One of the things beaten into my head in grad school back-in-the-day was to always look at Standard Accounting Ratios (SARs).
A fine example is when looking at long-term data, you don’t go back and look at how many people were working last month, or even last year. You go back and pencil out the data for long, long ago – decades – because there are many changes in a society and an economy that “creep in slowly” over time.
Let’s talk demographics, for-instance: When most “grays” (sixty-somethings) were growing up, the country’s racial composition was about 85 percent white. Today, it’s down to 66 percent (and dropping at an increasing clip). What this means (and no, this isn’t racist) is that consumptive habits are changing over time.
You see it in music and culture as reflected in Media. Why, back-in-the-day, to see minority performers on the networks during the Lawrence Welk-era, was a novelty. But, then came the Rock & Roll revolution, R&B, which became Urban Contemporary, which begat Rap. Personally, I’m stuck in late 60’s jazz and R&B…as my tastes run more George Benson, EWF (Earth, Wind, and Fire if you’re still in childhood) than, oh, Reba or Willie, for example. I like ’em all, don’t get me wrong. Just my wiring and upbringing in an egalitarian lower-middle neighborhood resulted in a really broad-spectrum appreciation for all.
As other cultures were forced into the “melting pot” during our lifetime, we have seen other changes besides music. Prior to the Vietnam War resettlement operation, Americans didn’t have any idea as a nation what Pho Noodles were. (Yum!) I could go on….but my point is Big Changes happen slowly. Even so, displacements happen and that’s where social stress comes from.
We’re all humans, we’re all in the “same pool” and we each have cultural strengths to bring to the party. The Scottish side of the family brought you know what adult beverage…(Haggis drive-throughs didn’t catch on…) while the Danish side brought pastries and a tendency to obesity and CHD.
Point is, as we change changed as a nation, we have not changed as much between the ears. And our taste in leadership hasn’t improved an iota. We are STILL buying into the same-old lies and BS promises the same-old way, and that results in the same-old lack of change and resulting the slow, painful death of American excellence.
Which has what to do with Manufacturing and SAR’s?
Just getting to that:
Context of Manufacturing Jobs first: Let’s go back to those “thrilling days of yesteryear.” Let’s take a cold, steely look at the manufacturing side of America:
See that? There is a broad peak that ran from about 1960 to 2002. In this period of time, it was still largely possible for one personal working to support a household unit.
Manufacturing and Farming is where the real wealth of the Nation comes from. Sure, sure, hats off to tech, but the real job growth in manufacturing has been in Asia and elsewhere since the Internet Bubble blew-up taking $8-trillion down the crapper in the early 2000’s. Yes, some of the decline was automation-induced, too.
Today, here we are 20-years later and when someone sees the root problem and wants to do something about it, what do we get? Here’s something from last month that tells it all: a Newsweek Video: Texas Teen Attacked for Wearing MAGA Hat.”
Without manufacturing, all there is – is what? The service industries. And when that falters, politicians reap a bitter harvest. Along the Mexico border, there’s been abundant economic “growth” in the illicit drug industry and, as a result, when things like black tar heroin show up in “sin city” (Las Vegas), the crime rate goes up. Ripple, ripple, political stars…how you blunder what you are….,
You see, there’s a soft sequence in the data that goes something like this – in long term, slow-motion:
- Manufacturing peaks
- Economic displacement begins
- Service industry grows
- Service industry reaches saturation
- Quality of work begins to fall
- Number of work-hours to support a family increases
- Economic crime (picking over the scraps) increases
- Abuse, differentiation, and division rises
- Public attitudes shift and consensus fractures.
- Blame and division ramp-up more
- Out come the demagogues to sell socialism etc.
- If the cycle reverses, then manufacturing picks back up. We are saved to go another long wave cycle.
- If not, Welcome to Venezuela!
Socialists (and their anarchist colleagues) and co-perps on social media plus those idiot sycophants in pop culture (who don’t think broadly or deeply) could do us all a favor with more emphasis in FIRST CAUSES. Get a job, get a Life.
The data says the economic conveyor belt did its “heaviest lifting” in the period I’ve highlighted above. Oh, and while we had a lot of inflation, we also didn’t have the choking-effect of compound interest on the National Debt. Back then – and through the 9/11 fiasco, things were slowly, incrementally, getting better.
Then it blew-up.
Sure, St. Alan Greenspan lit off another of the famous serial bubbles with the no-doc loan-based Housing Bubble, but that blew up, too leaving us just now back to even from that cluster****.
The release of the jobs report today comes amidst the usual political distractions, but it boils down to this:
When a resource-rich country like the USA can’t (pardon this) make it’s own shit, we pay someone else (China, India, etc) to make it for us. As a result, simple economic rules bite our butts…there are no retained earnings because we paid those out to these third-parties because we got lazy and because idiots (everyone face Washington) were too freaking dumb to grok that as we exported manufacturing, we exported our future.
One of the other “fall=outs” from this lack of understanding was that what capital was left had nowhere to go. And that brings us to the second background chart. The declining Velocity of Money at M2.
See what happened? (Go look at the first chart and then this one…flip back and forth a few times).
As manufacturing peaked, so did the Velocity of Money. Velocity is kinda like watching the electric meter spin. The more of its own manufacturing a country does, the more money there is to invest. People get along in such time because they are no longer fighting over an ever-smaller pie. The pie’s getting bigger, so racial, gender, orientation, religious, and other differences begin to pale because we can all look forward to larger slices. America – almost unbelievably – MAY have turned onto the road to recovery.
