The Economy Unveiled: Soft Landings, Icebergs, and Retirement Trends - The Cents of Things

Welcome to the Cents of things podcast, where your money talks and we listen, join host Jeff Kickel and Ron Lang as they explore the economy, financial planning, and the stock market, adding a splash of fun to make your financial journey engaging. Each episode, they break down complex topics to give you the clear edge in your financial decisions. Stay tuned and let's make Cents of things together.

Good morning and welcome to the Cents of things. It's Jeff and Ron here once again for another episode of fun things, markets and the economy. Ron, how are you doing this morning, sir?

Good. Just a quick public service note. Drink water.

Yes,

drink hydrated.

You're what did you say? The weather in Arizona is gonna be this week. Hit 1 10

today. But look, the afternoons are brutal. But you know what? It is the mornings are terrific. But yeah, it's starting to get soupy in the afternoons.

Yeah I will say Texas we have the equivalent of one 10 and we still haven't hit a hundred because we have so much humidity right now that it felt like I was I was literally swimming out to take trash out at the office.

Yeah. Bring a change of clothes for when you go outside.

Yeah, pretty much. Good thing is we do that at the end of the day. So I only have to smell myself for about a half an hour before I go home. All right let's kick it off today. I felt that one thing we haven't visited in a while is our Favorite friends, the Florida men. And so I figured it was a good time to kick us off with a little bit of Florida man action and talk a little bit about what's going on in the world. The Florida man. So starting

off by the way, real quick with Florida. It's got to be crazy with the heat. So you got to just equate it to that.

Yeah, but they do this all year long. So I'm not sure why, whatever. All so number one, Florida man story, Florida man breaks into a house, cleans it, leaves behind origami. So in 2019, a man identified as Nate Roman from Marlborough, Massachusetts. Reported a funny incident that left him shocked. He came home and found an intruder had entered his home, cleaned everything in the house, including spreading his bead and scrubbing the toilet or bed spreading his bead. I think means, I think they mean fixing his bed up, scrubbing the toilets. He even, what was even more crazy was that he left behind origami roses on his toilet paper rolls. He's got a, he's got a secret admirer. I'm actually impressed. I wish I would get a Florida man here to to take care of that. So second one, a Florida man blows a 0. 339. Had to be dead. How was he standing? That's alcohol level and gets a DUI on a golf cart. Alfred Constant Matthew went for a cruise on his golf cart while driving on the highway. He was stopped by police that who noticed he was drunk. Maybe the fact that he was driving a golf cart on the highway might have been the first indication on testing his blood alcohol content. It turned out to be 0. 339, which was way above the legal limit and almost to the death limit. He was arrested. If they

bring his arm. Probably that would be 1. 10 alcohol that would squeeze out and sweat. Absolutely.

All right. So here's another good one. Florida man flees cops so fast that some of his clothes come off. So police identified him with DNA from his socks. Cops could only find a pair of jeans, shorts, a sandal, and a sock. Now, this guy is so fast that he can run his pants off. I'm thinking Miami Dolphins next year, wide receiver. This is the other

thing I'm thinking. Probably they put out an APB of what he was wearing. So he just ripped off his clothes because they weren't expecting a naked guy. So he'd rather probably get arrested for indecent exposure than whatever. And for whatever he got in trouble

for. Yeah. It doesn't even say what he got a criminal. I think, I don't know. Maybe he had the forethought at the time to think about this. Florida man tries to walk off out of a store with a chainsaw stepped down his pants. Anthony Ballard took shoplifting a notch higher by shoplifting a chainsaw. He reportedly entered Treasure Coast lawn equipment, engaged cashier in small talk while hiding the Power tool in his pants.

Jeff, there's gotta be video of this.

I've, there's gotta be video of it, of him shoving in his pants and the, the employee saying, is that a chainsaw in your pants or are you just happy to see me? It depends whether or not it was on or not. That's true. That could be a problem. And we did have that one picture a few months ago where I got the second circumcision. Yep, exactly. Interestingly enough. All right. My favorite one of all florida man arrested for crashing a car into a mall says he was trying to time travel a car and crashed into the mall at north Davis highway in Pensacola florida. When cops questioned the unidentified man driving the dodge challenger, he said he was trying to time travel When the incident occurred. Now, if he'd had a DeLorean, he'd have been there, but unfortunately he chose the Dodge Challenger.

