February 12, 2026 • 38 mins
Mike Armstrong and Marc Fandetti break down a stronger-than-expected jobs report and what continued labor market tightness could mean for inflation and Federal Reserve policy. The conversation explores why healthcare hiring is driving much of recent job growth, how demographic trends are reshaping the labor force, and whether AI and robotics could eventually offset rising labor costs in the sector. The hosts also dive into the ongoing debate over tariffs, examining the economic trade-offs between protecting domestic industries and raising costs for consumers and businesses.
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Speaker 1 (00:00):
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(01:07):
and Mark Vandetti.
Speaker 2 (01:10):
Good morning, Happy Thursday, Welcome back to the Financial Exchange.
It's continuing to be a busy economic data week here.
Earning side, we don't have anything to too exciting. McDonald's,
T mobile, Shopify all went yesterday today only only big
you know, applied materials. Anheuser Busch would probably be the
(01:32):
most household name reporting earnings today. But the economic data
has been big this week. Instead of a Friday jobs
report last week, we got a Wednesday jobs report yesterday.
We will get an inflation report on the consumer price
index tomorrow if I'm not mistaken. Mark, and a lot
to digest here, because frankly, a better than anticipated unemployment report,
(01:54):
as we had been hinting might come over the course
of the last few few weeks. I'll tutor on Horn
for a moment here. There were some signs in the
weekly data that we took as positive indicators and turned
out to be for the month of January, but wanted
to dive in a little bit more now that we've
had a day to digest the jobs data, and a
(02:15):
lot's being made about the health care sector, and to
be clear about why, it's because that's where a lot
of the hiring is coming from. And the way that
I read a few of these pieces Mark this morning
was kind of pooh poohing the you know, the idea
that the economy or the labor market is in good shape,
and oh, look at what it looks like if you
(02:36):
just take out all the health and private education workers
to job growth. And I think, what, I know what
your answer would be, But that's kind of a false
premise in my mind, like I don't really care where
the jobs come from. I don't really care where the
jobs come from.
Speaker 3 (02:51):
Right, Well, you can't say if you just took those out,
because something would have happened in its place. And secondly, right.
Speaker 2 (03:02):
So, what we did see is a lot of healthcare
workers getting hired again in January. And what I found
interesting is if you take a look at the change
in non farm payrolls, and they did try and make
a chart here that explains how important this was. The
total change in non farm payrolls over the course of
twenty twenty five was pretty muted at around three hundred
(03:25):
thousand jobs created over that twelve month time period. If
you do strip out that health in private education, then
you had net job loss. So if you don't work
in those two sectors, and it feels like a week
jobs market it is. Yeah, I can see why you
feel that way. But again, if you're using the unemployment
report for what I think it's most useful for, which
(03:46):
is describing tightness in the economy, that's where That's where
this matters. Yes, because I believe I could be wrong,
But nurses do spend money, right, They don't just take
their wages and go home and sit there. If I'm
not mistaken. Sure what other takeaways that you have every years?
Speaker 3 (04:07):
Yes, nurses are people.
Speaker 2 (04:08):
And they do spend their money that they take. What
other takeaways you have from this week's jobs report?
Speaker 3 (04:14):
Mark, you made the key point. We talked about it
a lot internally this morning. Uh. Researchers you whose economic
data differently, they see the world differently. Maybe is a
is a more general way to put it than other people,
even full time finance people. Data means something only in
(04:35):
the context of a framework for thinking about the economy.
You don't just look at your blood pressure, well, lay
people do. I do, But a doctor takes that as
one data point in a much bigger sort of constellation
that forms a picture of your cardiovascular health, for example.
Similarly unemployment. You might think unemployment going up is unambiguously bad,
(04:58):
and in many cases that's true. But if the FED
is trying to squash inflation by constricting demand, a side
effect of that might be unemployment going up, So it
may not be unambiguously bad, is my point. Yesterday's unemployment
report was good. Is it unambiguously good? I don't know
(05:20):
the end? That sounds crazy? What are you as sadist?
What do you want more unemployment?
Speaker 1 (05:24):
No?
Speaker 3 (05:24):
But if unemployment is unnaturally load to begin with, I
don't think we're too far into the danger zone there,
but we might be. It depends on the structure of
the economy. The FED might be overstimulating it. That might
also sound crazy because the FED is cutting, and many
anticipate more cutting, more easing of monetary policy, stoking demand
(05:45):
to stimulate the economy. The problem we had in the
nineteen seventies was the FED didn't understand the structure of
the economy. It overstimulated, and then you had a couple
of big oil price spikes seventy three seventy four and
seventy nine eighty or seventy eight seventy nine. Then there
was the revolution I ran in nineteen eighty seventy nine eighty,
(06:06):
So there were some one offs, but the level of
underlying inflation, which we sometimes measure by core or similar metrics,
was elevated because the Fed thought the economy could run
faster than it was running. And looking at yesterday's unemployment report,
Mike in the last couple of quarters of GDP the
expected GDP, which is our way of measuring economic growth.
(06:29):
It's not perfect, of course, but it gives us a
good read on what we think is important. There's an
argument that the economies running too hot. Indeed, as Chucksata
pointed out yesterday, the Trump administration wants the economy to
run hot, right, I mean it seems likection year at
not uncommon for politicians. So my big takeaway is I
(06:49):
wonder if the risks have shifted to inflation relative to unemployment.
Speaker 2 (06:55):
I think there's some evidence there. Again, we are not
in a hot I don't think we can describe today
as a high inflation environment, at least not the last
twelve months. Right, We're sitting where would you describe inflation
Somewhere between night twos.
Speaker 3 (07:08):
I think if you look at measures of core that
tend to line up well with future inflation.
Speaker 2 (07:12):
Which is uncomfortable but not someone is that a good
sober way to Yeah, somewhat elevated. And so it all
plays into then what everyone thinks the FED might do
and to be you know, to put the odds out
there for a moment. A week ago before all these reports,
you had investors reacting a little bit to the downward
(07:34):
trend in markets from some of the AI stuff, and
I think it had some of them thinking, oh, maybe,
you know, maybe we're heading for a market downturn and
that would justify a FED pivot. Here there was a
one in four chance that the FED would cut rates
at that next meeting on March eighteenth. Lo and behold
a week later, now that we've gotten this Job's report,
the likelihood of a rate cut at that next meeting
is now sitting below six percent. Basically, nobody thinking that
(07:57):
they're going to be able to cut rates when you
just saw the un deployment rate dropping. And I have
to agree there's no possible way you do.
Speaker 3 (08:03):
So I'll say what I said yesterday. It's a little dramatic,
but this is radio and you don't want to be
a boring researcher cut rates, are you nuts? Unemployment is
way below what for decades most people thought was a
sustainable natural rate of non inflationary right now, the structure
of the economy changes, the natural rate changes, but you
(08:25):
cannot get away from that trade off between in the
short term, between unemployment and inflation. We ignore it at
our peril. It was ignored despite the fact that our
tools for measuring the potential of the economy and our
framework for thinking about it are better than they were
in the nineteen seventies. Notwithstanding that that trade off was ignored,
(08:47):
people wanted to run Nixon wanted to run the economy hot,
and then the Fed underestimated the speed limit associated with
the economy. You've got politicians now that want to run
the economy hot again. Moreover, they want to actually take
over monetary policy and keep lowering rates. This is setting.
I'm not making a prediction here, because I'm not. We're
(09:08):
not in that business, and it's not a fruitful business
to be in. But if if you'd ask me to
or any economists never mind, like a sort of a
generalist financial economists, last researcher like me, like an academic
monetary person, really high powered. Give me conditions under which
you would expect inflation to explode and for it to
take a long time to get it under control. You'd say, well,
(09:28):
loose fiscal policy. MIC, you'd say, loose monetary policy. You'd say,
so called fiscal dominance and political dominance of the monetary process.
