The unemployment rate in the Gen Z population, those born between 1997 and 2012, is edging up to 7 percent compared to the nation's overall employment rate of 4.3 percent. That is the highest gap the country has seen in 30 years. For entry-level college grads, aged 22 to 27, the number is roughly 5.8 percent — the highest level in a dozen years.

 

Fed officials and private sector economists have been quick to point out that the uncertainty created by the Trump administration's tariff increases is a major cause of reluctance among businesses to hire young, inexperienced workers. That makes some sense since entry-level jobs are the first to go in times of economic uncertainty.

 

Job openings in June fell to a post-pandemic low, but the rate of layoffs also stood near a record low, which is a good sign for the broader U.S. economy. Companies are reluctant to cut jobs because of the chronic labor shortage. They are worried they won't be able to rehire enough experienced people when the economy speeds up.

 

Young Gen Z workers are struggling to find jobs. Economists blame the uncertainty of tariffs, and, among white-collar workers, artificial intelligence is also taking its toll on entry-level college grads.

 

One interesting development is that the unemployment rate is just about the same regardless of whether the applicant holds a college degree. If one looks at overall job openings, there are still millions of jobs available, but many of them do not require a college degree. Corporations are realizing that an automatic college-level degree requirement for many entry-level jobs in their screening process is superfluous.

 

Over many years of writing these columns, I have addressed this subject on several occasions. I urged readers and their children alike to reconsider the worth of a trade school education versus a college degree. For those interested, check out my Feb. 14 and 21, two-part, 2013 columns "Trade Schools Versus College." 

 

Fast-forward to today, where at least some readers have taken my words to heart. The overall share of young college students has declined by about 1.2 million between 2011 and 2022, according to Pew Research Center. Enrollment at two-year vocational public schools has increased by 20 percent since 2020. It appears that we are finally realizing that vocational careers are enormous opportunities that pay exceptionally well.

 

History still says individuals with a bachelor's degree earn $1 million more over their lifetimes than those with a high school diploma and $500,000 more than those with an associate's degree. Of course, the area of study in college is important as well. Over the last decade or so, for example, many students realized that jobs for graduates with a liberal arts degree were scarce. Those who were lucky enough to land an entry-level position found that their salaries were less than what high school grads were making in fast food chains. This convinced many students to find more lucrative fields of study.

 

"You can't go wrong with a degree in technology" became the mantra of the day as college enrollment surged in programs leading to entry-level jobs in computer system design, related tech fields, and mathematical and computer sciences. Unfortunately, over the last few years, these areas have been among the first to feel the brunt of the increased adoption of artificial intelligence systems.

 

The professions where hiring is still exhibiting some modest gains are in health care, government, restaurants, and hotels. We all know that government jobs, thanks to DOGE, are among the riskiest fields to enter, while restaurants and hotels rarely require an upper-level education degree. Health-care occupations are projected to grow much faster than the rate of all professions, around 1.9 million openings each year, according to the Bureau of Labor Statistics. It is also recession-resistant, as more Baby Boomers require more health care.

 

Gen Z, at 70 million people, accounts for 20.81 percent of the U.S. population. Politically, this age group has traditionally leaned left, but that shifted somewhat during the last presidential election. For the first time ever, Gen Z voters backed more Republicans (47 percent) than Democrats (46 percent). The shift is widely attributed to economic frustration, discontent with President Biden, and the GOP's outreach to young people on social media.

 

However, over the last few months, support for the GOP has wavered, according to the latest data by the Pew Research Center. Gen Z has swung back to favoring Democrats by 49 percent, while Republican support has dropped to 43 percent. 

 

How much of that dissatisfaction is due to the economic frustration of unhappy college grads remains to be seen. Last year, according to the World Population Review, there were more than 20 million students enrolled in colleges and universities in the U.S. Just a quarter of that total would be more than enough to swing sentiment, especially in a period of populism and partisanship. Remember that in a populist era, voters are quick to reject candidates and political parties that fail to deliver and deliver quickly on their promises. 

 

The good news for college grads, if there is any, is that the economy is still growing. If the Trump plan to grow the economy at 3 percent per year pans out, and immigration continues to slow, there will still be plenty of jobs for Gen Z college grads. They may not be in their chosen field, but a job is a job. And if they really want to make money, try plumbing or electrical work.  