Did he hit 88 miles an hour? That's the true

question. I don't know. My wife owns a Dodge Challenger. The V six can get up. It's pretty fast. It's like a 6.3. Zero to 60. You should be able to get to 88 miles per hour in it, but apparently he did not have the flux capacitor filled or the the back to the future to where it's the Vegematic thing that's in there. He just didn't fill it up.

Gotcha. All right.

All right. Let's let's talk about my stuff for the day. Are we heading for a soft landing or an iceberg? This is one of my favorite terms that I hear from the stupidity of the government. And a lot of the market puns about financial media.

Mainly

Media. Yeah. Soft landing. Soft landing. Are we gonna have a soft on? Did you

ever hear Jerome Powell ever say hard or soft landing?

No. Nope. Not once ever. There is no such thing as a soft landing. It is an iceberg in most cases. And if you are looking for the Fed. Or anybody, the treasury or the fed to rescue the economy. If you look at their history, it has been absolutely atrocious. When it comes to this, they usually wait way too long to come in and try and slow things down, which they did this time by almost 18 months. And I would argue the point it was probably since 2010 that soft money policy just inflated assets and caused, a lot of issues that we're now dealing with. But the other side of the coin is is it an iceberg? And when do we hit it? We don't know, nor did the Titanic know that there was going to be an iceberg there. On our last show,

they were just weren't looking.

Yeah, exactly. And I, on the last show, we just touched at the end, Ron talked a little bit about jolts the jolts report, which is job openings report. This comes from the Bureau of Labor Statistics. And if you can see after the peak in about 2022, which was about 12 million, part of that was that you had so many people that were laid off and as the economy was starting to come back, there was a ton of job openings because people were looking, literally there was. For hire signs everywhere. And you had people during the pandemic that didn't want to go back to work. And the government was basically paying them not to go back to work. We've seen that get pulled back down. So the open job openings are reducing, but there's been an accelerated trend as of late, pretty much late 2023 going into 2024 and it's accelerating even more. And I would, I would garner to say that is also companies now starting to pull back. On jobs, they're just not the open jobs aren't there because companies are pulling back and, you're starting to see big layoffs in the tech space. That probably was because they went too far the other way, but we're starting to see those jobs pull back, which, if you look at the long term trend, it's getting back to where the long term trend was. But does it keep going beyond that and we start to drop into a situation like we typically see before big we got a

divergence because unemployment has ticked up

and

job openings are coming down

and non farm payrolls here once again, another sign of that if you look at year over year, we were up around 275. We came in this month, or last month around, I think it was 175. And if you look at the ADP number that came out earlier this week, it was around 152. It had been expected to be, in line with where it came in last month. So it'll be interesting because tomorrow is that nonfarm payroll number for. The month of May, and does this continue to decline? And is it, continued year over year decline? Why is that important? It is a sign of a slowing economy, but the challenge that we have now is we have really high interest rates, and we have massive amounts of of consumer credit. And if, this continues to increase and unemployment continues to increase, that's going to put a massive strain. On, the consumer, basically,

we didn't even talk about treasury debt and interest payments.

That's a whole nother animal. They can just, they have the ability to print money. We don't hourly earnings. This was something I hadn't looked at in a long time. And I just happened to catch it. I think it was on the non farm payrolls section of briefing. com. It was an extra chart and hourly earnings year over year have been declining just continually, which is. You look at inflation and inflation has gone this way and hourly earnings are going that way. And once again, we're seeing that accelerate to the downside as well. They

say wage growth is going up, but

yeah, I don't think so. Wage growth is going up. Here's a chart from Bureau of Labor Statistics and it ain't going up. I'm sorry. It's going down significantly. And if you look at real wage growth with inflation, it ain't good, cause. We're at 4 percent and inflation's basically at four or what? Five. Something at this point, I think it's under, I think it's just under four. Okay. All so it's your Bay you're breaking even at this point unemployment, like you were talking about, we had that spike up in, in the, during the pandemic, it had been coming down pretty significantly throughout the, basically from the peak of the 2008 period, the great recession. It had gone all the way down below 4 percent and we're starting to eke our way back up to 4 percent and above at this point. So it tends not to move rapidly, but it's starting to move in the direction you don't really want to see it go at that point. Inflation, once again, yes, it's gone down. Oh, it's gotten better. Yeah, but it's just starting to level off. Here when we look at inflation and it's leveling off at a much higher level than where the Fed is, willing to accept and this is the PCE number. This is the number that the Fed uses and that they trust the most. And it's still very far away from where their target is of 2 percent at that point. And, once