Can you think of of a combination of factors that's
more likely to lead to an explosion inflation and inflation
than we're walking into right now? Like, if you had
to set up your case for really bad, like describe
(09:48):
really bad monetary policy, it would look a lot like
what we're doing.
Speaker 2 (09:52):
Let's take a quick break. When we come back, I
want to shift back to the jobs report, and specifically
the healthcare piece of it. I found that particularly interesting
and contextualizing perhaps why we've seen such a dramatic growth
in healthcare workers over the course of the last decade.
That's next on The Financial Exchange.
Speaker 1 (10:09):
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Speaker 2 (10:59):
So one thing from all this employment data is abundantly clear.
The number of people working in the healthcare and social
assistance which you know, home health AIDS, things along those
lines would fall into this category has grown tremendously and
I think is outside of a really revolutionary change in robotics,
is going to continue to do so. Today the total
(11:24):
employees in healthcare and social assistance is about twenty six
percent higher than it was a decade ago. So we
saw these numbers drop during COVID as we did, you know,
employment everywhere, people dropping out of the workforce there. But
it has been on a straight line upwards since then.
And if you take a look at you know, population,
for example, populations only up like six percent over that
(11:46):
time period. And so I'm left scratching my head like, Okay,
it's not like our population has grown all that much
to necessitate this much new healthcare. But the reality is
that our older population is clearly what's driving this. Now.
I only have the sixty five plus population going through
twenty twenty four with my data here, but the population
(12:09):
of the United States that is over sixty five has
grown by about twenty grew by about twenty three percent
between twenty sixteen and twenty twenty four. So to me,
if you want to explain all the increase in health
care and social assistance, that is the factor. And I
don't I mean the estimates that I have seen for
our over sixty five population going to continue to grow
(12:34):
in perpetuity, but really rise dramatically through twenty forty. And
there's nothing that I see that would indicate to me
that this again not that we want a reversal of
employees working in healthcare, but it leads me to believe
one thing, which is all of these costs that people
are afraid of when it comes to end of life care,
(12:55):
assisted living, nursing homes, there's only really one directtion that
can possibly go, especially if we are restricting immigration as
heavily as we are right now.
Speaker 3 (13:05):
Assuming robots don't substitute for people.
Speaker 2 (13:09):
That's the question of that, that's the question.
Speaker 3 (13:10):
I think they probably will chucks the expert here, as
you know, but I think go ahead, No.
Speaker 2 (13:16):
That's the really fascinating question to me is how quickly
can robotics replace some of this work because here in
New England, for example, if you're not familiar, nursing home
average costs in New England are anywhere from twelve to
fifteen thousand dollars per month. That's just people cost like,
there's not a whole lot more that goes in. Obviously,
(13:39):
there's you know, and building costs and real estate is
very expensive around here. But you're effectively talking about wages
being a large part and that's all.
Speaker 3 (13:47):
That, and that's anybody who's been in a nursing home
knows that's all New Americans.
Speaker 2 (13:51):
Yes, yes, exact, I mean, like to a person right right,
it's low paid, low paid.
Speaker 3 (13:58):
Where they're happy to do it. Well there, happy to
do it. It's a it's a good ent trade of
the economy.
Speaker 2 (14:02):
And by the way, that's you know, that's the average
I have seen nursing homes around this area. We're broadcasting
from close to Boston in the you know, within the
one twenty eight loop, twenty twenty five thousand dollars a
month for nursing care in this area. If you want
to go to a top of the line place for
you know, for grandma, that's not unheard of. And so
(14:22):
that to me, yeah, fascinating question. You know, the supply
and demand for labor to take those jobs, where will
wages need to go Given your point that, hey, that
is a heavily immigrant labor workforce that does that work today,
if we are restricting that more heavily, do wages need
to go up to attract more people into it? The
answer is yes. And then ultimately, how quickly can Elon
(14:45):
Musk design a robot that can do some of that
stuff for you?
Speaker 3 (14:48):
Yeah, some of these tasks can't be Another point about
this is that these productivity is very low in that
sector because you can't scale taking care of patients, right, Like,
you can't scale what we do for a living in
our day job either. You talk to one client at
a time, you try to scale it. You do some
big zoom calls and stuff, but for the most part,
(15:10):
we work in a service so we get it. The
bigger story here, and this does have implications for productivity
and longer term growth, is the ascendants of services and
the dominance of services. That's what we do, Mike, that's healthcare,
that's government jobs, though those have been static as a
fraction of the population. The bigger story in terms of
(15:34):
importance for long term growth and a lot of the
things we talk of you guys talk about on the
show day to day is the ascendance of services and
the growth of services jobs. And again that's a lot
of different types of sectors here. As a fraction of
overall jobs. In nineteen eighty, for example, and I'll end
my point with this, services which have always been dominant,
(15:57):
even during World War Two, they were about seventy three
percent of all payrolls. Services were in nineteen eighty versus
twenty percent from manufacturing. Zipping ahead to today, the number
is now eighty six percent versus eight percent, and those.
At some point manufacturing jobs will level out. I don't
(16:17):
know if it's at six or five or what, but
at some point people are not perfectly substitutable for capital
like robots. But the long term trend is striking.
Speaker 2 (16:27):
Nor, by the way, have we seen any increase in
that manufacturing work this over the course of life. You know,
we now have enough data to look at, hey, has
manufacturing employment been affected by tariffs and any positive.
Speaker 3 (16:37):
No manufacturing chanstories. And the reason for that and this is, look,
I hate tariffs, obviously, I really wish we try something else.
But the reason for that is kind of interesting. It's
that businesses prove purchase most imports. It's not like far
and away, it's like sixty some odd percent. It said differently.
Businesses are consumers too. So the steel terrafs, for example,
(17:00):
from nineteen from twenty eighteen twenty nineteen were widely studied
by scholars and the conclusion was for every steel job saved,
it costs seventy five jobs in other industries. Industries that
buy steel. Auto manufacturers, for example, hate steel tariffs, and
you could see why.
Speaker 2 (17:18):
Yeah, so we have not seen that return. But one
thing that is just abundantly clear to me is that
healthcare work is going to be an in demand sector
and we continue to I continue to hear stories from
especially qualified registered nurses, especially those that aren't tied down
to a specific area. Man, the money that you can
(17:40):
make in that job if you're willing to be a
traveling nurse, for example, or even somebody that I know
who not a traveling nurse lived in Rhode Island and
commuted every day over an hour to Boston to work
for one of the major hospitals in Boston. And I
do you believe, if I'm not mistaken, that her wages
(18:02):
were forty percent higher by commuting from Rhode Island up
into Boston rather than working at her local hospital down
in Rhode Island. And so it is pretty wild.
Speaker 3 (18:12):
That's another really interesting subject. The best way to increase
your wages, no matter what you do, you're a barber,
you're a landscape or whatever, move around wealthier people. Everything
goes up. It's a widely studied effect.
Speaker 2 (18:26):
It is. Markets are in mixed territory here. We've got
a lot more to get into tomorrow. We will be
getting the inflation report in March. We will have a
big Federal Reserve meeting here as J. Powell faces down
his last few months in the job. And then just yesterday,
(18:47):
President Trump was rebuked over Canada tariffs as some mid
term anxiety seems to be growing. Here. We will see
if that has any effect on the direction of tariffs
and whether or not that can actually unlikely get through
the Senate in terms of making any changes. Markets and
mixed territory. Dow up thirty, SMP sorry, Dow up one
(19:08):
hundred and fifty s and P up eight. Nasdaq down
thirty nine. We're gonna take a quick break. Wall Street
Watches next.