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.

It is 2026. A new Fed chief has been installed after committing to follow the president's demands to cut interest rates and keep them low. The Fed's first act is a one percent cut in interest rates. How will the markets react?

 

If history is any guide, the stock market would roar. Bond yields across the board might plummet. The economy would catch on fire. Home prices in the real estate market could climb as buyers take advantage of falling mortgage rates. 

It would be a time to break out the champagne because good times are here again.

 

However, history may not be an accurate reference point. In the above scenario, we would be living in a macroeconomic environment in which the independence of the Fed will have taken a back seat to our high public debt and deficits. Those twin issues would now be the new Feds' focal point dictating and constraining America's monetary policy.

 

The U.S. would have entered a regime where the central bank's usual objective of controlling inflation and sustaining employment becomes secondary to the U.S. Treasury's budget financing needs. To accommodate the government's borrowing, the Fed would be expected to keep interest rates low, and if necessary, buy government debt (quantitative easing) on an ongoing basis.

 

Welcome to a state of Fiscal Dominance. We have had our first taste of this condition when former U.S. Treasury Secretary Janet Yellen, increased the amount of short versus long dated debt the government issued from 25 percent to 50 percent. While yields on Treasury bills and notes fell, long-dated securities (the 10-, 20- and 30-year bond yields) rose. Why?

 

Holders of longer-term bonds were not so quick to buy more in the face of the government's new tactics. As a result, the Fed reversed their quantitative tightening program and bought back more Treasury bonds and sold less. At the same time, the U.S. economy began to decelerate in both real and nominal terms.

 

The same thing happened in Japan in the first decade of this century. The Japanese central bank began buying Japanese Government Bonds (JGB). The Bank of Japan is now the largest holder of the country's national debt worth $4.3 billion. Under fiscal dominance, it is not hard to imagine a future where the U.S. Federal Reserve Bank becomes a bigger and bigger buyer of our debt.

 

To be sure, keeping interest rates low in an economy as large as ours would put a lot of pressure on the financial system. It would require the central bank to inject massive liquidity (print money) in order to keep buying up T-bills and notes while utilizing quantitative easing to buy Treasuries on the long end. In a situation like that, there would have to be fall out. In past episodes of fiscal dominance (mostly in emerging markets), it was the currency that fell victim to these government policies.

 

Consider that the dollar year to date, is down around 10 percent. The combination of Donald Trump's trade policies, inflation, Americas' increasing deficit and debt, and the administrations' disruption of American foreign policy has created alarm and a building distrust from friend and foe alike. These set of circumstances have conspired to pressure the dollars' downward spiral.  

 

Notice too that neither Trump nor his cabinet have uttered a word about the dollar's decline. That may be because in general, taken alone, currency declines can be good for the value of real assets. However, an imploding currency, especially if we are talking about the worlds' reserve currency, would create an enormous flight of capital by foreigners who hold trillions of dollars in U.S. bonds and stocks. That has not happened yet.

 

If Trump were to manage a fiscal dominant regime in the coming year, I expect the decline in the dollar would continue. That would hurt export-driven economies like Europe, Japan and China. At some point they would be forced to cut their interest rates and drive down the worth of their currency to protect their own exports. Economists would refer to this as a competitive devaluation. In a world where all currencies were declining, investors would be actively looking for somewhere to preserve their assets.

 

We are already witnessing that trend in action. Higher prices for gold, silver, and other precious metals, as well as the recent price gains in crypto currencies are no accident. It appears to me that investors worldwide are already anticipating further declines in the U.S. currency and are hedging their bets and exposure to the U.S. dollar.

 

As for the stock market, there will be winners and losers. Real estate, commodities, precious metals and oil stocks should do well. Anything that tracks the rate of inflation higher would be attractive investments. Exporters could benefit from a lower dollar while those that depend on exports will not.

 

Rate sensitive sectors like technology, consumer discretionary, financial and growth stocks might not do as well. Given the greater role the government would play in the economy, infrastructure, defense, and healthcare could do better. Foreign stocks, especially real asset-rich emerging markets, could also outperform domestic equity as well.