again,

yeah. And trying to lose that last 10 pounds or whatever is always going to be the toughest as well. And it's going to take some major moves or the economy kind of coming unglued to really get that number down. Home prices, this is something I was interested in as I was looking through all this. What is home? What are home prices look like? Because we've got really high, In the sevens range on 30 year mortgages at this point. House prices have slowed The average house price is about four hundred twenty five thousand dollars, but it's not declining rapidly It's just leveling off and the challenge that we run into with that is We don't have enough inventory. And the bigger challenge is the baby boom generation, which has traditionally been the generation that's driven everything economy wise in the world. What's happened with them while they had these big, huge houses where they had big, huge families. And now they're retiring and they're downsizing. And unfortunately they're downsizing right into the inventory that normally would be the young people coming in as a starter home. And I don't

understand and I haven't heard a cogent argument or any legitimacy of why Post covid prices just went parabolic. Oh, yeah With 10 000 people essentially hitting 65 every day or plus or minus people are downsizing so that's what, new home sales are spiking obviously, because there's no inventory existing home sales and a 7 percent plus 30 year fixed is slowing that down. But I don't understand if you take a look, what is that a 70 year history almost? Yeah. 60 year history. Why post COVID it literally has gone up. If you look at it, almost 35%. Yeah, four year period of time and I haven't heard any legitimacy behind why that's happened

I think from my perspective it was cheap money, you know during that time period you could basically Hold on to

interrupt you, but it was cheap following the financial crisis through 2019.

Yep cheap money, I think this cheap money and the ability for people to relocate because they could work independently, the ability to relocate and quite frankly, the people willing to just pay stupid money for houses. I remember, while I had a client, perfect example had what I would consider a very average house. It was probably 45, maybe 50 years old. Little bit of renovations, but not anything dramatic. And this was right at the beginning of kind of 2000 is rolling into 2021. She sold her house here in Austin for 40 percent more than what she listed it for. So it was like, it was maybe a 300, 000 house. She sold for 425, 450, 000. And the people that bought the house came in and ripped it down and put another built a whole new house. From ground up, so they paid 475, 000 for a lot and a house that they were going to rip down and then probably built another 500, 000 house on top of it. It was not a 1, 000, 000 neighborhood by any way, shape or form. And it still isn't to this day. So it was just people willing to pay stupid money for it. But it's amazing to me how persistent that price has been afterwards. Yes. The parabolic side of it, typically when you see a parabolic upward, you're going to typically see some kind of a pretty massive downward and it's not, it's flat at best at this point. So it's really shocking to me. From a real estate perspective.

Yeah, I don't understand it either

And I think my last point that I want to make out of this is the trend of the newest trend of unretiring As many as 20 of older workers are rejoining the labor market in their 60s and 70s As of late 2023, there was nearly twice the percentage of americans Over the age of 65 working compared to the 1980s, and this is by Pew Research. And I think this is, 1, it's an interesting trend because. You have a workforce and I will just say now I had somebody work for me for 3 weeks in another business. From the wealth management practice and quit via text. So I think part of it is the new younger workforce is not necessarily willing to work as hard, but I think a lot of these folks that retired and thought. Okay, i'm just done, you know a lot of them retired even early during the Pandemic, you know just saying i'll screw it I'll just go and retire early and then inflation's come back to bite them hard and I would venture to say That number is even higher than 20. What's your thoughts?