Speaker 1 (19:28):
Like us on Facebook and follow us on Twitter at
TFE show. Breaking business news is always first right here
on the Financial Exchange Radio Network. Time now for Wall
Street Watch a complete look at what's moving markets so
far today right here on the Financial Exchange Radio Network.
Speaker 4 (19:47):
After yesterday's release of the January job support, markets today
are mixed as investors continue to assess the path of
interest rates this year as a result of that stronger
than expected job support. Right now, the Dow is up
about a third of a percent, or one hundred and
forty points. SMP five hundred is mostly flat. Edging higher,
Nasdaq down about a third of a percent or seventy
(20:10):
seven points lower, Russell two thousand edging higher, mostly flat
ten Youre treas reeled down four basis points at four
point one four to two percent, and Crude oiled down
about one percent today, trading just below sixty four dollars
a barrel. Shares an app Love and fallen sixteen percent
despite the mobile advertising company beating quarterly expectations, as traders
(20:32):
are still weary about AI's potential impact on the business. However,
app Love and CEO downplayed AI threats to the company. Meanwhile,
McDonald's posted stronger than expected growth in same store sales,
citing success from its value campaign. During the fourth quarter,
US same store sales rose six point eight percent, while
globally that same metric climb five point seven percent. Shares
(20:54):
in the fast food jiner up one percent, Sticking with
the fast food space where Burger King parent company restaurant
brands beat on the top and bottom lines, lifted by
strong international growth. However, that stock is retreating about six
percent Elsewhere, Cisco shares a sinking nearly ten percent, even
after the networking equipment company reported higher revenue due to
(21:16):
increasing AI hyperscale or demand. Beer maker Aarnheuser Busch in
BEV beat fourth quarter earnings in revenue forecast, sending that
stock up by four percent, and after today's close, we'll
see earnings from applied materials in Vertex Pharmaceuticals. I'm Tucker
Silva and that is Wall Street Watch.
Speaker 2 (21:34):
As part of the financial exchange is continued support of
the Disabled American Veterans Department of Massachusetts. We want to
let you know about an event happening this morning at
the DAVMA headquarters in Gardner. The dav is partnering with
Ocean State Job Lot to help our veterans in the
housing program here in Massachusetts. Ocean State Job Lot is
tying in dav mass with their Operations Sleep Well program
(21:58):
and will be donating one hundred jackets, sixty coffee makers
with the coffee provided by Boston's Best, Lennon's Betting, and
other items to help support the seventy five plus veterans
and families in the housing program here in Massachusetts. Operations
Sleep Well is a charitable initiative run by Ocean State
Job Lot Charitable Foundation. It involves creating and donating sleep
kits that help people, especially veterans and individuals transitioning into
(22:21):
stable housing, get essential betting and comfort items they need
when moving into new or temporary living situations. And I'm
excited now to be talking with David Starlitto. He's a
long time executive with Ocean State Job Lot and the
current executive vice president of Corporate Giving, leading the Ocean
State Job Lot Charitable Foundation. In his seventeen years of
the company, David has transformed its foundation into one of
(22:42):
the country's most active private organizations serving veterans and military families.
And David's on his way to the headquarters in Gardner,
Massachusetts for a special event today. So David, you know,
before we talk about today's event, can you tell us
a little bit about Ocean State Job Lot and how
they became dedicate so dedicated to helping organizations in need.
Speaker 5 (23:04):
You know, it's a it's a pretty easy thing, and
I'll take a picture for you. The company has always
done a lot of work with military families and cerans.
I took the reins about seventeen years ago as the foundation,
and the question was what are we going to focus on.
We were doing a program and I believe it was
that joint bas Cape cod out of the Cape and
(23:27):
I we were bringing food to a pantry there and
we were within eye view of a tarmac, a tarmac
that just landed two families at leave. They had come
to anchorage, and two women who had three children in
tow and two of the children who were in shopping
cut the shopping stunt. And I asked the officer who
(23:49):
was next to I said, what's this. They said, that's
their baby carriage. I said, you're lying. He goes. Now,
the people assume that veterans and military families are tended
to what we would all hope would be the case.
But I learned them a lesson that that's not necessarily true.
(24:13):
That many of the individuals that are lying under bridges
actually took an oath to protect them, and that became
essentially the charter, or a part of the charter of
Ocean State John Lawn's Charitable Foundation Military Families and Veterans
was taken that, OK, we've taken oaths towards ten. Now
(24:33):
it may mean in a housing, It made mean an
additional supplemental healthcare, might be service dogs. It might be
the coats our program that coke program, which is part
of what we're going to be doing today. And gardeners
started off to eleven hundred tests in to Hampstid believe
that eight years ago, nine years ago, and it'll hit
(24:57):
between eighty five and ninety thousand coats between Vane all
the way down to Baltimore, Maryland and Delaware where we
have our operations.
Speaker 4 (25:07):
Now.
Speaker 2 (25:07):
The list now, now, David, I'm going to find this
answer obvious, but you know why the Disabled American Veterans Department,
How did how did you start and when did you
start working with that organization?
Speaker 5 (25:18):
Well, we don't do it alone. We've I've got one
hundred and seventy some odd stores, and we look for
organizations that basically have the wherewithal. They have the mix
of volunteers and a sturdy administrator structure. They have placements
where we need them, and they are able to do
(25:39):
distributions when I cannot. The a V is way us
at the top of that list. That's why we decided
if we could turn to the a V and into Connecticut,
in Rhode Island, so forth and so on. It's an
organization that can become a backbone of our commitment. That's
why the av is a very It's a good partner
(26:01):
for us.
Speaker 2 (26:02):
No doubt. David sar Litto, he is the executive vice
president of Corporate Giving, leading the Ocean State Job Lot
Charitable Foundation and driving out to Gardner, mass Chusetts right
now for their special event today. David, thank you so
much for joining us and for your support of the
disabled American Veterans Department of Massachusetts.
Speaker 5 (26:20):
Take care of yourself. Thanks for having me on.
Speaker 2 (26:22):
You as well. Take care.
Speaker 4 (26:24):
Uh.
Speaker 2 (26:25):
President Trump yesterday rebuked over his Canadian tariffs, not going
to do anything as this is very unlikely to pass
the Senate, but the House voted with six Republicans breaking rank.
Republicans Thomas Massey of Kentucky, Don Bacon of Nebraska, Kevin
Kyleie of California, Jeff Heard of Colorad Dan Newhouse of
Washington State, and Brian Fitzpatrick of Pennsylvania broke with their
(26:48):
party to join Democrats in passing the bill. This you
know context Obviously, there is the ongoing debate over the
bridge connecting Ontario and Detroit, Michigan. There is the the
Gourdy Howbridge. Yeah yeah, hockey fans out there. The measures
come also as President Trump is privately waight quitting the
(27:10):
us MC a trade pack that he really designed and
signed during his first administration, and you know, frankly, I
think we're going to see more of this more symbolic
than anything else type of voting ahead of the midterm elections,
as Republicans are pretty nervous clearly about keeping their jobs.
In this overall context, especially in some of these swing states,
(27:33):
this bill seems from what I've seen, incredibly unlikely to
pass the Senate, and even if it did, would likely
be receiving a veto by the President himself. But remember
the context of all this. I mean, first off, you know,
tariff revenue has you know, stored three hundred percent over
(27:53):
you know, twenty twenty five. It's a massive now source
of revenue out there. It is also so still kind
of awaiting a Supreme Court decision that could kill the
tariffs by and large across many areas, could force reimbursement
of tariffs. Frankly, I'm kind of anxious to see this
(28:16):
Supreme Court decision because I keep putting myself in the
shoes of any manufacturer or foreign company that exports goods
to the United States, and my sense is that all
of them are in this holding pattern right now. They're
basically saying to themselves, this all looks like some uncertain game,
(28:36):
and we don't know where tariffs will actually be in
the future, and so I don't think anybody out there
in the manufacturing sector is willing to invest any capital
right now.
