Bull market’s largest hopes for 2022 relaxation with millennial millionaires

If the millennial and Gen Z investing generations’ biggest, boldest bull market calls are best represented by the star turn of ARK Funds’ Cathie Wood, her funds’ struggles in 2021 are a microcosm of where risk-on investing runs into the reality of a market that, at least in the short-term, can’t always go gangbusters — or even up.

Americans born into the millennial and Gen Z generations came of age as investors — and some millennials, now in their fourth decade of life, also into considerable wealth — during a period of extremely muted inflation and a decade-plus bull market. If they have never known a Cathie Wood stock call that can go south, inflation as the No. 1 topic of concern for the economy is a new experience for them as well. And fears of an inflationary environment the U.S. has not seen since the 70s and early 80s isn’t only new to them in the form of rising prices. The low-inflation world contributed to a high return world for growth stocks that is now being threatened, and that leads to a question about whether young investors have enough experience with the inevitable ups and downs of the stock market.

Are young investors prepared to see double-digit equity market gains as the exception, rather than the rule, for the S&P 500?

Not yet, according to a recent survey of millionaire investors conducted by CNBC.

The bi-annual CNBC Millionaire Survey finds the youngest among America’s wealthy investors much more bullish and aggressive headed into 2022 than their investing peers from older generations. While the overall outlook from millionaires on the economy and stock market is “barely bullish,” according to the survey data, millennials see major potential for stocks gains and continued interest in risk-on trades including cryptocurrencies.

Covid ended the longest bull market in history, but stocks picked right back up and have since posted extraordinary gains in what amounts to a 13-year run for U.S. equities. Even if it doesn’t end, can this level of market returns last?

Drew Angerer | Getty Images

By the numbers:

  • 48% of millennials expect to increase their crypto investments in the next 12 months.
  • For many, that is a doubling down on crypto, as the survey finds more than half of the millennial millionaires said at least half of their wealth is in crypto.
  • 52% of millennials think the S&P 500 will be up by at least 10% next year (39% are even more bullish, expecting those gains to be above 15%). This is more than triple any other generation’s expectation for stock gains over the next 12 months.
  • 61% of millennials believe the economy will be much stronger next year; in all 93% believe the economy will be stronger, versus 41 percent for all millionaires.

The CNBC Millionaire Survey was conducted by Spectrem Group and surveyed 750 Americans with investable assets of $1 million or more. Caveat: Millennials are by far the smallest demographic sample in the survey. With the least time among generations to accumulate wealth, it follows there are many more Gen X, baby boomer and World War II millionaires in the data to accurately map the millionaire population of the U.S. The CNBC Millionaire Survey presents a snapshot of millennial millionaires, but it is only 31 out of the 750 wealthy Americans surveyed.

“Millennials are not a huge sample,” said Tom Wynn, director of research at Spectrem Group. “It’s enough to get some direction, but not huge, and we find that always in our surveys, they are way out there. I don’t know whether they are idealistic or just have an unrealistic view of things, but they are always extremely different,” he said.

And this is no different for investing than it is for taxes, or even religion.

Inflation, the Fed, stocks, and “stonks”

Some of the differences between millennials and the rest of the survey audience are stark. Inflation is the No. 1 economic concern among millionaires in the survey, while the millennial millionaire subset isn’t worried about it at all. And that finding highlights the generational nuances in the data and the question of whether younger investors are prepared for what inflation — and a Fed worried about inflation — can do to the stock market.

Lew Altfest, CEO of Altfest Personal Wealth Management, said most investors do think that in a Fed rate tightening cycle there is a greater chance of a correction next year, and overall, a lower return from the market.

Fed rate hike cycles haven’t been disastrous, but they have not been very good for stocks. Across the 17 previous Fed tightening cycles back to World War II, the Dow Jones Industrial Average and S&P 500 Index have struggled to post gains, according to CFRA Research. “Minor price increases for the equity market,” according to CFRA chief investment strategist Sam Stovall. In the 12-month period once the Fed starts raising rates at least three times, the S&P 500 rose a median of approximately 3.5%, and whether it gained or lost in any single period was little better than a coin flip: stocks gained in price 56% of the time.

The 1970s period of inflation was known as a “lost decade” for stocks because the compound annual growth rate in the S&P 500 was 1.6% — the index posted a 5.8% total return, but that is including dividends being reinvested and accounting for over 4% of the gain.

“They’re not thinking of double-digit returns and they are hoping they don’t get retribution for higher stock market prices,” Altfest said, referring to the price-to-earnings ratios which value-oriented investors such as himself find difficult to justify. “Value will have a run … stocks are going to go back to what are reasonable rates,” he said. “The question is the timing.”

A big millennial mistake and the market

There is some merit to the discussion about younger investors and inflation, says Doug Boneparth, president of Bone Fide Wealth, a wealth advisory firm, and a millennial himself. “The generation has not experienced an inflationary environment, and a boomer will be quick to point to 70s and 80s. When I talk to my own dad he doesn’t necessarily have the best memories of the 70s and 80s from an investment standpoint. Even myself, as an older millennial, I can’t recall investing or living through a non low-interest rate environment, so there’s something to say there.”

But this doesn’t mean he thinks 1970s-style inflation is about to repeat itself, and millennials may live in a world which they know is less likely to repeat that experience. “Anyone saying it’s going to be the 70s or 80s all over again, I’m not buying it. It’s a different world,” Boneparth said. “You didn’t have the internet or Amazon bringing goods to your door in 48 hours. It’s hard for young people to relate to what they do know historically about high inflation regimes,” he added.

