Worrisome Jobs Report, June Job Decline, Strong GDP Growth, Bank Scam Liability, Roth Account Perks, Japan Funding Deal, Stock Market Drop, AI Counterfeits, Rising Chocolate Prices & Housing Market

Should you be concerned by the jobs report?

The July jobs report showed nonfarm payrolls grew by 73k, which missed the estimate of 100k. Unfortunately, the news got even worse as you dug into the report. The prior two months saw major negative revisions as June was revised from 147k to just 14k and May was revised from 125k to just 19k. This amounted to a total negative revision of 258k when looking at the two months combined. Another negative was job growth in the month of July was heavily reliant on health care & social assistance as the category added 73.3k jobs in the month. This means that this category essentially carried the report as the total jobs created in the month topped the full headline number.

Some other areas saw growth with retail trade adding 15,700 jobs, leisure and hospitality adding 5k jobs, and construction adding 2k jobs. Unfortunately, there were more categories than normal that saw declines with information falling by 2k jobs, government was down 10k jobs, manufacturing declined by 11k jobs, and professional and business services declined by 14k jobs. While all this sounds negative, I still wouldn’t panic over this report. The main reason is the unemployment rate remains historically low at 4.2% and layoffs have not materially increased. I would even make the claim that the unemployment rate is healthier than it appears. Of those that are unemployed, the average weeks unemployed now totals 24.1 and those that have been unemployed for more than 27 weeks jumped to 1.82 million, which is about one-quarter of all the unemployed.

If you have been out of work more than 27 weeks, how hard have you really been looking, or are some of those really just retired now? It seems we are in an environment where companies are keeping their employees and limiting new hires. With more clarity on the trade deals and tariffs now, that could help stabilize the labor market, but my main concern is are there enough qualified candidates to truly fuel job growth? A large problem we have discussed in the past is an aging population that has seen assets climb tremendously, which has enabled many near retirement age the luxury to retire.

While I don’t want to say this is a negative, the working age population or those between 25 & 54 remained near historical highs around 83%. One positive in the report I didn’t discuss yet was the fact that wage inflation came in above expectations at 3.9%, which is nice considering the decline in inflation we have seen this year. While again I may sound negative on this report, I want to be clear that there is no reason to be overly concerned yet, I would be interested to see how the next few reports look before being worried about a potential recession in the near term. 

Job openings declined in the month of June

The June Job Openings and Labor Turnover Survey, commonly referred to as the JOLTs report, showed job openings declined to 7.4 million, down 275,000 from the prior month. While this may sound problematic, it is important to remember this is still a historically healthy level for job openings and it comes against a back drop of a historically low unemployment rate. I have said this for many months, but I believe there is even further room for job openings to decline without there being a problem for the labor market.

Taking that concept one step further, I would be quite surprised to see growth in job openings from here. The main reason for that is there just aren’t enough people to fill those openings, especially since it appears many companies are choosing to retain employees rather than look for new ones. I say this because layoffs continue to remain quite low. In the month of June, they totaled 1.6 million and really since 2021 they have maintained that level with the average monthly total since January 2021 standing around 1.57 million. If we look pre-covid, from December 2000 (when the data first started) to February 2020, layoffs averaged 1.91 million per month. Even though you will always hear news about various companies implementing layoffs, I believe we remain in a healthy labor market with good unemployment and low layoffs. This healthy labor market remains one of the key reasons for why I believe the economy will remain in a good spot for the foreseeable future. 

GDP came in stronger expected, another good sign for the economy!

While Q2 gross domestic product, also known as GDP, jumped 3% and easily topped the estimate of 2.3%, the numbers were not as strong as the headlines indicate. With the tariffs having a large impact on trade and business inventories, this report is the opposite of Q1 when actual results were much better than the headlines showed. In Q1 companies were likely trying to get ahead of tariffs so they were trying to load up on inventory and import a lot more foreign goods than normal. This led to a 37.9% increase in imports during Q1 which subtracted 4.66% from the headline GDP number. In Q2 we saw a complete reversal as imports fell 30.3% and added 5.18% to the headline GDP number.

The change in private inventories was also extremely volatile during these last two periods considering it added 2.59% to the headline number in Q1, but subtracted 3.17% from the headline number in Q2 as many businesses were likely working through excess inventory. I bring all this up not to say that the GDP report was bad and in fact it was still a good number, but rather to show the messiness in the numbers for the first two quarters. We should not see the type of volatility that we have seen in trade going forward as it normally has a small impact on the overall report. The main reason I see Q2 GDP as a good report is because the consumer, which is the main driver in the long-term, held up well. There was a small 1.1% increase in services spending and goods saw an increase of 2.2%.