Speaker 3 (28:45):
That's one cost, and it's very hard to quantify the
cost to employment. And as you say investing, though, that
doesn't seem to be any shortage of investment from other sectors.
Sure hard to say, though, I mean, investment has not
been the driver of GDP recently. The certain cost of
techs is that which is imposed on the average consumer.
Tariffs benefit a small, very small number of producers at
(29:06):
the expense of everybody else. But the cost to the
rest of us is so small that we don't have
any incentive to organize to oppose them. So you have
to oppose them on principle, which sounds kind of silly,
like don't you want to save that plant? Well, I do,
but think about the cost it's at worth. Like every
study that's ever been done has has concluded that every
(29:32):
job saved from any tariffs, the one off stuff that
we did from in Trump won or you know, previous
presidents have. There been plenty of examples for study. Job
saved costs hundreds of thousands of dollars each, Like you
could send every employee of a shuttered plant back to school,
his whole family back to school. He could pay for
his daughter's wedding. You could buy them a house practically
(29:53):
with the money that it costs us on average, which
is not much per per person. For these protectionstionist policies,
they're just such a bad and inefficient way. We haven't
even gotten into the inefficiencies they create in the economy
as all.
Speaker 2 (30:07):
Let's take a quick break when we come back. The
median amount American workers have saved for retirement. It's appalling
and we'll be covering it next on The Financial Exchange.
Speaker 1 (30:18):
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Speaker 2 (30:45):
The National Institute on Retirement Security puts out all sorts
of surveys that they do on a regular basis, and
they have a new one that indicates we are woefully
unprepared for retirement. But there's actually some interesting data in
the survey beside the headline, which is that the median
savings from their survey they did they did a data
(31:07):
panel in twenty twenty three, so it's a couple of
years outdated at this point. They surveyed respondents between the
ages of twenty one and sixty four who have any
personal income, so you had to have income in order
to be part of this data. And the median amount
that they had saved for retirement among all workers was
(31:32):
nine hundred and fifty five dollars, which is not great, Bob.
The average was closer to one hundred thousand at ninety
three thousand. And the other good signs in here were
that participation in retirement plans is actually higher than I
would have guessed. Do you I mean, do you have
a guess what the participation rate for retirement plans is?
Speaker 3 (31:52):
I bet since auto enrollment it's seventy.
Speaker 2 (31:55):
Percent close sixty four percent for the private sector eighty
two percent PERI. They don't the key finding, Uh, it's
much lower. By the way, if you're self employed, only
thirty eight percent of private sector self employed individuals fund
retirement accounts, so that it seems to me like a
(32:16):
build up why your business. I get why you reinvested
into your business. I know you know you might be
buying other assets to lower your tax bill. But I
think that's a pretty big missed area that people.
Speaker 3 (32:28):
Well that what they could do if they worked with
a professional, and not everybody has the time to do this.
You set up a pension fund where the limits are.
Speaker 2 (32:35):
Huge, ye, and you can sock away a lot of money.
Speaker 3 (32:38):
Sorry, and cut your tax bill by I'm not given
tax advice here, but you a lot of small, even
soul props.
Speaker 2 (32:44):
The other piece that I think people are generally unaware
of when it comes to their own businesses is if
you tried to look into a four to one K plan,
for example, a decade ago, as a small employer with
say eight employees, it was really expensive, like very very expensive,
even for just like a solo person who had their
own thing going. I was speaking to somebody in Maine
(33:06):
the other day who again has his own small business
for like three employees. He had a four oh one
K a decade ago. He closed it because nobody was participating.
It was costing him thousands of dollars a year. Now
every main resident who has a job, whether they have
a four oh one K offered by their employer or not,
can participate in a main state employee at four kgree
(33:26):
long ado. So the costs for these things have come
way down, and that is I think bumping up the participation.
The other point that you made that auto enrollment does
make it was revolutionary.
Speaker 3 (33:39):
In two thousand and six, Congress passed a law that
said you could do it. Before then, it was unclear
plans were bigger plan sponsors with ARISSA is the Employee
Retirement Income Security Act. It governs the conduct of tax
favored plans like four oh one k's plans were doing it,
but you had to have an ARISSA attorney on staff
to tell you was okay and then fight the irs
when they challenged you on it, or fight acclaim When
(34:00):
a participant me and you being participants, people are getting rolled.
They say you auto enrolled me, then I lost money.
They could sue you. Until Congress carved out a safe
harbor for that action. It wasn't clear. Now everybody does it,
but it's a scale business, Mike. You know when you
price a plan for a big company with fifteen thousand employees,
(34:22):
the per head cost is a fraction of what it
would cost, say Vanguard or Fidelity or whomever to administer
a much smaller plan. So states doing this is a
very very good thing because they can exploit the scale.
Speaker 2 (34:34):
So something like a decade or two ago, that piece
was carved out. I don't remember when that was when
that was changed, but the auto enrollment feature was passed
by Congress.
Speaker 3 (34:45):
Twenty two thousand and six was PPO That's Your Protection.
Speaker 2 (34:47):
Act, So two decades ago that was passed. We're on
the cusp now of a bunch of new changes when
it comes to retirement plans, and I think it's going
to make them, unfortunately a little bit more complicated. We're
talking about adding annuities to plans. I at equity investments
into four one can. Those have been out there for years, Mike,
they have, but I think evaluating those on one's own becomes,
(35:08):
forget about it, pretty challenging. If you're falling into one
of these buckets. Maybe you're self employed and you're trying
to figure out, how can I best save for my
future other than reinvesting into my business, Or if you're
a employee of a company and trying to figure out, Hey,
what's the best savings vehicle for my future? Give the
folks at Armstrong Advisory Group a call. We work with
our clients one on one to evaluate these decisions. The
(35:31):
numbers eight hundred three nine three for zero zero one.
You can go to Armstrong Advisory dot com find a
time for us to call you back. But again that number,
if you want to call now, is eight hundred three
nine three for zero zero one.
Speaker 1 (35:44):
The proceeding was paid for by Armstrong Advisory Group, a
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Armstrong guide a specific financial, legal or tax advice. Consult
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Speaker 2 (36:00):
Mark, We've got a text on the tariff conversation, and
to be fair, I do not think while it may
be universally agreed, the tariffs are not great idea. Of
course to economists, it's not universally held by the average person.
And somebody brought up like why. The question was, if
tariffs are such a bad idea, how come so many
other countries have it's high tariffs.
Speaker 3 (36:19):
It's a great question. They may have different reasons for
protecting different industries. And in point of fact, most countries
don't have high tariffs. Ours are now much higher and
second late. And by the way, I'm not saying this
like you should know this, because I didn't know it
until I sure made some you know, carved out some time,
and I have considerable free time to study this type
of stuff and piggyback on the work of others. There's
(36:40):
no correlation between level of tariffs and trade surplus or deficit.
There are countries that try desperately to protect home industries
and still run big trade deficits and vice versa. Why
is that. It's because trade deficits are the result of
not saving enough, and that is also not an obvious
result and one that's a little too complicated get into here. Also,
(37:01):
most people probably don't care that much, but it's a
great point. Different countries protect industries for different reasons. There's
no question though, that other consumers not employed in that
industry bear the cost of that protection.
Speaker 2 (37:15):
By the way, my answer would just be just because
another country does it doesn't mean it's a good idea. Go.
You can verily easily search this at the World Bank
and pull up the countries with the highest average effective
tariff rate and rank them, and I think what you're
gonna find is you don't really want the type of
economy that they know now. They're generally being in countries
(37:36):
like Bermuda, the Democratic Republic of Congo, and Equatorial Guinea.