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Even though millennials did not cite inflation as a risk to the economy, millennials in the survey were almost evenly split with 45% saying inflation would be temporary and 48% saying it would last a long time. This split within the generation itself brings to mind a point Boneparth says needs to be made when we start talking about “millennials”: the idea that millennials are a monolithic generation is a mistake.

“There are 80 million millennials and some can be viewed as just becoming adults, to full-fledged adults with children,” said Boneparth, who is closer to 40 than 20 and a homeowner with children.

It is an even bigger mistake, he says, when people assume that all millennials believe the stock market will only go up.

“It is a pretty big range and does mean some have been through different market cycles,” Boneparth said. “I’m old enough to know what a bad market looks like, in 2008-2009. For older millennials, the feelings and thoughts are alive and well. They shaped the older end of the millennial generation,” he said.

Though for millennials and Gen Z investors in their 20s who were just becoming teenagers during the Great Recession, recent performance could lend itself to overconfidence in the stock market. “And that could shape how they are investing their money,” Boneparth said. “I don’t think that stigma of 08-09 will ever escape my mind at 37. But you almost certainly get a ‘stocks are stonks’ often out of Gen Z, who are all about everything in a good way.”

Long-term returns and low returns

Market experts are worried that the extraordinary returns stocks have produced in recent years cannot be sustained. A recent survey of 400 investment professionals conducted by CNBC finds more than half (55%) expecting the S&P to return less than 10% next year. And more think the index will either be flat or down than up by more than 10%.

Most millionaires taking the CNBC Millionaire Survey believe their assets will be the same at year-end 2022 and they anticipate a rate of return between 4%-5% in 2022 — though since many are retired, they have a much more conservative asset allocation. Millennials believe their rate of return will be higher, with 39% predicting 10%-plus in 2022, and another 32% expecting at least 6% to 10% from their investments.

Every year, the major fund companies, such as Vanguard Group, release their investment return assumptions, and in recent years, the predictions for a lower return world haven’t been proven correct. For the record, Vanguard’s 2022 outlook says U.S. stocks are more overvalued than any time since the dotcom bubble, but there is no clear correlation in the historical data saying that inflation and rising rates will necessarily cause an abrupt end to the valuation momentum. “Our outlook calls not for a lost decade for U.S. stocks, as some fear, but for a lower-return one,” Vanguard concluded.

“It’s always best to be as accurate as you can, but since being accurate is hardest thing to do, the next best thing is to overdeliver,” said Mitch Goldberg, president of investment advisory firm ClientFirst Strategy. “In next 10 years, we expect a positive return of anywhere from 5%-8% annualized. I’m comfortable saying that, but I’m not comfortable saying next year only expect 5%.” 

There is an important distinction in how investors think about the rate of return. A diversified portfolio is not a 100% stock portfolio. When firms assume a 4% to 6% annual rate of return, that is assuming a mix of stocks and bonds, even if stocks are the majority. The S&P 500 has averaged an annual return of 9% since World War II, according to CFRA.

Boneparth says regardless of how well the stock market has been doing, issuing conservative return assumptions for clients is the proper communication to make annually. When he does forward-looking returns, he pegs a 5.3% return on a risk-adjusted basis for an 80-20 equity-bond portfolio. “When the market keeps pumping out returns, you have to go back to the 60 to 80 years history,” he said. History is only “wrong” right now, he said, because of the microenvironment of the past 10 years, from recession to expansion and Covid and through it all, multiple phases of monetary stimulus.

“Professionally speaking, you want to temper expectations about what returns can look like,” he said. “Every year S&P predictions are wrong, so millennials may be thinking ‘their guess is as good as mine, but when I am doing planning, I am being conservative in assumptions on rates of return in market portfolios,” Boneparth said. “Because I am trying to build a margin of safety, so if you are up 10%, you are way ahead of the curve.”

Younger investors have more time than any other generation to accumulate wealth, and tied to that, more reason than any other generation to remain aggressive in their portfolio allocations. This doesn’t mean their short-term optimism will be proven right, but staying in the market with a significant allocation to equities over the long-term is the right decision, as long as short-term success in the market does not breed hubris.

How to become a great investor

“Ask any fabulously successful entrepreneur how long it took them to become a competent investor and they will say five years; incredibly, it takes five years before you get your sea legs,” said Michael Sonnenfeldt, founder and chairman of Tiger 21, an investing network for the wealthy. He learned the hard way that early success in stock market investing does not ensure continued success. “The worst thing that ever happened to me in college was I bought options as my first investment and they doubled or tripled. That was the most expensive financial lesson I ever had because it completely inflated my confidence,” he said. “I had to lose many times what I made to understand those bets I made were luck and nothing more than luck.” 

Yet the current world is one in which investors have been forced, by economic and market conditions, to learn that equities are the way to generate market wealth. A generation ago, when there were much higher interest rates, debt investments could do a better job of helping a balanced portfolio beat inflation.

“In the low interest rate environment, a subset of people are learning how to drive returns through equity, whether private or direct or public,” Sonnenfeldt said. Even with rates set to rise in 2022, they will remain at what are very low levels compared to history. “They really have to work those assets and that may be part of what’s going on, people learning how to work their assets to beat inflation will have a very different view than we had a generation ago,” he added.

One finding that is consistent across members of the Tiger 21 affluent investing network is less reliance on the stock market for returns. In the past few years, venture capital has become much more prevalent among members and, in general, stocks do not make up the majority of an investor’s portfolio. Even as younger investors have high hopes for the S&P 500 next year, and generate a significant portion of their wealth from cryptocurrency, the CNBC Millionaire Survey did find their portfolios to be much more diversified than older investor peers — who tend to stick more to a traditional equities, fixed income and cash mix — millennial allocations to international, alternative assets and private markets are similar to public stock market weightings.

