September, the slowest pace since May 2021, while consumer prices rose 3.7%. Workers are keeping their jobs, but their raises are trailing inflation, and companies are protecting margins by holding headcount flat rather than paying up for new hires.

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Why This Sticks Around

Three forces keep the low-fire pattern in place. None of them looks likely to fade before year-end.

• Labor hoarding is a habit now. After the hiring scramble of 2021 and 2022, management teams treat experienced staff as an asset they don't want to lose, which keeps layoffs low even as orders soften.

• A slower-growing labor force needs fewer new jobs. Economists estimate the break-even pace of hiring has dropped sharply, so weak payroll numbers no longer push unemployment up the way they once did.

• The Fed isn't riding to the rescue. In a Reuters poll, 94 of 100 economists expect a hold on October 28, and all 100 expect another hike in December. Without layoffs, there is no trigger for rate cuts.

That last point is the one that should shape your portfolio. Higher-for-longer rates and steady employment together reward businesses that earn interest on cash, lend to people who stay employed, and collect fees without owning heavy assets.

How This Reprices Everything You Own

If you own consumer lenders, the low-fire economy is better news than the hiring data suggests. Card losses track layoffs, not job openings. As long as weekly claims stay near 200,000, charge-offs can keep improving even if growth stays sluggish.

If you own companies that need fast hiring to grow, such as staffing firms or businesses selling to new hires, the picture is worse. Their revenue depends on job churn, and churn is close to the lowest it has been in decades. The same goes for any thesis built on a big wage-driven spending boom, because real pay is slipping.

Debt Keeps Growing (Sponsored)

Your Share: $117,000. The Bill Arrives Differently.

America’s national debt has crossed $40 trillion, which works out to roughly $117,000 for every person in the country.

No one is sending you a bill. But investors can still feel the pressure through inflation, higher borrowing costs, and weaker purchasing power.

That’s one reason more retirement savers are looking at gold as a way to diversify beyond traditional dollar-based assets.

See How Gold Can Fit Into a Retirement Portfolio Before Debt Pressure Builds Further

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What the Data Says About Spending

Employed consumers are still spending, but they are choosier. Lodging is a good example: Wells Fargo now models 4.3% U.S. revenue-per-room growth for Hilton's third quarter, up from 4.0%, and expects the whole lodging group to beat its guidance. Business and group travel, which depend on stable corporate headcount, are doing much of the lifting.

Credit tells the same story. Synchrony, one of the country's largest store-card lenders, reported on October 20 that loans 30 or more days past due fell to 4.34% from 4.39% a year earlier. Households with steady paychecks are keeping up with their bills, even with borrowing costs this high.