Quick break. A lot more to cover in the second hour,
the financial exchange. We'll be right back
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(01:07):
and Mark Vandetti.
Speaker 2 (01:10):
Good morning, Happy Thursday, Welcome back to the Financial Exchange.
It's continuing to be a busy economic data week here.
Earning side, we don't have anything to too exciting. McDonald's,
T mobile, Shopify all went yesterday today only only big
you know, applied materials. Anheuser Busch would probably be the
(01:32):
most household name reporting earnings today. But the economic data
has been big this week. Instead of a Friday jobs
report last week, we got a Wednesday jobs report yesterday.
We will get an inflation report on the consumer price
index tomorrow if I'm not mistaken. Mark, and a lot
to digest here, because frankly, a better than anticipated unemployment report,
(01:54):
as we had been hinting might come over the course
of the last few few weeks. I'll tutor on Horn
for a moment here. There were some signs in the
weekly data that we took as positive indicators and turned
out to be for the month of January, but wanted
to dive in a little bit more now that we've
had a day to digest the jobs data, and a
(02:15):
lot's being made about the health care sector, and to
be clear about why, it's because that's where a lot
of the hiring is coming from. And the way that
I read a few of these pieces Mark this morning
was kind of pooh poohing the you know, the idea
that the economy or the labor market is in good shape,
and oh, look at what it looks like if you
(02:36):
just take out all the health and private education workers
to job growth. And I think, what, I know what
your answer would be, But that's kind of a false
premise in my mind, like I don't really care where
the jobs come from. I don't really care where the
jobs come from.
Speaker 3 (02:51):
Right, Well, you can't say if you just took those out,
because something would have happened in its place. And secondly, right.
Speaker 2 (03:02):
So, what we did see is a lot of healthcare
workers getting hired again in January. And what I found
interesting is if you take a look at the change
in non farm payrolls, and they did try and make
a chart here that explains how important this was. The
total change in non farm payrolls over the course of
twenty twenty five was pretty muted at around three hundred
(03:25):
thousand jobs created over that twelve month time period. If
you do strip out that health in private education, then
you had net job loss. So if you don't work
in those two sectors, and it feels like a week
jobs market it is. Yeah, I can see why you
feel that way. But again, if you're using the unemployment
report for what I think it's most useful for, which
(03:46):
is describing tightness in the economy, that's where That's where
this matters. Yes, because I believe I could be wrong,
But nurses do spend money, right, They don't just take
their wages and go home and sit there. If I'm
not mistaken. Sure what other takeaways that you have every years?
Speaker 3 (04:07):
Yes, nurses are people.
Speaker 2 (04:08):
And they do spend their money that they take. What
other takeaways you have from this week's jobs report?
Speaker 3 (04:14):
Mark, you made the key point. We talked about it
a lot internally this morning. Uh. Researchers you whose economic
data differently, they see the world differently. Maybe is a
is a more general way to put it than other people,
even full time finance people. Data means something only in
(04:35):
the context of a framework for thinking about the economy.
You don't just look at your blood pressure, well, lay
people do. I do, But a doctor takes that as
one data point in a much bigger sort of constellation
that forms a picture of your cardiovascular health, for example.
Similarly unemployment. You might think unemployment going up is unambiguously bad,
(04:58):
and in many cases that's true. But if the FED
is trying to squash inflation by constricting demand, a side
effect of that might be unemployment going up, So it
may not be unambiguously bad, is my point. Yesterday's unemployment
report was good. Is it unambiguously good? I don't know
(05:20):
the end? That sounds crazy? What are you as sadist?
What do you want more unemployment?
Speaker 1 (05:24):
No?
Speaker 3 (05:24):
But if unemployment is unnaturally load to begin with, I
don't think we're too far into the danger zone there,
but we might be. It depends on the structure of
the economy. The FED might be overstimulating it. That might
also sound crazy because the FED is cutting, and many
anticipate more cutting, more easing of monetary policy, stoking demand
(05:45):
to stimulate the economy. The problem we had in the
nineteen seventies was the FED didn't understand the structure of
the economy. It overstimulated, and then you had a couple
of big oil price spikes seventy three seventy four and
seventy nine eighty or seventy eight seventy nine. Then there
was the revolution I ran in nineteen eighty seventy nine eighty,
(06:06):
So there were some one offs, but the level of
underlying inflation, which we sometimes measure by core or similar metrics,
was elevated because the Fed thought the economy could run
faster than it was running. And looking at yesterday's unemployment report,
Mike in the last couple of quarters of GDP the
expected GDP, which is our way of measuring economic growth.
(06:29):
It's not perfect, of course, but it gives us a
good read on what we think is important. There's an
argument that the economies running too hot. Indeed, as Chucksata
pointed out yesterday, the Trump administration wants the economy to
run hot, right, I mean it seems likection year at
not uncommon for politicians. So my big takeaway is I
(06:49):
wonder if the risks have shifted to inflation relative to unemployment.
Speaker 2 (06:55):
I think there's some evidence there. Again, we are not
in a hot I don't think we can describe today
as a high inflation environment, at least not the last
twelve months. Right, We're sitting where would you describe inflation
Somewhere between night twos.
Speaker 3 (07:08):
I think if you look at measures of core that
tend to line up well with future inflation.
Speaker 2 (07:12):
Which is uncomfortable but not someone is that a good
sober way to Yeah, somewhat elevated. And so it all
plays into then what everyone thinks the FED might do
and to be you know, to put the odds out
there for a moment. A week ago before all these reports,
you had investors reacting a little bit to the downward
(07:34):
trend in markets from some of the AI stuff, and
I think it had some of them thinking, oh, maybe,
you know, maybe we're heading for a market downturn and
that would justify a FED pivot. Here there was a
one in four chance that the FED would cut rates
at that next meeting on March eighteenth. Lo and behold
a week later, now that we've gotten this Job's report,
the likelihood of a rate cut at that next meeting
is now sitting below six percent. Basically, nobody thinking that
(07:57):
they're going to be able to cut rates when you
just saw the un deployment rate dropping. And I have
to agree there's no possible way you do.
Speaker 3 (08:03):
So I'll say what I said yesterday. It's a little dramatic,
but this is radio and you don't want to be
a boring researcher cut rates, are you nuts? Unemployment is
way below what for decades most people thought was a
sustainable natural rate of non inflationary right now, the structure
of the economy changes, the natural rate changes, but you
(08:25):
cannot get away from that trade off between in the
short term, between unemployment and inflation. We ignore it at
our peril. It was ignored despite the fact that our
tools for measuring the potential of the economy and our
framework for thinking about it are better than they were
in the nineteen seventies. Notwithstanding that that trade off was ignored,
(08:47):
people wanted to run Nixon wanted to run the economy hot,
and then the Fed underestimated the speed limit associated with
the economy. You've got politicians now that want to run
the economy hot again. Moreover, they want to actually take
over monetary policy and keep lowering rates. This is setting.
I'm not making a prediction here, because I'm not. We're
(09:08):
not in that business, and it's not a fruitful business
to be in. But if if you'd ask me to
or any economists never mind, like a sort of a
generalist financial economists, last researcher like me, like an academic
monetary person, really high powered. Give me conditions under which
you would expect inflation to explode and for it to
take a long time to get it under control. You'd say, well,
(09:28):
loose fiscal policy. MIC, you'd say, loose monetary policy. You'd say,
so called fiscal dominance and political dominance of the monetary process.
Can you think of of a combination of factors that's
more likely to lead to an explosion inflation and inflation
than we're walking into right now? Like, if you had
to set up your case for really bad, like describe
(09:48):
really bad monetary policy, it would look a lot like
what we're doing.