“My returns won’t mirror public market returns, and if I didn’t know any better I would say, geez, I should be unhappy,” Sonnenfeldt said. “But if I am north of 10% and still dramatically less than the public markets, it could be an incredible year, knowing no matter what happens in the market I may duplicate those returns again.”

Whether the S&P 500 repeats its nearly 30% gain of 2021, or reverts to its long-term annualized average of 9% in 2022 — or takes it on the chin — being realistic about the long-term, and having a plan for it, is more important than being remembered as the one who got next year’s S&P 500 call right. 

Preserving wealth, while covering living expenses and taxes, is the No. 1 goal, and that requires a realistic understanding of what can be earned from investments year in and year out. And over a longer period of time, with more time in the market, the best young investors will learn to adjust expenses to that realism.

“Optimism and realism are not the same thing, and many people are optimistic but not every realistic,” Sonnenfeldt said.

Y2K 2.zero Was the Largest Avenue Fashion Development of 2021

Love it or hate it, Y2K style was a big issue on both the catwalk this year (see Blumarine) and on the street, whereby the interpretations of the trend, which is pushing the boundaries of “good” taste, are interpreted differently from city to city. In Shanghai, the influence of the early 00s was evident in the form of eye-catching pants in various neon colors and prints; in Paris, scarves became crop tops. Mini skirts almost as tiny as they were in spring 2022 Miu Miu ruled the streets of London, while crop tops and logo baby t-shirts were all the rage in Milan and New York. The finishing touch to any aughts-inspired outfit is a Fendi baguette, then loved by Carrie Bradshaw (this iconic episode aired October 8, 2000) and now trendy Danes.

See how the year 2000 unfolded in six capital cities.

Paris

U.S. cash market funds see greatest weekly outflow in 9 months -Lipper

Global indices are displayed on a screen on the trading floor of the New York Stock Exchange (NYSE) in Manhattan, New York City, USA, 19 August 2021. REUTERS / Andrew Kelly / File Photo

Sep 17 (Reuters) – US money market funds faced large outflows in the week leading up to September 15 as risk sentiment improved as fears of high inflation eased and the US Federal Reserve prematurely suspended stimulus measures after the Data showed a slowdown in the pace of consumer price increases.

Data from Lipper showed US money market funds saw an outflow of $ 43.34 billion for the week ending Wednesday, the largest since December 16.

Cash inflows in US stocks, bonds, and money market funds

The core measure of US consumer prices rose 0.1% last month, the smallest increase since February. The August slowdown gives the Federal Reserve breathing room as it prepares to shrink its massive bond holdings and decide how quickly to start raising rates from near zero. Continue reading

Meanwhile, U.S. equity funds rose $ 5.54 billion net after seeing $ 1.83 billion in outflows the previous week.

U.S. equity mutual funds drew in $ 1.28 billion net and growth funds got $ 208 million net after each one saw an outflow the previous week.

Among the equity funds, tech and real estate funds rose $ 435 million and $ 383 million, respectively, despite financials outflowing $ 845 million.

Flows into US equity sector fundsFunds flows into US growth and value funds

US bond funds rose $ 5.56 billion net for a ninth straight week of inflows.

US short / intermediate investment grade funds saw cash inflows rise two-fold to $ 2.07 billion and US municipal debt purchases rose 27% to $ 1.06 billion. However, the purchase of inflation-linked funds has almost halved to $ 574 million.

flows into US pension funds

Reporting by Gaurav Dogra and Patturaja Murugaboopathie in Bengaluru; Editing by Andrea Ricci

Our standards: The Thomson Reuters Trust Principles.

Shares making the largest strikes noon: Pfizer, Moderna, Boeing, extra

A Boeing 737 MAX 10 airliner stops while taxiing on the airline.

Stephen Brashear | Getty Images

Check out the companies that are making the headlines in midday trading.

Boeing – Boeing shares rose 3.2% after Virgin Orbit, a satellite launch spin-off from Sir Richard Branson’s Virgin Galactic, announced that it will go public at a valuation of $ 3.7 billion. Boeing will invest in the deal’s private investment in a public equity round. Virgin Orbit partners with a special purpose vehicle NextGen Acquisition Corp. II, which was up 1.9% on its shares after the news.

Pfizer, BioNTech – Drug manufacturers’ stocks rose Monday after the Food and Drug Administration full consent given to the Pfizer and BioNTech Covid-19 vaccine – first in the US to receive the coveted award. Pfizer’s shares rose 2.5% and BioNTech rose 9.6%. Shares in Modern rose 7.6% in the hope that approval paves the way for own approval.

General Motors – The automaker’s shares ticked 1.3% lower after General Motors’ Recall of his electric car Chevy Bolt on Friday. It will include newer models, a move that will cost the automaker an additional $ 1 billion. The recall addresses an issue that can increase the risk of battery fire.

Occidental Petroleum, Devonian energy – Energy stocks rebounded Oil prices rose on Monday, with a seven-day losing streak, the longest in crude oil since 2019. Occidental Petroleum rose 6.9%, Devon Energy rose 6.1%. Diamondback energy 5.9% increased and Marathon oil 5.4% up.

Robin Hood Robinhood stock rose 6.2% despite Wall Street analysts pessimistic on newly listed brokerage stocks. Many Cover initiated by investment firms was rated neutral or equal by Robinhood on Monday, and the stock was even given a rare underweight to JPMorgan’s Kenneth Worthington.