Considering we are primarily a service-driven economy; I do worry the goods spending could have been further pull forward in demand as consumers try to get ahead of price increases from tariffs. This could have a negative impact on consumer spending going forward as they may not need to purchase as many goods. With many areas of the report normalizing as we exit the year, I’m still looking for GDP growth that would likely be in the 1-2% range. 

Should Banks be responsible when their customers get scammed?

It’s a sad thing to see someone in their 60s or 70s get scammed out of their life savings. Unfortunately, there are many online scams now and it appears they just keep growing. According to the FBI, in 2024 online scams totaled $16 billion, which was a 33% increase from 2023. A big question that people have been asking is should banks be the ones that are held responsible when it comes to preventing their customers from making poor investment decisions or losing money in online romance scams? Banks are already trying to prevent money laundering, terrorist financing and other types of fraud that is costly for the banks to maintain. Adding another oversight would be another expense for the banks, which could lead to costs elsewhere in the banking system to make up for those added expenses. From the consumer standpoint this could also lead to frustration when trying to get money for legitimate purposes as it could lead to longer review periods for certain transactions or if your account were to get flagged who knows how long it would take to get that resolved.

As an example, let’s say a teller sees the same person coming in taking out large sums of money on a regular basis, should the teller stop the activity? Again, if it was for legitimate purposes, wouldn’t that be frustrating? What something like this would likely mean for banks is they would have to set up departments to review the situations of potential scams and take many hours to discuss with bank employees, the customer and maybe even family members why the withdrawals are taking place. No surprise here, but attorneys in some states have begun going after the banks saying it is their obligation to protect their clients’ assets. There are laws that were passed in the 70s that requires banks to report suspicious money laundering activity and even required banks to screen for fraudulent activities and reimburse customers for stolen funds. However, it’s limited to criminal impersonations of a customer to get unauthorized access to their accounts. This is different than many of the scams we are seeing today where the customers themselves are taking the money from their own account and sending it to the scammer. In my opinion, the best thing to do is educate people about these scams and if you have parents, be sure to have conversations with them about them before they happen.

Financial Planning: The Secondary Benefits of Roth Accounts

While the primary advantage of Roth accounts lies in their tax-free growth and withdrawals in retirement avoiding potentially higher tax rates, there are several powerful secondary benefits worth considering. First, Roth IRAs are not subject to Required Minimum Distributions (RMDs), which means retirees can keep their money growing tax-free for life. In contrast, traditional pre-tax retirement accounts force RMDs beginning at age 75, whether the funds are needed or not. These mandatory withdrawals must be taken as taxable income and cannot be reinvested into another tax-advantaged retirement account.

The most similar alternative is a regular taxable brokerage account, where earnings such as interest, dividends, and capital gains are subject to annual taxation—ultimately reducing the net return over time. By avoiding RMDs, Roth accounts allow retirees to maintain greater control over their tax situation and preserve more wealth in a truly tax-advantaged environment. Second, Roth accounts are far more advantageous for heirs. While both Roth and pre-tax retirement accounts are now subject to the 10-year rule—requiring inherited accounts to be fully distributed within 10 years of the original owner's death—the tax treatment is vastly different.

Pre-tax inherited accounts are fully taxable to beneficiaries, which can push heirs into higher tax brackets as they’re forced to withdraw large sums over a relatively short period. In contrast, inherited Roth accounts allow for the same 10 years of tax-free growth, but the entire balance can be withdrawn tax-free at the end, providing greater flexibility and preserving more value. Third, for individuals whose estates exceed the federal estate tax threshold, Roth accounts offer superior after-tax value. Both Roth and pre-tax accounts are included in the taxable estate, but Roth funds retain their full value since they are not subject to income tax when withdrawn. These features make Roth accounts not just a retirement planning tool, but also a strategic asset for legacy and tax-efficient estate planning.

Is Japan really giving the United States $550 billion?

I’m sure you’ve seen the headlines about the trade deal with Japan and how they are going to give the United States $550 billion. When you dig into the details, they are kind of giving us $550 billion, but in reality, it is made up from equity, loans and loan guarantees from the Japanese government. This will not happen all at once as the money will come in as deals begin. I need to point out that the government of Japan already has a debt to GDP that far exceeds the debt situation we have here in the US. The deal has been agreed to in principle, but there is no firm contract at this time. The concept of what the President is trying to do is a good one for the United States, but I do wonder about the longevity of this sovereign fund. This fund will be controlled by the President of the United States and it will allow him to decide where to invest the money. It will be guided by the Commerce Department US Investment Accelerator, Michael Grimes, whose team will identify investments and make sure the funds are used properly and quickly for the investment.