Speaker 2 (09:52):
Let's take a quick break. When we come back, I
want to shift back to the jobs report, and specifically
the healthcare piece of it. I found that particularly interesting
and contextualizing perhaps why we've seen such a dramatic growth
in healthcare workers over the course of the last decade.
That's next on The Financial Exchange.
Speaker 1 (10:09):
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Speaker 4 (10:23):
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Speaker 2 (10:59):
So one thing from all this employment data is abundantly clear.
The number of people working in the healthcare and social
assistance which you know, home health AIDS, things along those
lines would fall into this category has grown tremendously and
I think is outside of a really revolutionary change in robotics,
is going to continue to do so. Today the total
(11:24):
employees in healthcare and social assistance is about twenty six
percent higher than it was a decade ago. So we
saw these numbers drop during COVID as we did, you know,
employment everywhere, people dropping out of the workforce there. But
it has been on a straight line upwards since then.
And if you take a look at you know, population,
for example, populations only up like six percent over that
(11:46):
time period. And so I'm left scratching my head like, Okay,
it's not like our population has grown all that much
to necessitate this much new healthcare. But the reality is
that our older population is clearly what's driving this. Now.
I only have the sixty five plus population going through
twenty twenty four with my data here, but the population
(12:09):
of the United States that is over sixty five has
grown by about twenty grew by about twenty three percent
between twenty sixteen and twenty twenty four. So to me,
if you want to explain all the increase in health
care and social assistance, that is the factor. And I
don't I mean the estimates that I have seen for
our over sixty five population going to continue to grow
(12:34):
in perpetuity, but really rise dramatically through twenty forty. And
there's nothing that I see that would indicate to me
that this again not that we want a reversal of
employees working in healthcare, but it leads me to believe
one thing, which is all of these costs that people
are afraid of when it comes to end of life care,
(12:55):
assisted living, nursing homes, there's only really one directtion that
can possibly go, especially if we are restricting immigration as
heavily as we are right now.
Speaker 3 (13:05):
Assuming robots don't substitute for people.
Speaker 2 (13:09):
That's the question of that, that's the question.
Speaker 3 (13:10):
I think they probably will chucks the expert here, as
you know, but I think go ahead, No.
Speaker 2 (13:16):
That's the really fascinating question to me is how quickly
can robotics replace some of this work because here in
New England, for example, if you're not familiar, nursing home
average costs in New England are anywhere from twelve to
fifteen thousand dollars per month. That's just people cost like,
there's not a whole lot more that goes in. Obviously,
(13:39):
there's you know, and building costs and real estate is
very expensive around here. But you're effectively talking about wages
being a large part and that's all.
Speaker 3 (13:47):
That, and that's anybody who's been in a nursing home
knows that's all New Americans.
Speaker 2 (13:51):
Yes, yes, exact, I mean, like to a person right right,
it's low paid, low paid.
Speaker 3 (13:58):
Where they're happy to do it. Well there, happy to
do it. It's a it's a good ent trade of
the economy.
Speaker 2 (14:02):
And by the way, that's you know, that's the average
I have seen nursing homes around this area. We're broadcasting
from close to Boston in the you know, within the
one twenty eight loop, twenty twenty five thousand dollars a
month for nursing care in this area. If you want
to go to a top of the line place for
you know, for grandma, that's not unheard of. And so
(14:22):
that to me, yeah, fascinating question. You know, the supply
and demand for labor to take those jobs, where will
wages need to go Given your point that, hey, that
is a heavily immigrant labor workforce that does that work today,
if we are restricting that more heavily, do wages need
to go up to attract more people into it? The
answer is yes. And then ultimately, how quickly can Elon
(14:45):
Musk design a robot that can do some of that
stuff for you?
Speaker 3 (14:48):
Yeah, some of these tasks can't be Another point about
this is that these productivity is very low in that
sector because you can't scale taking care of patients, right, Like,
you can't scale what we do for a living in
our day job either. You talk to one client at
a time, you try to scale it. You do some
big zoom calls and stuff, but for the most part,
(15:10):
we work in a service so we get it. The
bigger story here, and this does have implications for productivity
and longer term growth, is the ascendants of services and
the dominance of services. That's what we do, Mike, that's healthcare,
that's government jobs, though those have been static as a
fraction of the population. The bigger story in terms of
(15:34):
importance for long term growth and a lot of the
things we talk of you guys talk about on the
show day to day is the ascendance of services and
the growth of services jobs. And again that's a lot
of different types of sectors here. As a fraction of
overall jobs. In nineteen eighty, for example, and I'll end
my point with this, services which have always been dominant,
(15:57):
even during World War Two, they were about seventy three
percent of all payrolls. Services were in nineteen eighty versus
twenty percent from manufacturing. Zipping ahead to today, the number
is now eighty six percent versus eight percent, and those.
At some point manufacturing jobs will level out. I don't
(16:17):
know if it's at six or five or what, but
at some point people are not perfectly substitutable for capital
like robots. But the long term trend is striking.
Speaker 2 (16:27):
Nor, by the way, have we seen any increase in
that manufacturing work this over the course of life. You know,
we now have enough data to look at, hey, has
manufacturing employment been affected by tariffs and any positive.
Speaker 3 (16:37):
No manufacturing chanstories. And the reason for that and this is, look,
I hate tariffs, obviously, I really wish we try something else.
But the reason for that is kind of interesting. It's
that businesses prove purchase most imports. It's not like far
and away, it's like sixty some odd percent. It said differently.
Businesses are consumers too. So the steel terrafs, for example,
(17:00):
from nineteen from twenty eighteen twenty nineteen were widely studied
by scholars and the conclusion was for every steel job saved,
it costs seventy five jobs in other industries. Industries that
buy steel. Auto manufacturers, for example, hate steel tariffs, and
you could see why.
Speaker 2 (17:18):
Yeah, so we have not seen that return. But one
thing that is just abundantly clear to me is that
healthcare work is going to be an in demand sector
and we continue to I continue to hear stories from
especially qualified registered nurses, especially those that aren't tied down
to a specific area. Man, the money that you can
(17:40):
make in that job if you're willing to be a
traveling nurse, for example, or even somebody that I know
who not a traveling nurse lived in Rhode Island and
commuted every day over an hour to Boston to work
for one of the major hospitals in Boston. And I
do you believe, if I'm not mistaken, that her wages
(18:02):
were forty percent higher by commuting from Rhode Island up
into Boston rather than working at her local hospital down
in Rhode Island. And so it is pretty wild.
Speaker 3 (18:12):
That's another really interesting subject. The best way to increase
your wages, no matter what you do, you're a barber,
you're a landscape or whatever, move around wealthier people. Everything
goes up. It's a widely studied effect.
Speaker 2 (18:26):
It is. Markets are in mixed territory here. We've got
a lot more to get into tomorrow. We will be
getting the inflation report in March. We will have a
big Federal Reserve meeting here as J. Powell faces down
his last few months in the job. And then just yesterday,
(18:47):
President Trump was rebuked over Canada tariffs as some mid
term anxiety seems to be growing. Here. We will see
if that has any effect on the direction of tariffs
and whether or not that can actually unlikely get through
the Senate in terms of making any changes. Markets and
mixed territory. Dow up thirty, SMP sorry, Dow up one
(19:08):
hundred and fifty s and P up eight. Nasdaq down
thirty nine. We're gonna take a quick break. Wall Street
Watches next.
Speaker 1 (19:28):
Like us on Facebook and follow us on Twitter at
TFE show. Breaking business news is always first right here
on the Financial Exchange Radio Network. Time now for Wall
Street Watch a complete look at what's moving markets so
far today right here on the Financial Exchange Radio Network.
