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It would almost seem an error of judgment to consider the recent dip in unemployment and current low inflation as a threat to America’s current economic boomlet.
Even more unexpected is the labor force participation rate of people in the 25-to-54 age range has seen a surge of women workers entering the workforce, far greater than the comparable bounce-back by men in the same age category. Of even greater interest is that small, independently owned businesses, which suffered the greatest during the recent financial crisis, are booming forth like never before as the mid-term elections are just around the corner.
Another important factor in the current economic boomlet is that young women (aged 25 to 34) have reached new highs in joining the active employment market, while the labor force participation rate of the 25-to-35 male sector continues to wallow in the near all-time low inflationary economic comeback.
However, the Federal Reserve Board, which controls the nation’s overall interest rates, is facing a quandary. The new Fed Chairman Jerome Powell is facing increased pressure as to whether raising interest rates could affect America’s low inflation rate and receding unemployment and open the door to a future runaway inflationary spiral.
He is facing the question of how fast the Fed should lower its $4 trillion balance to its traditional level of $1 trillion. While this dilemma might cause Fed funds rates to change more frequently than the current tri-annual level, even the final 2018 amount called for could impinge on the continued expansion of the current economic expansion.
Another major factor that could have an unexpected impact is the use of international tariffs to allow America’s manufacturing sector to reverse its shrinkage, both in the expansion of existing factories as well as the additional blue collar and trained/skilled workers who will be called for to make this happen.
Unquestionably, the outcome of the Nov. 6 mid-term elections and events leading up to it also will generate major political reactions.
The shakiness of the equity markets, compounded by the export/import imbalance, will play its part in the eventual vitality of the overall 2018 economy, together with the reduction of the nation’s world-leading gross domestic product, which had reached an all-time high consumption rate of 68 percent.
While President Trump’s universal tariff approach will certainly gratify America’s independent businesses, already burdened by the death tax, it is inevitable that the overall cost of consumer products will take a substantial leap forward as conglomerates are being encouraged to return their manufacturing facilities to the United States.
The Opioid Genie
Who would have thought a mere decade ago that opium would spread like wildfire as it sought “legitimacy” and legalization, supposedly as a painkiller, in much of the United States?
While the original legitimacy objective was meant to be meritorious, the ultimate result of opioid legality may prove unstoppable in the future. Like other well-meaning objectives, the opium craze in any form could have far more negative consequences.
More people are already dying of overdoses as new synthetic opioid drugs can be more potent than other such drugs. Wide-ranging addiction will create bigger worries for businesses already struggling to fill positions.
An increasing number of employers are aware of the problem but most are still unprepared for it. Scattered surveys indicate that 70 percent of businesses are already starting to deal with this monstrosity and feeling the effects of this abuse by addicted workers with poor work performance.
The cost of opioid misuse by employees is estimated at nearly $100 billion — from the impact on employers’ health plans, lost productivity and the cost of replacing and rehiring people. Reports note that working-age men are especially vulnerable to the excessive use of opioids. In particular, it impacts manufacturers of products in U.S. factories where the daily use of “health drugs” is especially common in young and middle-aged men.
There isn’t much owners and general managers can do to curb the excessive use of opioids by men and women in their employ. It is particularly difficult since a sophisticated plan of employee oversight has as yet not been developed in some sectors.
However, even the government has taken note of the growing menace that the ongoing expansion of opioids can bring. Congress approved $6 billion in new funding to curb opioid abuse. Lawmakers also are urging the Food and Drug Administration to become more involved in cracking down on illegal opioids entering the United States from abroad and curbing supplies of prescription pills.
But such combinations of health workers, employers and the U.S. government can only go so far to curb what could become a national crisis if allowed to go unchecked. Ironically, this is especially so as current employment growth is on a tear.