I want to congratulate the 23 graduates of the Citizens Business Bank Credit College Class of 2023. This is an intensive three week program requiring homework as well as completing various group case studies in commercial banking. They all passed with flying colors, reinforcing the fact that Citizens Business Bank has an elite set of bankers. Citizens Business Bank is a premier California regional bank that is continually rated as one of the top banks in America. One reason for their impressive ratings is their commitment to hiring and investing in the very best bankers they can find. Congratulations to both the new graduating class and Citizens Business Bank.
We have heard of the “under employed”. These are workers that are either working multiple part time jobs to keep their financial heads above water or they are those who are working part time in a job while they look for full time employment. Over the past three years a new population has emerged related to the remote work environment. They are the “Over Employed.” These are workers that are allowed to work remotely. They found that they had enough time and flexibility to add a second full time job. Neither employer knows about the moon lighting. This is different than having a side gig, this is splitting two 40 hour a week jobs, providing each employer with a less than 40 hour engagement. Beyond the ethical issues of being “Over Employed”, there is also a question of how it is impacting the US jobs reports over the last two years. While the jobs have been filled, the numbers of new hires are likely well over reported. No one is currently sure where the overlap is.
With some employers requiring workers to be back in the office, it is likely employees will have to quit one job or run the risk of being uncovered and fired. This will likely impact the employment reports in the near future. First may be the job quits report as employees severe their excess jobs. New job hire numbers may be lower due to the lack of suitable candidates to fill the newly departed double dippers.
Related to the job market, the layoffs in the banking industry are starting. PNC Bank announced 2,700 layoffs on Friday. Other larger banks have already announced their anticipated cuts. Goldman Sachs, Morgan Stanley, Citigroup and JP Morgan have all reported upcoming job cuts. The regional banks are just starting to consider trimming their staff levels. Between a softening loan demand and lower depository levels to fund new loans, many banks are finding they are over capacity at this time. The total displacement in the finance industry is currently unknown. Most of the cuts will be made before the fiscal year end.
There are a couple of signs that the consumer spending is cooling. The Michigan Consumer Expectations report fell to 60.7. The index peaked in July at 68.3. While not at its lowest level during the past 18 months, the sustained decline reflects a consumer that is concerned about the future. The most recent Prime Days this October was another case where the consumer was seen to have been careful in spending. The total sales fell beneath expectations. While overall the sales were above 2022 levels, shoppers’ habits focused on staple products and not big ticket, fun, discretionary expenditures. Amazon also extended more sales items beyond the end of Prime Days Sales hoping to entice buyers who are on the fence, giving them a second chance. Overall, the consumer appears to be focused more on day to day financial health and not stocking up on non-essential stuff.
The core inflation rate in September rose by .3%. There were certain areas such as used vehicles and apparel, which experienced deflation. Of course, energy prices rose in September, increasing 10.6%. Food prices increased by .2%. Service sector prices pushed higher primarily due to wage increases that needed to be offset. Inflation is still here. To move from our current level of 3.6% annually down to the target of 2% annually will be painful.
Have a great week.