Speaker 4 (19:47):
After yesterday's release of the January job support, markets today
are mixed as investors continue to assess the path of
interest rates this year as a result of that stronger
than expected job support. Right now, the Dow is up
about a third of a percent, or one hundred and
forty points. SMP five hundred is mostly flat. Edging higher,
Nasdaq down about a third of a percent or seventy
(20:10):
seven points lower, Russell two thousand edging higher, mostly flat
ten Youre treas reeled down four basis points at four
point one four to two percent, and Crude oiled down
about one percent today, trading just below sixty four dollars
a barrel. Shares an app Love and fallen sixteen percent
despite the mobile advertising company beating quarterly expectations, as traders
(20:32):
are still weary about AI's potential impact on the business. However,
app Love and CEO downplayed AI threats to the company. Meanwhile,
McDonald's posted stronger than expected growth in same store sales,
citing success from its value campaign. During the fourth quarter,
US same store sales rose six point eight percent, while
globally that same metric climb five point seven percent. Shares
(20:54):
in the fast food jiner up one percent, Sticking with
the fast food space where Burger King parent company restaurant
brands beat on the top and bottom lines, lifted by
strong international growth. However, that stock is retreating about six
percent Elsewhere, Cisco shares a sinking nearly ten percent, even
after the networking equipment company reported higher revenue due to
(21:16):
increasing AI hyperscale or demand. Beer maker Aarnheuser Busch in
BEV beat fourth quarter earnings in revenue forecast, sending that
stock up by four percent, and after today's close, we'll
see earnings from applied materials in Vertex Pharmaceuticals. I'm Tucker
Silva and that is Wall Street Watch.
Speaker 2 (21:34):
As part of the financial exchange is continued support of
the Disabled American Veterans Department of Massachusetts. We want to
let you know about an event happening this morning at
the DAVMA headquarters in Gardner. The dav is partnering with
Ocean State Job Lot to help our veterans in the
housing program here in Massachusetts. Ocean State Job Lot is
tying in dav mass with their Operations Sleep Well program
(21:58):
and will be donating one hundred jackets, sixty coffee makers
with the coffee provided by Boston's Best, Lennon's Betting, and
other items to help support the seventy five plus veterans
and families in the housing program here in Massachusetts. Operations
Sleep Well is a charitable initiative run by Ocean State
Job Lot Charitable Foundation. It involves creating and donating sleep
kits that help people, especially veterans and individuals transitioning into
(22:21):
stable housing, get essential betting and comfort items they need
when moving into new or temporary living situations. And I'm
excited now to be talking with David Starlitto. He's a
long time executive with Ocean State Job Lot and the
current executive vice president of Corporate Giving, leading the Ocean
State Job Lot Charitable Foundation. In his seventeen years of
the company, David has transformed its foundation into one of
(22:42):
the country's most active private organizations serving veterans and military families.
And David's on his way to the headquarters in Gardner,
Massachusetts for a special event today. So David, you know,
before we talk about today's event, can you tell us
a little bit about Ocean State Job Lot and how
they became dedicate so dedicated to helping organizations in need.
Speaker 5 (23:04):
You know, it's a it's a pretty easy thing, and
I'll take a picture for you. The company has always
done a lot of work with military families and cerans.
I took the reins about seventeen years ago as the foundation,
and the question was what are we going to focus on.
We were doing a program and I believe it was
that joint bas Cape cod out of the Cape and
(23:27):
I we were bringing food to a pantry there and
we were within eye view of a tarmac, a tarmac
that just landed two families at leave. They had come
to anchorage, and two women who had three children in
tow and two of the children who were in shopping
cut the shopping stunt. And I asked the officer who
(23:49):
was next to I said, what's this. They said, that's
their baby carriage. I said, you're lying. He goes. Now,
the people assume that veterans and military families are tended
to what we would all hope would be the case.
But I learned them a lesson that that's not necessarily true.
(24:13):
That many of the individuals that are lying under bridges
actually took an oath to protect them, and that became
essentially the charter, or a part of the charter of
Ocean State John Lawn's Charitable Foundation Military Families and Veterans
was taken that, OK, we've taken oaths towards ten. Now
(24:33):
it may mean in a housing, It made mean an
additional supplemental healthcare, might be service dogs. It might be
the coats our program that coke program, which is part
of what we're going to be doing today. And gardeners
started off to eleven hundred tests in to Hampstid believe
that eight years ago, nine years ago, and it'll hit
(24:57):
between eighty five and ninety thousand coats between Vane all
the way down to Baltimore, Maryland and Delaware where we
have our operations.
Speaker 4 (25:07):
Now.
Speaker 2 (25:07):
The list now, now, David, I'm going to find this
answer obvious, but you know why the Disabled American Veterans Department,
How did how did you start and when did you
start working with that organization?
Speaker 5 (25:18):
Well, we don't do it alone. We've I've got one
hundred and seventy some odd stores, and we look for
organizations that basically have the wherewithal. They have the mix
of volunteers and a sturdy administrator structure. They have placements
where we need them, and they are able to do
(25:39):
distributions when I cannot. The a V is way us
at the top of that list. That's why we decided
if we could turn to the a V and into Connecticut,
in Rhode Island, so forth and so on. It's an
organization that can become a backbone of our commitment. That's
why the av is a very It's a good partner
(26:01):
for us.
Speaker 2 (26:02):
No doubt. David sar Litto, he is the executive vice
president of Corporate Giving, leading the Ocean State Job Lot
Charitable Foundation and driving out to Gardner, mass Chusetts right
now for their special event today. David, thank you so
much for joining us and for your support of the
disabled American Veterans Department of Massachusetts.
Speaker 5 (26:20):
Take care of yourself. Thanks for having me on.
Speaker 2 (26:22):
You as well. Take care.
Speaker 4 (26:24):
Uh.
Speaker 2 (26:25):
President Trump yesterday rebuked over his Canadian tariffs, not going
to do anything as this is very unlikely to pass
the Senate, but the House voted with six Republicans breaking rank.
Republicans Thomas Massey of Kentucky, Don Bacon of Nebraska, Kevin
Kyleie of California, Jeff Heard of Colorad Dan Newhouse of
Washington State, and Brian Fitzpatrick of Pennsylvania broke with their
(26:48):
party to join Democrats in passing the bill. This you
know context Obviously, there is the ongoing debate over the
bridge connecting Ontario and Detroit, Michigan. There is the the
Gourdy Howbridge. Yeah yeah, hockey fans out there. The measures
come also as President Trump is privately waight quitting the
(27:10):
us MC a trade pack that he really designed and
signed during his first administration, and you know, frankly, I
think we're going to see more of this more symbolic
than anything else type of voting ahead of the midterm elections,
as Republicans are pretty nervous clearly about keeping their jobs.
In this overall context, especially in some of these swing states,
(27:33):
this bill seems from what I've seen, incredibly unlikely to
pass the Senate, and even if it did, would likely
be receiving a veto by the President himself. But remember
the context of all this. I mean, first off, you know,
tariff revenue has you know, stored three hundred percent over
(27:53):
you know, twenty twenty five. It's a massive now source
of revenue out there. It is also so still kind
of awaiting a Supreme Court decision that could kill the
tariffs by and large across many areas, could force reimbursement
of tariffs. Frankly, I'm kind of anxious to see this
(28:16):
Supreme Court decision because I keep putting myself in the
shoes of any manufacturer or foreign company that exports goods
to the United States, and my sense is that all
of them are in this holding pattern right now. They're
basically saying to themselves, this all looks like some uncertain game,
(28:36):
and we don't know where tariffs will actually be in
the future, and so I don't think anybody out there
in the manufacturing sector is willing to invest any capital
right now.
Speaker 3 (28:45):
That's one cost, and it's very hard to quantify the
cost to employment. And as you say investing, though, that
doesn't seem to be any shortage of investment from other sectors.