 

The question many readers might ask is will the country go along with this policy change? I suspect they would, given the era of populism we find ourselves in. In my May 2024 column "The Federal Reserve's Role in Today's Populism," I argued that the U.S. central bank's monetary policy is and has been a "top-down approach" where lowering interest rates primarily benefited the wealthiest segment of the population and the largest companies within it.

 

It was they who could borrow the most but needed it the least, who benefited while Americans at the other end of the scale could borrow not at all.  An independent Fed is a Fed that inadvertently fostered and increased income inequality among Americans in my opinion. Given that, I am guessing that a different approach to monetary policy might be greeted with open arms among a large segment of the population.

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.

 

The rhetoric is getting louder. Potential contenders to replace the head of the U.S. Central bank are lining up for that coveted position. The president's demand for lower interest rates is now almost a daily occurrence. Why?

 

Jerome Powell, the chairman of the U.S. central bank, is now on Donald Trump's sh*t list. The White House and its allies have intensified their assault on the Fed chairman. The president is actively asking his allies in Congress if he should fire Powell — if he can. Some members of his administration are using the Fed's over-budget $2.5 billion headquarters renovation to build a case for removing Powell sooner than next spring, when his term is set to end. Why now? What is so important that Trump can't wait a few months before the Fed lowers interest rates anyway?

 

From a financial perspective, the economy appears to be in no danger of recession. The latest non-farm payroll report for June was a robust upside surprise, signaling a healthy labor market. Inflation, while down over the last few months, is by no means defeated. And yet, the administration's urgency to reduce interest rates is palpable.

 

Some dismiss the president's rhetoric by explaining that the president has always been a "low interest rate kinda guy," which is a legacy of his years as a real estate mogul. OK, I can buy that, but Scot Bessent, the Treasury secretary, is a Wall Street money manager. He knows the interest-rate market like the back of his hand. He cares deeply about the ramifications of lowering interest rates in today's economic environment.

 

Some of Bessent's recent comments may hold the key to what is really going on. In a recent Bloomberg TV interview, he stated that President Trump had instructed him "not to do any debt beyond nine months or so" until a new Fed chair is installed. He explained his reasoning: "Why would we issue debt at current long-term rates?" With the government's interest payments exceeding $1 trillion annually, selling longer-term maturities that command higher interest rates would substantially increase those costs.

 

What this indicates to me is that there has been an essential shift in the country's policy toward borrowing, away from long-term debt such as 10, 20, or 30-year Treasury bonds and towards lower-interest, short-dated debt, such as Treasury bills with less than one-year maturities. Why does that matter?

 

Readers should be aware that interest rates on long-term debt are determined by the market, whereas the Federal Reserve sets those on short-term debt through adjustments to the Fed Funds rate. Historically, the Fed has acted independently of the rest of the government, doing what it thinks best to curb inflation and maintain employment, but times change.

 

The person who receives the nod to become the next Fed chairman will be determined by two things: his loyalty to the president and his willingness to reduce interest rates. Once appointed, he is expected to be at the beck and call of Donald Trump's interest rate demands. Given that the president has already instructed the Treasury to focus on issuing debt in the short-term market, the Fed will be able to effectively decide the interest rate the government pays on its debt.

 

Since interest rate payments are now the second-largest cost item after entitlements, the government's control of how much it pays for borrowing would save the government billions of dollars in interest expense. Since the issuance of long-term Treasuries is significantly lower, yields on that debt should drop due to supply and demand. However, interest rates on long-term bonds will depend on what the market decides is a fair yield, based on its growth and inflation expectations.

 

A friendly new Fed chairperson, working with the Treasury to maintain this new financing mix of lower interest rates and short-dated maturity issuance, could keep the nation's interest payments in check. In one fell swoop, the Fed and Treasury would reduce the budget deficit and stimulate the economy at the same time. But what happens if the bond buyers of our long-term debt don't go along with this scheme? There is a remedy for that as well.

 

Recall that last year,  the Fed cut interest rates by 50 basis points. The short end of the yield curve dropped as expected, but the longer-dated bonds (controlled by the markets) did the opposite. What was behind that rise in interest rates? Financial markets decided that the Fed cut could lead to higher inflation over the long term. Since then, yields on those bonds have remained higher than most expected.