I always when I talk to clients that are pre retirees I always say there's a difference between when you reach a certain age that you have to work Yeah, where you want to work. Yeah huge difference and where i'm going with that is the following I think people are working longer now because Better health. Yeah. Better living through chemistry, better health. But I think the other reason is if you love what you do and you enjoy getting up in the morning, why would you quit? let's say you're not a golfer, you're not a traveler. Yep. What are you gonna do? Sit around, gain weight, eat. Yeah. But my point is that. You can hit a certain age and be somewhat financially stable. Not a hundred percent and go. I'm gonna throttle back I have lots of clients in their 70s that are still working and they enjoy getting up every day And it's not a grind and most of them I would say not only do they enjoy working, but they don't have to work, but they enjoy working. Plus, the additional income allows them to take an extra vacation or do something else that they want to do. Or here's the other big thing. They enjoy working because that extra money. Helps them provide for their kids or grandkids or extended family because they're struggling. So it's a different age. Back in the day you hit 65, it was like Logan's run. You were done, right? The light

was blinking in your palm at that point. You're

out. But, today it's a very, it's a very different story.

I give

the, we're not 60 yet, but people ask me, Ron, we're planning 10, 15 years out. What are you looking to retire? What are you talking about? My father's 83, he's still in the business. He's not putting in 40 hours a week. But he loves the business. He's doing business. So if he did it and it was stressful, he wouldn't be doing it. Neither would I, neither would you know, it's a different, if you enjoy

what you're doing and you don't have to do it, my dad's a great example of this. He's 84 years old and he works for Lowe's, and he works in the hardware section, which That's what he loves. He was a quality control engineer. So if you ask him, how do I fix this? He's going to show you how to take every screw, what tools you're going to need, everything else. And he loves it. And it's that interaction. And, basically he and my mom had almost 15 years of travel and all that. And he's not a golfer and he's not, he's done every project around the house. At this point. So he was really getting to that point where it was like, okay, I can just sit here and read books for the rest of my life and die, or get up and do this. And, he's, he works the schedule that they give him, but he's also very, specific about, I do not want to work more than 20 hours a week, it hurts my back if I'm on my feet that much. He's just, it keeps him healthy. He looks great. He's, it's keeps his weight down and everything else. And my mom does volunteer work So I think it is a different generation

the coattails of that jeff Creating a lifestyle that makes Cents to them and it involves working what's the big deal? Yeah volunteer a lot of people like volunteer. I tell people don't do nothing, you know Do something volunteer, work part time do something that you enjoy

Yeah, and I've worked with retirees for 30 years, and I tell people all the time I've met some of the youngest 90 year olds in the world and some of the oldest 60 year olds, and it's how you adjust yourself to that. Yes, I'm retiring. I think part of it is financial, but I think the other side of that is exactly where you and I are coming from. It's not a death sentence to go back to work. It's the ability to go, you know what? I'm gonna go back to work, but you know what? I'm also retired. I just do this part time and I'm going to take some time off. So if you've got something that is a saleable skill, whether it's your ability to work or it's the knowledge in your head that you spent 40 years learning. I don't intend to retire. I can write books until I'm, a hundred years old. I can do what I do for a living, managing people's money. I don't dig ditches for a living. So as long as my brain's still working I can keep doing this.

I hear you. Everybody's different, but there's no de facto line of demarcation at 65.

You're just not going to sit there on the front porch and whittle wood until you die. The reality is we. We went from 1938, the average the average life expectancy. I just looked this up the other day for a book I'm writing. The average life expectancy was like 63 years old in 1938.

I did the same thing for many seminars. I've spoken at in the past, 1912 was 54.

So when you think about social security, it was a pretty good bet. You started it at 65 and the average age was like 63. So it was a great bet from the government that, okay we'll just take care of the people that actually live beyond that time period. What they didn't realize was, Oh crap. What happens when we get really good at keeping people alive until they're in their eighties that's the challenge that we face today. We're nineties or nineties. Yeah it's going up. It creeps up every year. Folks, thank you for joining us as always. We we do the Cents of things for. That very purpose for you and you only, it's not for Ron to get on Ron and I, to get on here and show you funny stuff every week. It's really for us to give you information. And I hope you enjoy this. And I hope it gives you some ideas about what you're doing in your own portfolios. So make sure you subscribe to the channel, make sure that you hit that little upvote button to let us know that you exist. And Because we're seeing a huge amount of new people joining us on the show. And if you're new to the show, thank you for being on and thank you for being a subscriber. So thanks a lot. And we'll see you guys back here the very next time.