While this concept may sound great, what happens when a new president gets elected in 2028? They could potentially scrap the whole deal or divert funds to other projects that may not be part of what was initially intended. Although there are questions about this deal, it is still a big benefit since 90% of the profits will go to United States. Where will the profits come from you may wonder? The US fund would construct a facility for any corporation and lease it to the corporation and keep 90% of the leasing revenue as profit. If this works, this would be great for the United States to build infrastructure and enhance industries such as energy, semiconductors, and even ship building or really whatever appears to be a good investment with no taxpayer dollars. I hope the fund stays the course and other funds from other countries come into the sovereign fund to build the United States to new levels.

AI is benefitting online counterfeit goods

There are many positives to AI, but there are also a lot of negatives if it falls into the wrong hands. It used to be a little bit easier to find counterfeiters online because of misspellings and bad grammar, but generative AI has helped counterfeiters remove these glitches. In the last four years, counterfeit goods that have been seized has climbed to over $5 billion from just a little over $1 billion. The consumer is generally the one holding the bag and their losses cannot be corrected. Social media sites have really benefited from increasing traffic as it allows them to charge more for advertising and they are currently not responsible for what is on their site because they are not the owner of the merchandise just a conduit.

The risk here on the counterfeit goods is not just the money that is lost, but there are also safety issues on things like toys, apparel, and accessories that failed to comply with the US product safety standards. People have even purchased fake parts for their cars, which has caused fatal car crashes. Customs and border patrol saw an increase in 2024 of counterfeit airbags, which may not deploy and ends up killing the driver or the passenger. There is potentially some help on the way as a new law called the Stopping Harmful Offers on Platforms by Screening Against Fakes in E-commerce Act, also known as the SHOP SAFE Act, is in Congress, but it has not been passed yet and it seems to be stuck in the mud.

There’s also a lawsuit in the courts further scrutinizing these social media apps, Anderson versus TikTok, in which a 10-year-old died after she was shown a blackout challenge. These sites are using algorithms to push out content that people aren’t searching for and can be dangerous. This is then causing people to buy products that they may have never thought about buying. My advice here, until there is more clarity, I wouldn’t buy anything on these social media sites. 

Sorry to tell you, but the price of chocolate will be increasing

This has a larger effect on Americans than most probably think considering 89% of people in the US eat chocolate once a week and 40% of people in the US eat chocolate on a daily basis. Looking back just four years ago, cocoa prices were under $4000 per ton. By the end of December 2024, they hit $12,000 and now in July 2025 they have pulled back to $8500, still more than double where they were just five years ago. The reason for the surge in price is the poor weather in West Africa where roughly 70% of the world cocoa supply comes from. Unfortunately, there’s also been a cocoa plant disease in West Africa which has hurt prices even more. This has led to a shrinking supply of cocoa and it is not expected to turn around anytime soon.

So if you like Hershey’s chocolate or Oreo cookies, you’ll likely see prices continue to increase. As profit margins get squeezed for companies like Hershey’s, where chocolate accounts for 67% of total sales, their stocks could struggle in the months ahead. If you’re a chocolate lover, you may have to cutback your daily intake of chocolate or be prepared to increase your chocolate budget! 

The U.S. Housing Market is still in the Doldrums

The spring home selling season has been a disappointment and it doesn’t look like there will be much improvement going forward. This is the third year in a row of slow housing sales and both realtors and homeowners are becoming impatient. There is good news for homeowners on the national level as the median price of a home increased to $435,300 in June, a record that goes back over 25 years. This is an increase of 2% from 2024 and it is important to point out that this is the median price so while there are areas that saw growth, there are also other areas that saw declines.

Areas in Texas and Florida come to my mind first when thinking about some areas that have struggled. On the negative side of the coin, US existing home sales was down 2.7% in June from May, which was not a good sign for demand. Another concerning data point came from real estate company Zillow, as it said 25% of listings in June saw a price cut, this was the highest proportion of price cuts for any June in the last seven years. The National Association of Realtors also pointed out that the typical home in June was on the market for 27 days, which was a five-day increase from June 2024 when a house was on the market for only 22 days.

Don’t listen to anyone blaming the Federal Reserve for the housing slowdown because they are not cutting interest rates. Mortgage rates are not tied directly to what the Federal Reserve does on short term interest rates. Generally, mortgage rates move more in tandem with longer-term government bond yields. I hate to say it, but I do not see much of a chance for a big decline in long-term interest rates because of the high supply of US government debt that continues to hit the market. I think we will continue to see a slow housing market in 2025 and perhaps even start off 2026 at a slow pace as well.