 

Could that happen under this new regime at the Fed? It could, but there would be nothing to stop a less-independent central bank from buying longer-dated Treasury bonds on its own, thereby driving down long rates as well. They have done it before under the name of quantitative easing. If they wanted, they could even buy long-dated Treasury bonds at auction if needed§.

 

There is a name for this kind of policy change. It's called Fiscal Dominance, something I witnessed countless times in several emerging market economies back in the day. It is a policy that subordinates a previously independent central bank to the needs of the Treasury. It typically occurs in a government that has abandoned budget discipline and resorts to printing money to finance its deficit. Sound familiar?

 

During my travels throughout South America in what was known as "the lost decade of the Eighties," Fiscal Dominance governments emerged everywhere. Their government leaders opted for stimulating growth this way but ignored the risks of price stability. What occurred was structurally higher inflation, currency debasement, and ultimately, a political crisis.

 

Can this happen here, and if so, what will be the impact on the financial markets? Next week, we will examine how a potential change in Fed leadership, influenced by the president and the U.S. Treasury, could impact bonds, the dollar, commodities, and the stock market.

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.

Older populations worldwide are experiencing a significant increase in skin cancer cases after years of cumulative sun exposure over multiple decades. In the U.S., invasive melanoma rates continue to rise sharply among those older than 60, especially among whites.

 

The American Cancer Society estimates that approximately 104,960 new cases of melanoma will be diagnosed by dermatologists this year. Is it any wonder that health experts predict the dermatology sector of healthcare will reach $3.59 billion over the next 10 years? Last week, I examined some of the reasons why skin care has been the overlooked stepchild of health care for an entire generation.

 

It was almost as if the Baby Boomer generation was bound and determined to do as much damage as they could to this vital part of their anatomy. I explained how the Sixties generation became sun worshipers searching for the perfect Beach Boys tan at a time when industry was decimating the ozone layer with chlorofluorocarbons.

 

As Baby Boomers stripped down and the ozone layer began to disappear, we found even better, faster ways to damage our skin than simply frying our baby oil-soaked skin in the sun for hours. The explosion of cheap package holidays and tours to exotic locations (noted for their tropical sun) made for a great tan that would be the envy of the neighborhood.

 

Tanning beds were introduced to North America in 1978 and gained popularity by the mid-1980s. At its peak, the industry was generating $2 billion annually; however, as the health risks of exposure to UV became apparent, revenue plateaued, remaining around $1.9 billion per year.

 

The dermatology industry argues that the use of these beds significantly increases the risk of developing skin cancer. In one study alone, 61 of 63 women were diagnosed with melanoma, the deadliest form of skin cancer, before 30 who used tanning beds. These beds can also compromise your immune system, cause clinical eye issues, and lead to photodamage, as well as accelerate photoaging or premature skin aging.

 

The facts are that as we age, the incidence of certain skin disorders increases, as exposure to the sun over a lifetime creates cumulative damage. That is another explanation for why my parents did not have my skin problems. Baby Boomers are living longer than previous generations, thanks to advancements in medicine and technology.

 

In my case, one or both of my parents may have had skin issues, but neither ever bothered to see a dermatologist. I know of several men in my generation or younger who have never had their skin checked out for skin cancer. To me, that is astounding since the median age of onset for melanoma is 55, with the highest incidence rates found in the 65-plus demographic. What's worse, people with paler skin are 20 times more likely to develop skin cancer than those with darker skin.

 

I also wondered if, as a teenager, exposure to the sun while in Vietnam for almost two years may have damaged my skin. No one wore sunscreen, nor was it issued to the troops. Would a similar exposure by U.S. service members in the Middle East also be a factor?

 

I know my father, who served in the 101st Airborne, only served in Europe during World War II, but what about the Marines in the Asian theater?

 

Interestingly, a large proportion of World War II patients with skin cancer were stationed in the Pacific. The Veterans Administration concluded that a few months to a few years of prolonged sun exposure in a high-intensity area may result in skin cancer many years after exposure. Similar findings by the Journal of the American Academy of Dermatology in 2018 indicated the same high risks applied to service members and veterans.