Didi Global – Chinese ride-hailing app shares rose 3.4% despite Beijing’s investigation into the company. The Financial Times reported Didi could be forced to sell shares with special rights to the Chinese government and the company could be asked to cut commissions from drivers.

Tesla – Tesla shares rose 3.8% after Deutsche Bank reiterated its purchase rating at the electric vehicle manufacturer. The company said Tesla’s Artificial Intelligence Day last week set out a “bold vision” and analysts “came with greater appreciation for it Tesla ‘s efforts on AI. “

Abercrombie & Fitch The apparel retail stock rose 2.3% after Tesley confirmed its outperformance rating from Abercrombie & Fitch and expected “margin widening”. The company plans to publish the results this week.

– CNBC’s Maggie Fitzgerald and Yun Li contributed to the coverage

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Colorado’s greatest hospitals made cash throughout pandemic

When the coronavirus shut down Colorado last spring, fears rose that the state’s hospitals would get into financial trouble.

In order to quickly focus on caring for sick COVID-19 patients, hospitals paused lucrative voting procedures. Patients skipped the usual visits. Hospitals have pumped money into buying protective gear and converting floors into coronavirus units. Estimates of lost revenue ran into the billions of dollars.

But a new report released by a state agency on Aug. 18 concludes that Colorado’s major hospital systems ultimately made profits despite the challenges in 2020.

The better-than-expected performance was due in part to revenue recovering in the summer when normal operations resumed, in part to capital gains from a rallying stock market, and in part to federal stimulus dollars.

Looking at the national operating margins for six different systems that hospitals operate in Colorado, the state Department of Health Policy and Funding found that four of them – UCHealth, HealthONE, Banner Health, and AdventHealth, which are part of Centura Health – were either profit or loss even broke before stimulus monies were taken into account.
Including the boost from those stimulus dollars, two other systems – SCL Health and CommonSpirit, which make up the other half of Centura Health – also rose to profitability.

“All of Colorado’s major hospital systems had operating profits in 2020 with no need to use reserves, which is a significant finding,” the report said.

The situation is different for rural and independent hospitals in Colorado. Often times, these smaller hospitals held enough cash to cover only three months into the future and needed the lifeline that the stimulus money provided.

Even then, some of them – like Boulder Community Health or the Colorado Canyons Hospital and Medical Center in Fruita – lost money last year, according to the report.

Highest profit margins in the country

The analysis was one of two released on Aug. 18, highlighting the strong profits and high prices of some of Colorado’s largest hospitals.

The other analysis, taken from annual financial reports that hospitals are required to file with the federal government, found that Colorado hospitals had the highest profit margins in the country and the sixth highest prices in the country in 2018, the most recent year for which data exist.

That confirms an analysis presented to a health care advocacy group in Colorado earlier this year. And it comes after years of reports of increasing profit margins for the largest hospitals and systems in the state.

The new report found that Colorado hospitals posted profits of $ 2.9 billion in 2018 – a profit margin of 15.6% compared to the national median profit margin of 6.5%. The prices billed to patients were 22.8% above the national median in 2018, a significant increase from 2009 when prices were 9.2% above the national median, according to the report.

“Our hospitals got worse when it came to prices,” said Kim Bimestefer, chief executive of the Department of Health Policy and Funding.

In a statement, the Colorado Hospital Association said the 2018 numbers are “a reminder of why Colorado hospitals have worked diligently to make health care affordable for Coloradans.”

The association referred to the legislature’s many years of work to lower insurance prices, for which hospitals were often at the negotiating table. The result is that while hospital prices can be high, insurance premium prices are among the lowest in the country for some buyers.

“Colorado hospitals are committed to their employees, patients and communities and will continue to partner with innovative and effective ways to improve affordability and access to quality care,” the association said.

Praise for the work of the hospitals

The reports are the latest volleys in Governor Jared Polis’s battle against large hospital systems that Polis said is ripping off Colorado patients. And they show how HCPF, the state agency overseeing Medicaid in Colorado, has gone from being a quirky health insurance administrator to an all-purpose price fighter under Polis. Spending on Medicaid in hospitals accounts for about 9% of the total state budget.

But the reports also land at a delicate moment. As much as state officials want to take over the hospital awards and profits, they are also cautious about playing their hand on hospitals that have worked closely with the state to respond to the pandemic and have been hailed as one of its heroes.

Bimestefer praised the work of the hospitals on August 18.

“Ultimately, we are extremely grateful,” said Bimestefer. “We need these hospitals. You took care of our people. You saved lives. “

However, she said the reports highlight the lessons that need to be learned and the changes that need to be implemented. Future stimulus funds could, for example, take into account the amount of reserves that a hospital must draw from. Large hospitals could rethink their pricing and investments by focusing on delivering great community benefits and reducing inequalities in care.

“Sometimes when you are going through the toughest times, these are the times for the most transformative changes,” said Bimestefer. “We know we have to transform.”

This story comes from The Colorado Sun, a Denver-based journalistic news agency that covers the state. For more information and support for The Colorado Sun, visit coloradosun.com. The Colorado Sun is a partner of the Colorado News Conservancy, owner of Colorado Community Media.

U.S. life expectancy dropped by 1.5 years in 2020, greatest drop since WWII

The Covid-19 pandemic cut average life expectancy in the United States by about 18 months in the past year, which is the largest annual decline since World War II, according to new data from the Centers for Disease Control and Prevention.

According to the report released Wednesday by the CDC’s National Center for Health Statistics, Americans are now expected to live an average of 77.3 years, compared with 78.8 years in 2019. Hispanics saw the sharpest decline in life expectancy last year, followed by black Americans.

