The Employment – Cost Index which measures the total cost of workers rose 5% in the Third Quarter of 2022 as compared to the same quarter last year. This was down from an increase of 5.041% in the last quarter.
As wages increased, spending increased as well. Household spending increased sharply in September, according to a separate report from the Commerce Department that came out last Friday.
This will put further pressure on the Fed to increase the Fed Funds Rate. Many are expecting another 75 basis point increase at their next meeting in their continuing fight to tame inflation.
These latest numbers show an economy that’s still growing but losing momentum. The labor markets are still incredibly tight with low unemployment and lots of job openings.
Let me leave you with this.
I’ve spoken to many Entrepreneurs who seem to be at their wits end given the problems they are experiencing in finding good people. Many have suggested selling their businesses and getting out entirely. Let’s all take a moment and realize one basic, all-encompassing fact.
This too shall pass.
One of the reasons for the strong labor market is that Entrepreneurs are afraid to let anyone go. It’s just too hard to find anyone decent, but let’s remember that it’s always hard to find good people. Now, it’s just a lot more difficult.
But the labor markets will turn, and probably in relatively short order. The Fed will continue increasing the interest rates until they do. They have no choice.
I’m suggesting that we all take a longer view when considering our options. Don’t make a hasty decision that will ruin your business and your life.
It’s certainly true that newer businesses are out poaching our people, offering them anything under the sun to get them to jump ship. It’s also true that what they’re putting into place and the promises being made are simply unsustainable.
Don’t fall into the insanity of the moment. Are you really willing to give up over these momentary problems? We’re probably talking about something that’s only a few months away from straightening out.
This time next year we’ll probably be closer to 10% unemployment and in a nasty recession. Trust me when I say that you won’t have any problems finding people in that economy. That’s when all the idiots out there stealing your best employees, will be filing bankruptcies.
Stand your ground. Don’t fall into the mass hysteria. Be the steady hand at the helm necessary to get your ship through the storm.
Things will even out when all of the clients currently being handled by your competitors that are hurting you, go up for grabs. Be ready to give all of that new business a happy home.
For this too shall pass.
We’re all going to get through this. Let’s get through it together.
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