This is not to say the current administration has been perfect, You kidding? BUT: it is extremely evident in the data that the globalist-socialist alliance that has included the minions of the rich in congress, has been slowed. America is no-longer running straight down the Road to Ruin.
Is it a momentary blip of hope of a long-term change? Too early to tell. Politics can run us into the ditch – again – quite easily.
I’ve got plans to put a hanging sign on the front of a MAGA hat that will dangle down from the bill of the hat and it will read “Idiot Detector.” If you don’t like the hat (and forget Trump, think of it as a Manufacture American Goods Again hat), you have the economic IQ of a doorknob.
Socialists are advantage-seeking lying pricks during all this. They are never done as long as someone else has money or power. When you try to corner them and ask them “How’s that really work?” – and especially if you cite use cases from Venezuela and the Former Soviet Union – they’ll quickly call you names and move on. You’re not fit to have the wool pulled over your eyes by ’em, so why argue the point, right? There are plenty of idiots to follow ’em.
I didn’t mean to get into a re-write of the Invisible Hand, nor a long discussion how Trump is trying to fire up the Virtuous Cycle in economics, but the data argues that until his presidency, the street signs to Venezuela (or, God-forbid, another EU-like dicktatership) were were getting closer.
The lefties in politics keep mashing on the Tax Cuts, but the data says they have begun to work – bringing money back into America. And modest increases in the interest rates will – eventually – drive those bond-heavy dark pools of capital– back into productive use. Building factories and a future.
The simplest way for any of us to participate is to dial down consumption of foreign-made goods. But, we’ll save that rant for another morning.
It’s time to “read ’em and think” about the fresh job report. Here’s what we’ve got…
“Total nonfarm payroll employment rose by 157,000 in July, and the unemployment rate edged down to 3.9 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in professional and business services, in manufacturing, and in health care and social assistance.
Household Survey Data
In July, the unemployment rate edged down by 0.1 percentage point to 3.9 percent, following an increase in June. The number of unemployed persons declined by 284,000 to 6.3 million in July. Both measures were down over the year, by 0.4 percentage point and 676,000, respectively.
Among the major worker groups, the unemployment rates for adult men (3.4 percent) and Whites (3.4 percent) declined in July. The jobless rates for adult women (3.7 percent), teenagers (13.1 percent), Blacks (6.6 percent), Asians (3.1 percent), and Hispanics (4.5 percent) showed
little or no change over the month.”
OK, now the Standard Account Ratios:
- Overall population up 201,000
- Civilian labor force was up0 105,000
- Participation rate unchanged at 62.9 percent
- The number of people employed was up 389,000 – which is a BIG increase and will drive sales on the consumer side as we see it.
- Unemployed dropped by 284,000 which will cut the cost of government a bit.
- Goods producing jobs were +170,000
- And, Manufacturing jobs were +37,000.
Then there’s the CES Birth-Death Model that estimates new business creations and closures and what-not. This contributed 146,000 jobs and the biggest gains were in professional services, hospitality and leisure, and in education and health.
In all, a fairly good report. But down on Wall Street, only good for 50-points up on the Dow Futures. We wouldn’t be surprised, though to see a +100 (or better) day by Miller time.
Passable Trade #’s, Too
Some of this was driven by people pre-buying from overseas to avoid possible tariffs…
Gun-Hating Socialists Dept.
I talked to a long-term friend in the PNW yesterday. He’s a former USN Commander and a very sensible fellow: The socialists are at it again. This time with an initiative (1639) that reads like this:
“Initiative Measure No. 1639,
AN ACT Relating to increasing public safety by implementing firearm safety measures, including requiring enhanced background checks, waiting periods, and increased age requirements for semiautomatic assault rifles and secure gun storage for all firearms; amending RCW (blah, blah, blah); adding new sections to (blah); creating new sections; prescribing penalties; and providing effective dates. ”
The Commander explains that under this new grab, looks to him like a .22 rifle could be called as an “assault rifle.” What’s more, looks like if you have a gun in your home and it’s not in a gun safe – and the gun gets stolen – you could be held liable for whatever crimes it is used to commit.
How would you like that applied to other things…like, oh, CARS for example? OMG! Car gets stolen and you’re responsible for the crime spree of the perps? Who are these people?
The Commander also confessed he’s now criminal: Last week, he drove in his personal vehicle with a plastic straw in his pop from a Renton drive-in hamburger joint up Rainer Avenue into Seattle where plastic drinking straws are a crime.
I may never speak the Commander again. It doesn’t help our sterling reputation this consorting with known straw-criminals like him, regardless of past decorated meritorious service to the country.
I wonder if Amazon bans plastic straw shipments into Seattle? You know there’s massive new “stainless steel straw” industry? FMTT.
ISYN, Seattle is nuts.
And in Other News
This distant planet is one of the best places to search for alien life. No, Seattle is not a planet.
Small thaw with Russia here? For investors in Russia, U.S. sanctions will not pack the same punch as before.
And if you have a well-equipped home chem lab: Newly characterized molecule offers possibilities for novel Alzheimer’s treatments.
OK, more tomorrow…prepping articles on the weekend and Peoplenomics for subscribers where we get deeper into markets and long-term strategic thinks…