“The decline in life expectancy between 2019 and 2020 is primarily due to deaths from the pandemic,” the report said. Covid deaths accounted for nearly 75% of the decline. More than 609,000 Americans have died in the pandemic, including about 375,000 last year, according to the CDC.

About 11% of the decrease is due to an increase in deaths from accidents or accidental injuries. Deaths from drug overdose, the pointed 30% during the pandemic accounted for about a third of accidental injuries last year.

The life expectancy of American men decreased 1.8 years from 2019 to 2020, while the life expectancy of American women decreased 1.2 years from 2019.

“The difference in life expectancy between the sexes was 5.7 years in 2020, increasing from 5.1 in 2019,
said the report.

Hispanic Americans typically have longer life expectancies than non-Hispanic blacks or whites, but according to the report, Hispanic life expectancy declined more than any other ethnic group in the past year. The life expectancy of all Hispanics decreased by three years, from 81.8 years in 2019 to 78.8 years in 2020. Hispanic men suffered a decrease of 3.7 years in 2020.

“Covid-19 was responsible for 90% of the decline in life expectancy in the Hispanic population,” the report said.

The narrowing of the life expectancy gap between white and Hispanic populations “is a strong indicator of the deterioration in health and mortality scores for a population that, paradoxically, before the Covid-19 pandemic, was able to meet expectations.” coincide with their disadvantaged socio-economic profile. Said the report.

“You were at a greater risk of getting infected,” said Elizabeth Arias, the report’s lead author, in an interview. “People who work in the service sector could not telework.”

Hispanic and Black Americans are largely overrepresented in jobs that were deemed essential during the pandemic lockdown and are more exposed to the virus than office workers who could work from home.

“These groups have been infected and that has a lot to do with their status in society,” said Arias.

Black Americans experienced the second largest decline in life expectancy, falling nearly three years from 74.7 years in 2019 to 71.8 years in 2020, the lowest since 2000, the report said. Covid was responsible for 59% of the decline in life expectancy among blacks.

Life expectancy among white Americans fell 1.2 years in 2020, from 78.8 years in 2020 to 77.6 years, its lowest level since 2002. Covid-19 was responsible for 68% of the decline in whites last year .

Covid-19 was the third leading cause of death last year, and “the overall death rate was highest among non-Hispanic blacks and non-Hispanic Native American or Alaskan people,” the CDC said in its preliminary mortality report in April.

The life expectancy of black Americans consistently lags behind whites, but the last time the life expectancy gap between blacks and whites was this large was in 1999, according to the report.

“You would expect an infectious disease or pandemic to affect everyone … but it affected populations that differed by race and ethnicity,” said Arias.

Other factors that contributed to the 2020 decline in life expectancy include homicides, which accounted for 3% of the decline, and diabetes and chronic liver disease, which accounted for 2.5% and 2.3%, respectively.

Why the largest job wage growth post-pandemic is blue collar

Businesses across the country are in dire need of workers as economic reopening collides with a tight labor market, but the boom in wage growth for manual workers is ahead of the pandemic.

Donna Kauffman, co-owner of a landscaping and construction company in Colleyville, Texas, said a tight labor market had raised her starting wage to $ 13.75 an hour, compared to lower wages in previous years.

Economic forecasters like Gary Shilling have seen an upward trend in wages for manual workers and manual services in recent years, growing faster than white collar wages and a trend reversal that has persisted for the past 30 years, according to the US Bureau of Labor Statistics.

“In general, at the worker level, you’re likely to see higher real incomes,” Shilling recently told CNBC.

Schilling says “work share” – the amount of GDP that is paid out in wages, salaries and benefits – what was in decline has been trending upwards for decades, while the “capital share” – the amount of national income from invested capital – is trending downwards.

For workers in labor industries such as construction, transportation and manufacturing, as well as workers in manual service sectors such as hospitality, leisure, hospitality, and beauty and health services, they have seen the highest wage leaps in recent years. These wages continue to rise after the pandemic.

On July 7, 2021, in San Rafael, California, a sign reading “Now Hiring” was posted in the drive way of a McDonald’s restaurant.

Justin Sullivan | Getty Images

Gad Levanon, head of the Labor Institute at the Conference Board, said the economy will depend on the reopening of manual jobs and the recent wage hike is due to labor shortages in these industries as the country continues to grapple with the aftermath of the ongoing pandemic.

The June Non-Agricultural Payroll Report showed a rise Average hourly wages in all industries, with employment growth of 343,000 in leisure and hospitality professions, more than half of which are in the hospitality industry. But employment in areas such as construction, transportation and manufacturing remained low.

Levanon says that despite the rise in wages, it is taking longer to find workers in these industries as these positions are usually filled with workers from lower socioeconomic status who are still affected by the pandemic. These jobs require personal interaction and practical skills that pose potential health risks to workers, and many of these workers will either not return to their jobs or will not be able to return to work due to factors such as lack of access to childcare and continued state unemployment benefits.

The discussion about why workers do not return to work remains highly controversial. Some say unemployment benefits deter workers, others say Advantages don’t matter. Some say rising vaccination rates will encourage workers to come back, but others say the risks for vulnerable populations are still high.

Zoom In Icon Arrows pointing outwards

US Bureau of Labor Statistics

Some experts consider the wage increases to be here to stayand it is up to companies to compensate for labor costs when more workers return.

“America is first and foremost a service economy,” said Daniel Zhao, Senior Economist at Glassdoor. “So with the economy reopening, I expect greater demand for personal services, and this will add to the coming boom in service roles and work.”

