The economy continues to move forward; the unemployment rate is at a new record low rate of 3.5% due to an estimated 7 million jobs created in the last three years. Wages have improved, with the average hourly earnings growing at a 3.1% annualized pace. Additionally, job openings (positions currently open) are closer to 4.5%, which results in a net shortage of workers.
When everyone has a job, it is a bit less likely they will default on loans, especially if collateral values (i.e., a home) continue to increase. Housing starts are still low, based on my expectations, but pricing is higher than I expected. Again, this is a result of a tight labor market. There are not enough home builders or trades.
Brexit is back in the news, and a general UK election is taking place on Thursday, December 12th. The expectation is that Boris Johnson’s party will succeed in getting a majority and that Brexit will be a reality in January. Stay tuned, as this is a significant modification to the EU.
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Have a great week!