Sure hard to say, though, I mean, investment has not
been the driver of GDP recently. The certain cost of
techs is that which is imposed on the average consumer.
Tariffs benefit a small, very small number of producers at
(29:06):
the expense of everybody else. But the cost to the
rest of us is so small that we don't have
any incentive to organize to oppose them. So you have
to oppose them on principle, which sounds kind of silly,
like don't you want to save that plant? Well, I do,
but think about the cost it's at worth. Like every
study that's ever been done has has concluded that every
(29:32):
job saved from any tariffs, the one off stuff that
we did from in Trump won or you know, previous
presidents have. There been plenty of examples for study. Job
saved costs hundreds of thousands of dollars each, Like you
could send every employee of a shuttered plant back to school,
his whole family back to school. He could pay for
his daughter's wedding. You could buy them a house practically
(29:53):
with the money that it costs us on average, which
is not much per per person. For these protectionstionist policies,
they're just such a bad and inefficient way. We haven't
even gotten into the inefficiencies they create in the economy
as all.
Speaker 2 (30:07):
Let's take a quick break when we come back. The
median amount American workers have saved for retirement. It's appalling
and we'll be covering it next on The Financial Exchange.
Speaker 1 (30:18):
Miss any of the show. The Financial Exchange Show podcast
is available on Apple, Spotify, and iHeartRadio. Hit the subscribe
button and leave us a five star review. This is
the Financial Exchange Radio Network.
Speaker 2 (30:45):
The National Institute on Retirement Security puts out all sorts
of surveys that they do on a regular basis, and
they have a new one that indicates we are woefully
unprepared for retirement. But there's actually some interesting data in
the survey beside the headline, which is that the median
savings from their survey they did they did a data
(31:07):
panel in twenty twenty three, so it's a couple of
years outdated at this point. They surveyed respondents between the
ages of twenty one and sixty four who have any
personal income, so you had to have income in order
to be part of this data. And the median amount
that they had saved for retirement among all workers was
(31:32):
nine hundred and fifty five dollars, which is not great, Bob.
The average was closer to one hundred thousand at ninety
three thousand. And the other good signs in here were
that participation in retirement plans is actually higher than I
would have guessed. Do you I mean, do you have
a guess what the participation rate for retirement plans is?
Speaker 3 (31:52):
I bet since auto enrollment it's seventy.
Speaker 2 (31:55):
Percent close sixty four percent for the private sector eighty
two percent PERI. They don't the key finding, Uh, it's
much lower. By the way, if you're self employed, only
thirty eight percent of private sector self employed individuals fund
retirement accounts, so that it seems to me like a
(32:16):
build up why your business. I get why you reinvested
into your business. I know you know you might be
buying other assets to lower your tax bill. But I
think that's a pretty big missed area that people.
Speaker 3 (32:28):
Well that what they could do if they worked with
a professional, and not everybody has the time to do this.
You set up a pension fund where the limits are.
Speaker 2 (32:35):
Huge, ye, and you can sock away a lot of money.
Speaker 3 (32:38):
Sorry, and cut your tax bill by I'm not given
tax advice here, but you a lot of small, even
soul props.
Speaker 2 (32:44):
The other piece that I think people are generally unaware
of when it comes to their own businesses is if
you tried to look into a four to one K plan,
for example, a decade ago, as a small employer with
say eight employees, it was really expensive, like very very expensive,
even for just like a solo person who had their
own thing going. I was speaking to somebody in Maine
(33:06):
the other day who again has his own small business
for like three employees. He had a four oh one
K a decade ago. He closed it because nobody was participating.
It was costing him thousands of dollars a year. Now
every main resident who has a job, whether they have
a four oh one K offered by their employer or not,
can participate in a main state employee at four kgree
(33:26):
long ado. So the costs for these things have come
way down, and that is I think bumping up the participation.
The other point that you made that auto enrollment does
make it was revolutionary.
Speaker 3 (33:39):
In two thousand and six, Congress passed a law that
said you could do it. Before then, it was unclear
plans were bigger plan sponsors with ARISSA is the Employee
Retirement Income Security Act. It governs the conduct of tax
favored plans like four oh one k's plans were doing it,
but you had to have an ARISSA attorney on staff
to tell you was okay and then fight the irs
when they challenged you on it, or fight acclaim When
(34:00):
a participant me and you being participants, people are getting rolled.
They say you auto enrolled me, then I lost money.
They could sue you. Until Congress carved out a safe
harbor for that action. It wasn't clear. Now everybody does it,
but it's a scale business, Mike. You know when you
price a plan for a big company with fifteen thousand employees,
(34:22):
the per head cost is a fraction of what it
would cost, say Vanguard or Fidelity or whomever to administer
a much smaller plan. So states doing this is a
very very good thing because they can exploit the scale.
Speaker 2 (34:34):
So something like a decade or two ago, that piece
was carved out. I don't remember when that was when
that was changed, but the auto enrollment feature was passed
by Congress.
Speaker 3 (34:45):
Twenty two thousand and six was PPO That's Your Protection.
Speaker 2 (34:47):
Act, So two decades ago that was passed. We're on
the cusp now of a bunch of new changes when
it comes to retirement plans, and I think it's going
to make them, unfortunately a little bit more complicated. We're
talking about adding annuities to plans. I at equity investments
into four one can. Those have been out there for years, Mike,
they have, but I think evaluating those on one's own becomes,
(35:08):
forget about it, pretty challenging. If you're falling into one
of these buckets. Maybe you're self employed and you're trying
to figure out, how can I best save for my
future other than reinvesting into my business, Or if you're
a employee of a company and trying to figure out, Hey,
what's the best savings vehicle for my future? Give the
folks at Armstrong Advisory Group a call. We work with
our clients one on one to evaluate these decisions. The
(35:31):
numbers eight hundred three nine three for zero zero one.
You can go to Armstrong Advisory dot com find a
time for us to call you back. But again that number,
if you want to call now, is eight hundred three
nine three for zero zero one.
Speaker 1 (35:44):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal or tax advice. Consult
your own financial tax into state planning advisors before making
any investment decisions. Armstrong make contact you to offer investment
advisory services.
Speaker 2 (36:00):
Mark, We've got a text on the tariff conversation, and
to be fair, I do not think while it may
be universally agreed, the tariffs are not great idea. Of
course to economists, it's not universally held by the average person.
And somebody brought up like why. The question was, if
tariffs are such a bad idea, how come so many
other countries have it's high tariffs.
Speaker 3 (36:19):
It's a great question. They may have different reasons for
protecting different industries. And in point of fact, most countries
don't have high tariffs. Ours are now much higher and
second late. And by the way, I'm not saying this
like you should know this, because I didn't know it
until I sure made some you know, carved out some time,
and I have considerable free time to study this type
of stuff and piggyback on the work of others. There's
(36:40):
no correlation between level of tariffs and trade surplus or deficit.
There are countries that try desperately to protect home industries
and still run big trade deficits and vice versa. Why
is that. It's because trade deficits are the result of
not saving enough, and that is also not an obvious
result and one that's a little too complicated get into here. Also,
(37:01):
most people probably don't care that much, but it's a
great point. Different countries protect industries for different reasons. There's
no question though, that other consumers not employed in that
industry bear the cost of that protection.
Speaker 2 (37:15):
By the way, my answer would just be just because
another country does it doesn't mean it's a good idea. Go.
You can verily easily search this at the World Bank
and pull up the countries with the highest average effective
tariff rate and rank them, and I think what you're
gonna find is you don't really want the type of
economy that they know now. They're generally being in countries
(37:36):
like Bermuda, the Democratic Republic of Congo, and Equatorial Guinea.
Quick break. A lot more to cover in the second hour,
the financial exchange. We'll be right back
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