Sportswear company Under armor increases his Minimum hourly wage for its retail and sales reps from $ 10-15, while restaurants like MC Donalds and Chipotle are increase their wages, and in April the White house increased the minimum wage to $ 15 for government contractors, including jobs for construction workers and mechanics.

Zhao says when companies like McDonald’s and Chipotle raise their minimum wages, it means they are realizing it Labor shortages and wage inflation as long-term problems.

“If they only perceived this as a temporary pandemic lack of time, they would only be relying on one-time bonuses or recruitment bonuses,” Zhao said. “But the fact that they are raising wages shows that there are employers who believe the recruitment challenges will continue for a long time.”

Workers willing to do manual work are falling

While every industry is currently suffering from work constraints, Kauffman said she has seen a steady decline in workers willing to do practical work over the past 20 years.

44 percent of the companies currently have vacancies for skilled workers, see above a June poll by the National Federation of Independent Business, and 66% of construction companies said they were not hiring enough skilled or skilled workers.

One reason workers aren’t returning to these jobs quickly is because of their bargaining power, says Gregory Daco, chief US economist at Oxford Economics. Employers must continue to meet higher wage and employment requirements in order to attract this workforce back.

A member of the Ironworkers Local 7 union installs steel beams on a skyscraper under construction during a summer heatwave in Boston, Massachusetts on June 30, 2021.

Brian Snyder | Reuters

The labor market for manual activities has been shrinking since the years leading up to the pandemic, according to Levanon, as older generations retire and there are fewer people doing these jobs. This trend will continue in the years to come.

“Retired baby boomers are people with lower education who do these worker and manual service jobs,” Levanon said. “And the majority of the younger generation it replaces are better educated and less willing to work in such professions.”

Kauffman said her landscaping company used to hire young adults, either high school students or out-of-college young adults, but gradually as high schools in her area started pushing college for more students and ending agricultural education programs, she has potential workers lost.

Daco says that while workers’ desire to perform these roles is an issue, there are more direct reasons for labor shortages and wage increases in both manual and manual service occupations. On average, there are enough people to do these jobs, he says, given the 6.4 million people who are not currently working but want a job, according to the June payroll report.

Skills shortages and job shortages in the place of residence of workers contribute to recruitment difficulties.

“They have workers, but they may not be in the right place at the right time,” said Daco. “Perhaps there are rural areas where people have to work in services, leisure or hospitality, but fewer people want to live there.”

Infrastructure spending can drive wages higher

While the debate in Congress and the White House over a draft federal spending and infrastructure bill continues, bipartisan support for strengthening physical infrastructure across the country, including adding and expanding roads, bridges, and highways, should meet the demand for workers and wages keep high pressure on employers.

The details of any specific plan passed by Congress are crucial, but Levanon says companies will continue to face extremely difficult recruitment barriers for construction workers and manual workers.

As federal spending plans become clearer, Daco expects increased pressure to fill these positions, which will drive wages higher, but not suddenly. He predicts a more gradual increase towards mid-2022 when infrastructure plans become a reality. And while current wages represent a starting point for the future, he does not see this as a starting point for a sustained surge in the wage boom for workers.

“I don’t think this is the start of wage inflation as wages will continue to rise at the same rate as they are indefinitely,” he said.

—MacKenzie Sigalos of CNBC contributed to this report

The largest errors vacationers make in main world cities

Travel writers make their trade out of helping tourists navigate unknown places. Still, even the most savvy traveler tends to make the occasional gaffe while on vacation.

This is where CNBC’s travel agents share the biggest mistakes visitors make in the cities they call home.

A stroll through Singapore

“Trying to stroll around Singapore is a huge mistake. If you cover just a few miles that you would love to walk in most cities, you end up drenched – either from the heat or from tropical weather.” Regardless of whether Google Maps shows your destination is not far, take a taxi or the MRT [Mass Rapid Transit] Train. They’re both cheap and luckily air-conditioned. “

—Christian Barker, Australia

See everything in New York City

“New York is a huge travel destination with a multitude of options, and that makes a tourist’s time in the city precious. Unfortunately, I’ve found that many visitors – especially first-time visitors – try to squeeze too much into a trip to their Midtown hotel to walk across the Brooklyn Bridge, then speed up to Uptown to tour part of Central Park, before seeing a Broadway show that evening.

The view of Lower Manhattan from the Brooklyn Heights Promenade.

cmart7327 | E + | Getty Images

“Rather than packing an itinerary for 12 hours each day, I recommend picking a handful of sights to explore. And leaving some unplanned blocks of time as the moments you’ve only heard of in New York are almost over . ” always unplanned.

“For example, don’t try to see the Statue of Liberty, the Empire State Building, and the Metropolitan Museum of Art in one day. You will be so exhausted – you won’t appreciate any of Liberty and then head to nearby Ellis Island and its immigration museum, or dedicate a day to Central Park and the surrounding areas – the park is bursting with beauty in every corner and nooks and crannies of its 840 hectares.

“Remember, New York is not going anywhere. The city will be ready and waiting to welcome you back.”

—Tracy Kaler, United States

“Stick to the script” in Jamaica

“I’ve nested in Jamaica for the past six months and vacationed here many times over the past 20 years. Now that I’ve spent time here, I realize how much I’ve missed – and how many tourists miss.

Jamaica is the kind of place to stray from the script.

Sheryl Nash-Nance

American travel writer

“So many come to the island and hardly venture beyond their all-inclusive resort or stick to the tours that the hotel offers. Heavy sigh. Jamaica is the kind of place to stray from the script if you haven’t gone to a beach only locals know about, or if your taste of Jamaican cuisine is limited to the typical jerk chicken or pork, try a restaurant outside the hotel and the tourist area.

