The U.S. economy added 206,000 jobs in June, but the unemployment rate unexpectedly rose to 4.1%. Despite headlines touting a stronger consumer, rising inflation and high interest rates have led to a significant decline in consumer spending, particularly in the services sector. As the government may respond with increased spending, concerns grow over the impact on the U.S. dollar and exacerbated financial pressures placed on American households.

TRANSCRIPT:

Hi everyone. Thank you so much for being here. We have a lot to go over today in the economy, what’s coming next and most importantly, how it impacts you. Now, I think a lot of people read the news and they get really honed in on these specific individual short-term reports when really they need to be looking at the big picture, which is what we’re going to do today.

But first, this week, the U.S. economy added 206,000 jobs in June. The unemployment rate rises to 4.1%, unexpectedly. I don’t think that it was unexpected for you or for I or anyone who’s been reading these numbers closely month over month because we know that they are continuously being inflated. May alone was revised down by some 50,000 jobs that were never created in the first place. We also know that full-time jobs are decreasing and part-time jobs are rising.

But anyway, again, I don’t want to go into too much detail about this. I think what’s important here about unemployment, and I’ve explained this before, is that it’s a lagging indicator. So what I mean by that is that unemployment rates don’t predict recessions. As recessions happen, unemployment rates reflect that. So as businesses are struggling and they’re cutting jobs or not hiring as much, we could expect to see unemployment rates rise. Now, the reason why I remind you of this and go over this is because I want to know what’s coming next, what is happening in the big picture. And I found an article that I thought was interesting that says a key part of America’s economy has shifted into reverse.

This article says a vast swath of the U.S. economy is showing signs of weakness as unemployment rises to its highest point in more than two years. Consumer demand seems to have tapered off so far this summer. Now, consumer demand, as many of you know, is the foundation of our economy. Over the last couple of years, I have been exhausted by the number of headlines that have claimed that we have a strong consumer. The consumer is strong, the U.S. consumer is strong. Consumer spending saves us again, essentially, that people keep spending. Therefore, the economy is doing well when in reality we know that the consumer is not strong. The consumer is struggling. And before you out there say, well, what do you mean? I mean, consumer spending is hurting. Does that mean fewer people are going to concerts? No, it even says right here this ranges from restaurants to dental clinics. So when we’re talking about consumer spending on the decline, we’re talking about any kind of spending by consumers.

It goes on to say that the Institute for Supply Management’s latest survey gauges that the services sector has unexpectedly slipped into contraction territory, falling by about 5% from May to June.

That is significant, especially if it continues on that way. The article even goes on to say that this means we could see businesses hiring at a slower pace and slashing jobs. The overwhelming majority of employment in the United States is considered service-providing. Specifically, 86% of the 158.6 million total jobs in June. 86% are service-providing. And if we’re seeing a 5% decrease in consumer spending in services, that is significant.

And why are we seeing this decrease now? Well, the article goes on to say things that, again, I think we already all knew: the U.S. consumer is under pressure, still high inflation. Thank you for saying that because still high inflation is absolutely a thing. Well, right now I’m seeing a lot of headlines about inflation being under control. Today, this is your reminder that just because the rate of inflation is slowing, it does not mean that inflation is coming down. I talk to friends all the time who are so confused or so upset and say, why are they saying that inflation is under control? I still am feeling the pain in all these different areas of my life where I know prices have not come down. As a reminder, if inflation is slowing, it doesn’t mean that it’s coming down, it just means the rate at which it’s going up isn’t happening as fast. So while the Fed might be making improvement on inflation, we are still feeling the pain that is very much real.

The highest interest rates in more than two decades depleted pandemic savings, which is true. Americans have less savings now than they have in years and a growing load of debt. If you look at credit card delinquencies, they are on the rise.

Americans are taking out their retirement, their 401-Ks for hardship measures in record numbers. All of these indicators are here showing that the American household is struggling. And yet the majority of headlines like to say that the consumer’s strong. Well, we know that the consumer is not strong and we’re finally starting to see it. This is one of those moments where I wish I was wrong.

But again, why does this actually matter to you and to the big picture?

When we look at consumer spending depleting, when we think about businesses slashing hiring, and we know that employment’s at 4.1% or higher, depending on who you ask, what is the government going to do? Let me ask you, what do you think the government will do when the pain gets worse? When unemployment rises? Do you think that they’re going to potentially spend more to try and make it better?

The reason I ask is because I think we all know the U.S. debt is at a crisis. We are at a breaking point. And how much more deficit spending can we really take? The U.S. dollar is already worth significantly less than it was just a couple of years ago. So if all of this starts to reach a boiling point where people can’t take it anymore, what is going to happen?

The United States government is going to spend. They are going to spend and continue to spend even more than they already have to try and help the American people, which will ultimately just hurt the American people who have everything saved in these dollar-denominated assets. Because the more that our deficit grows, the more debt that we accumulate, the more dollars that are printed, the less that the dollars that are already out there are worth.

We also know that foreign interest and demand in U.S. debt has been declining. So as we continue to create more U.S. dollars, as the U.S. Treasury issues more debt, it’s going to be less favorable, something they’re not as interested in. And it means that you and I are going to have our dollars be worth even less than they already are.

Now, I think, again, a lot of this has already started to happen over the last couple of years, but things are going to get worse and as they get worse, we can expect to see what’s already been happening continue to happen at an even faster pace. This is why I’m so passionate when I talk to my friends and family about making sure that they’re protecting themselves with physical gold and silver. Because if the U.S. Treasury issues more debt, if more U.S. dollars are printed, it doesn’t impact the value. The true store of wealth is in physical gold and silver that have always maintained their value, even in recessionary times. So do you have any questions about that or do you want to learn more? That’s what we’re here for.

Otherwise, if you haven’t already, please like and subscribe. It means so much to us. It really helps us get the word out. And as always, I appreciate you being here with us today. I’m Taylor Kenney with ITM Trading, your trusted source for all things gold, silver, and lifelong wealth protection. Until next time.

SOURCES:

https://www.cnbc.com/2024/07/05/jobs-report-june-2024.html

https://www.cnn.com/2024/07/07/economy/stocks-week-ahead-services-sector-slow-restaurants-stores/index.html