 

You would think that with all the new medical research on the causes and consequences of skin cancer, the younger generations of Americans would learn from our many mistakes. We never heard about SPF labels back in the day, but we do now. Not so. The American Academy of Dermatology found that Millennials and Gen Z, while more attentive to their overall health, tend to prioritize sun protection less.

 

In a recent survey, 70 percent of respondents did not understand the skin cancer risks associated with sunburns, and nearly 60 percent believe in sun tanning myths. The younger generations believed that base tans were healthy and said they would rather tan and look great, even if that meant they wouldn't look good later. They also believed that tanning beds are safer than sun exposure.

 

Some say skin cancer is part and parcel of our culture now. The phrase "Beauty is only skin deep" was first stated by Sir Thomas Overbury in his poem "A Wife," written in 1613. Tell that to the marketing world today, who argue the opposite. As such, most Americans grew up believing that the better you look, the more successful, happy, wealthy, and so on, you are. 

 

That has spawned an insatiable demand for aesthetic appearance. Aging Baby Boomers want to turn back the clock. Younger generations view skin as simply another cosmetic to alter or do with as they please. Technological advancements promise a wide range of innovations. Bikinis have gotten smaller. Tans are still "in" unless, of course, you are like me and have had several bouts of biopsies, laser treatments, surgery, and more. As any parent of a teenager will tell you, trying to get people to cover up who don't want to is pointless. No wonder dermatology is a growth business with no end in sight.

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.

The dermatology sector in health care is expected to grow by almost 7 percent per year between now and 2034. That is good news, but the increasing incidences and prevalence of skin disorders are behind the industry's torrid growth rate.

 

The global market was estimated to top $1.4 billion last year, with North America being the fastest-growing market, followed by the Asia-Pacific. Skin cancer, warts, infections, dermatitis, psoriasis, and acne are among the primary disorders treated using a variety of therapeutic strategies, including cryosurgery, laser therapy, photodynamic therapy, radiation, and vitiligo therapies.

 

Over the past decade, like many other health-care areas, acquisition and investment activity in dermatology has skyrocketed, fueled by private equity, family offices, and institutional investors.

 

I am practically an expert in the area, given the number of times I have been scraped, cut, fried, and zapped over the last several years. As I wait for yet another biopsy on two spots, one on the crown of my head and the other on my forehead, I wonder how come I have all these unrelenting skin treatments when my parents had none, so I did a little research on the subject.

 

Each year in the U.S., an estimated 6.1 million people are treated for skin cancer, and that number is growing. With names such as basal cell carcinoma and squamous cell carcinoma, the most common forms are usually treatable. Most of these maladies are caused by overexposure to ultraviolet radiation from the sun and indoor tanning devices.

 

We know that the thinning of the ozone layer, where 90 percent of the earth's ozone sits between six and 31 miles above the surface, is partially responsible. This allows harmful ultraviolet rays (UVA) to penetrate the earth's surface and damage the middle layer of our skin. Unfortunately, it was only in the late 1970s that people realized that man-made chemicals, specifically chlorofluorocarbons, were destroying the ozone.

 

As a Baby Boomer, I recall the 1950s at Barnegat Bay on the Jersey Shore with my family. That's when suntan lotion became "a thing." We kids had to slop Coppertone on, although my parents rarely used it. It did little good anyway since I still managed to get a glowing red sunburn that ended in my peeling away large sections of white dead skin weeks later.

 

Reflecting on the past, I realized that basting in the sun only gained popularity in the late 1950s, at least in this country. It was then that the modern bikini became the rage for American women, shortly after Brigitte Bardot modeled a floral version on the beach at the Cannes Film Festival in 1953.

 

Before that, having a summer tan was the mark of a lower-class individual or an outside day laborer, while pale skin signified anything but. Having a tan became high on everyone's agenda. A tan was healthy, sexy and signified someone on the move.

 

I also recall that every male in America wore a hat of some kind while I was in grammar school. It was only after John F. Kennedy first appeared bareheaded at his 1961 inauguration that wardrobes began to change. He is credited with the death of the men's hat as males of all ages gladly exposed their scalps to the rays of the sun in perpetuity.  

 

The point is that, in general, people wore far more clothes back then than we do both summer and winter. Next week, I will expand on this combination of culture, science and events that conspired to create today's epidemic of skin cancer.

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.