“Dunn’s Rivers Falls is fine, but there are spectacular waterfalls without the crowds. Negril and Montego Bay get all the press, but make your way to Portland. Jamaica is full of secrets. Do a little digging before your trip, be it from your social media groups or friends of friends. Find an insider who will give you the skinny. “

—Sheryl Nash-Nance, United States

Be a morning person in Melbourne

“Stroll around Melbourne on Saturday morning at 9:00 am and you might be wondering if aliens abducted most of the population overnight.

Melbourne’s most popular coffeehouses are busiest after 9 a.m.

Jacobs Stock Photography Ltd | DigitalVision | Getty Images

“The only people in museums and galleries at 10 am are families with young children. Instead, we tend to pile up the other end of the day and meet later – brunch should never start before 1 p.m. – and go to the footy [football match], linger over dinner, meet for a drink, then maybe see a show. It’s not uncommon for a headliner to take the stage in a pub … at midnight.

“If you got up at 7 a.m. and filled the day with activities, you won’t make it to the encore. Relax, get a good night’s sleep and make sure you see the best of Melbourne – it glows after dark. “

—Carrie Hutchinson, Australia

I miss the quieter side of Hong Kong

“I’ve lived in Hong Kong since 2005 and many first-time international visitors still assume it is mostly a concrete jungle when it is actually made up of 261 islands. There are stunning secluded hikes, beaches on par with the French Riviera.” can accommodate, cascading “Waterfalls, jungle-covered temples and great snorkeling spots … there is so much more than just skyscrapers here.”

—Chris Dwyer, United Kingdom

The view along the Dragon’s Ridge, a popular hiking trail in Sheck O Country Park on Hong Kong Island.

Nukorn plain pan | Moment | Getty Images

“Hong Kong was my expat home for 20 years. I have always asked myself why visitors – be they tourists or business travelers – make the city a shopping and dining paradise. The ‘Pearl of the Orient’ has so much more to offer just requiring tourists to be on the MTR. climb [Mass Transit Railway] or a minibus and get off at one of the many landscape parks.

“After living in the city for a long time, I started kayaking to get a new and different perspective on the place. There is much more for tourists to explore, discover and enjoy. “

—Petra Loho, Austria

Worries about street food in Bangkok

“Bangkok’s reputation as one of the world’s most incredible culinary destinations is largely due to its street vendor offerings. The street chefs produce a fantastic selection of Thai classics and conjure up everything from Chinese-inspired stir-fries to spicy salads, spicy curries and grilled meat.

A seller cooks street food in Bangkok, Thailand.

Nigel Killeen | Moment | Getty Images

“Despite the fame of the street dining scene, some visitors are squeamish about the hygiene standards in these places. It doesn’t have to be. Every street vendor stall that’s worth its price – fish sauce with blindingly hot bird’s eye chilies – has freshly cooked food.

“Look out for long lines of local guests and you will know you are on a good cause.”

—Duncan Forgan, United Kingdom

How Gojek and Tokopedia teamed up in Indonesia’s largest merger

Kevin Aluwi and William Tanuwijaya recently made Indonesian history.

As founding members of the GoTo Group, the 30-year-olds are responsible for creating Indonesia’s newest and most valuable tech company after turning their ride-hailing and e-commerce startups into the biggest business in the country ever.

The combined company is contributing 2% to Indonesia’s GDP across its various lines of business, including a powerful super app, according to the company. And that is just the beginning.

“Hopefully one day we’ll add 5 to 10% of that,” said Tanuwijaya, Co-Founder and CEO of Tokopedia CNBC does it.

But maybe you have never heard of it. What exactly is GoTo and how did it get so big?

Founding of Indonesia’s largest technology company

GoTo Group is an Indonesian tech giant founded in May 2021 through a blockbuster merger between two of the country’s largest startups: Gojek and Tokopedia.

Tokopedia was founded one year apart in the capital Jakarta and started as an e-commerce marketplace in 2009 to connect small traders with buyers, while Gojek was launched in 2010 as a ride-hailing platform for motorcycle taxis.

Both companies were owned by a Group of friends in their 20s, who at the time were responding to an emerging wave of Internet connectivity that swept the country.

Indonesian technology company GoTo offers on-demand, e-commerce and digital payment services.

Go to

“There was something of a tipping point where people began to see the potential of the internet, especially with the advent of mobile devices,” said Aluwi, Gojek’s co-founder and CEO.

In a vast country with the fourth largest population in the world and a rapidly growing middle class, the founders had something under control. In the years that followed, both companies ventured into digital payments and other services.

Imagine that Amazon, DoorDash, Uber, PayPal, Stripe are combined with each other.

William Tanuwijaya

Co-Founder and CEO, Tokopedia

Tokopedia has doubled in size to add new market segments such as parents and small stallholders to its ecosystem. In the meantime, Gojek has expanded its ride-hailing platform regionally and expanded its local super app, which offers users on-demand services from food to massages and manicures.

In 2015, the two began working together, using Gojek drivers to deliver Tokopedia products on the same day outside of rush hour.

“We were the first in the world to form a partnership between an on-demand platform and an e-commerce platform,” said Aluwi.

A localized super app

Six years later, amid growing competition from regional and global tech companies, the two agreed to officially merge into an $ 18 billion deal last month. Indonesia’s greatest ever.

“Imagine Amazon, DoorDash, over, PayPal“Stripe is combined with each other,” said Tanuwijaya. “There is a saying that if you want to go fast you go alone; if you want to go far you go together. So GoTo basically means to go far, to go together. “

The Indonesian technology company GoTo Group comprises three business lines, Gojek, GoTo Financial and Tokopedia.

CNBC

In the new structure, Andre Soelistyo from GoJek will take over as CEO of GoTo Group and GoTo Financial, Patrick Cao from Tokopedia will become President, while Aluwi and Tanuwijaya will remain CEOs of Gojek and Tokopedia, respectively.

The combined company has over 100 million monthly active users, more than 11 million dealers and over 2 million drivers in an ecosystem that works for 2% of Indonesia’s GDP of $ 1 trillionannounced the company.

GoTo hopes to use it to capture more of the market in Indonesia and beyond.

Seize the opportunity in Southeast Asia

Indonesia’s digital economy is projected to be worth $ 124 billion by 2025 as the value of the broader Southeast Asian online market triples to more than $ 309 billion. According to a recent study.

“Indonesia remains very exciting because of the population in Southeast Asia, the enormous economic growth forecasts for the next 10 years or so and (and) a really consumer-oriented economy,” said Florian Hoppe, partner at Bain & Company and co-author of the study.

This is both a huge business opportunity and an area where we truly believe we can make a big difference.

Kevin Aluwi

Co-founder and CEO, Gojek

However, in order to expand, companies need to focus on their services 120 million Indonesians those outside urban areas in the more than 17,000 archipelago.

“Much of the early growth was driven by major urban centers, was driven by Java,” he said. “The next half will be the really interesting story. How do you get there? Establishing logistics services there, integrating them for payments, really integrating them into the digital economy. ”

Southeast Asia’s digital economy is expected to triple in value by 2025.

CNBC

For GoTo, this includes providing payments and financial services in a country where 47 million adults do not have access to popular financial services and products, and 92 million people have never used a bank.

“It’s these people, with or without a bank account, where illness or economic shock can really make the difference between belonging to the middle class and falling back into poverty,” said Aluwi. “So this is both a huge business opportunity and an area where we really believe we can make a big difference.”

Target of the IPO in 2021

To date, neither Gojek nor Tokopedia is profitable.

GoTo is said to be planning another round of fundraising prior to a public listing. likely in Jakarta and the US The company already has an impressive list of investors like Softbank, Alibaba, Tencent, Facebook and Google.

“In terms of the timeframe, not just for going public but for all product development, my timeframe is always yesterday,” said Tanuwijaya. “But to be realistic for the team and so on, it’s as soon as possible. We hope we can try to get on the list hopefully by the end of this year.”

The potential is clearly there and I think international investors have recognized that.

Florian Hoppe

Partner, Bain & Company

In April, the competing super app Grab completed a Nasdaq listing the world’s largest “blank check merger” – an acquisition company for special purposes valued at nearly $ 40 billion. GoTo is intended to be a public market valuation target for $ 35 to $ 40 billion.

The GoTo and Grab IPOs will also serve as a litmus test for the region. If successful, it could pave the way for more tech startups as investor appetite grows.

“Historically, Southeast Asia has had a slightly more difficult time getting on the radar alongside China and India,” said Hoppe. “The last few years have shown that the digital economy is now at least competing with India. But the potential is clearly there and I think international investors have become aware of it.”

Prepare for global alignment

With the newly combined resources and thriving business in the new landscape, the company is now planning its expansion strategy, including an ambitious promise of sustainability.

“GoTo comes with a great responsibility,” said Tanuwijaya. “We’re trying to provide solutions to a problem we figured out a decade ago. But that solution will also create another problem: with millions of drivers, emissions, so many dealerships, packaging, and so on.”

GoTo is an Indonesian technology company that emerged in May 2021 from the merger of ridesharing giant Gojek and the e-commerce platform Tokopedia.

Go to

“That’s why we’re committed to truly zero waste and zero emissions by 2030 and become a company that can be a legacy for the next generation.”

The bold ambitions imply that the GoTo of 2030 could look very different than it is today. But as for the leaders, they’re just getting started.

“Our ambitions are without a doubt global,” said Aluwi. “We are not only active in Indonesia and we firmly believe that the future of our combined group is beyond one country.”

Do not miss: How 3 friends from Indonesia’s street stalls made a billion dollar business

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Wilmer Valderrama: Fatherhood is the largest win of my life | Leisure

Wilmer Valderrama admits that fatherhood feels like the “greatest asset” of his life.

The 41-year-old actor has a three-month-old daughter named Nakano with Amanda Pacheco, and he enjoys the challenge of parenting and admits it made him “tougher” in his professional life.

He shared, “I always knew why I was doing what I was doing.

“I’ve always said if you wake up this morning you will already win. And when I wake up I feel like I’ve won because I just woke up and then go to her room and wake her up in the morning before she feeds and sees her eyes open … it’s the biggest win I’ve ever been in my life had.

“That is something different. And it makes me vibrate harder – everything you see, what I do professionally and spiritually … especially with my mind, my soul and my body should not only be a role model, but a great role model . “

Wilmer – who previously dated Demi Lovato, Mandy Moore, and Ashlee Simpson – is determined to set an example for his daughter.

He thinks it is imperative that she also have strong female role models in her life.

The actor told The Jess Cagle Podcast: “I was thinking of their generation and you know what toys will they play with? Will they look like them? Are there heroes who look like them? Are there women who can ? strive to be? “

Wilmer also revealed why he named his daughter Nakano.

He stated, “I think she has to defend herself in life. That’s why I gave her a strong name.

“It’s the name of a legendary warrior in Japan and I wanted her to have the conversation: ‘What does your name mean?'”