Click to enlarge.
1. We should definitely base our long-term investment decisions on the steady, predictable, and prosperous post World War II era. Every financial expert tells us this. Therefore, just extrapolate that trend channel well into the distant future I say! 50+ years of relative stability (until 1998 anyway) can't be wrong!
2. It's only a matter of time before we get back in the channel, and just think of the amazing growth opportunities we'll have as we do it. At a minimum, that's at least 6 million jobs coming our way!
3. Don't believe me? Look at the fantastic progress we've made since the end of the Great Recession. We've already gained back roughly 800,000 jobs of the roughly 7.5 million jobs lost since 1998. And it only took us 4 years to do it!
4. What is wrong with you? Why is this so hard to understand? Since 2009, the trend is definitely up and it is definitely sustainable. The employment future's so bright in manufacturing and agriculture that we've all gotta wear shades! Not only are we apparently ditching twenty-first-century combines, but we're also dumping smarter factory robots too. More hard manual labor is here to stay! Isn't that fantastic? Not only that, but we're going to spread all this extra wealth around too, as evenly as humanly possible no doubt. Gone are the days of rising income and wealthy inequality! Everyone will be working on farms and/or in factories again someday!
5. All it took was more debt and ZIRP that just won't quit. As the Chinese almost say, may we live in interest-free times! Some see it as a curse. Not me. We are truly blessed! The weaker our economy gets, the stronger and more resilient it becomes!
Damn. Where did everyone go? I was warned to not do a hard sell on this wacky prosperity theory. I clearly should have offered more free candy and refreshing iced beverages during my presentation. It's just that there have been so many budget cutbacks in these lean times. The costs of free candy and iced beverages can no longer be absorbed as easily as they once were. What's an optimistic pessimist, such as myself, supposed to do? I work with what I've got!
Oh, crap. I just broke my sarcasm meter. Those things don't come cheap either. Well, that's not quite true. I import them one cargo container at a time. I've got so many I don't even know what to do with them all.
This post inspired by Troy who pointed out the agricultural employment picture in a comment found here.
Source Data:
St. Louis Fed: Custom Chart
Primary Sector -- Ag, Fishing, Forestry, Mining
ReplyDeleteSecondary Sector -- Mfg
Tertiary Sector -- Services
Quaternary Sector -- Information
http://research.stlouisfed.org/fred2/graph/?g=u3K
is mining + logging + retail + information employment.
Up 100%, 10M to 20M, 1970-2000, down 1M, 5%, since 2000.
http://research.stlouisfed.org/fred2/series/USGOVT
govt employment is similarly up +10M since 1970, but pretty flat since 2000.
It's like we've hit a wall or something.
Troy,
ReplyDeleteIt's like we've hit a wall or something.
Yeah.
Building things like dams and highways were great ideas in the past. They really boosted the economy.
Spending money to maintain them would be a good idea too, but it doesn't actually offer the same bang for the buck.
Over the long-term, the ideas for job destruction seem to be coming in faster than the ideas for job creation.
Perhaps the wall was just the tipping point. Once a certain threshold was hit, it built upon itself in a non-virtuous way, much like a locust swarm eventually does. Sigh.
Jobs. Ha! Tell it to the Cambodians:
ReplyDeleteCambodia's largest export industry is facing its biggest crisis, with garment workers and security forces engaged in a series of ongoing clashes. One recent protest left five people dead and scores injured.
http://www.aljazeera.com/programmes/101east/2014/03/dying-fashion-2014317102854441156.html
I think Sebastian has a sarcasm meter that has never been used. If his comments are any indication he as no idea of its value either.
ReplyDeleteFatboy,
ReplyDeleteMass faintings are also common. Investigations show that garment workers typically toil in poorly ventilated factories, work long overtime hours to earn extra income and suffer from malnutrition.
Meanwhile, we've got 45+ million on food stamps with no overtime hours buying those goods. Go figure.
Crazy @#$%ing world.
Rob Dawg,
ReplyDeleteI can't seem to build up the motivation to read the comments at CR much these days.
The pre-recession Sebastian couldn't spot the Great Recession coming. The post-recession Sebastian apparently believes he has a "sure thing" model to spot the next one though. What hubris! Probably wonders why the top economists from around the world aren't flocking to his door for sagely "sure thing" advice, lol.
oh, he had a model for the last one.
ReplyDeleteWright's Model B
This guy saw the storm coming, May 2008:
"Things are very bad and getting worse. I see it every day and talk to customers and suppliers who are living it as well.
"The second half of this year is going to be worse than the first half too."
http://www.hoocoodanode.org/node/3257
Same guy a bit later:
Seb,
You are a troll and a fool.
The trade numbers reflect exactly what you'd see in a recession.
You clearly have no idea what you are talking about.
Seb pumped EGLE in that thread, I see it crashed from $30 to $10 that year, now trading at $1.
Somebody else:
ReplyDelete"American oil production has been declining since 1972, which isn't really a surprise to anyone paying attention"
vs.
http://www.nytimes.com/2014/01/25/business/us-oil-production-keeps-rising-beyond-the-forecasts.html
up 30%+ from the 2009 low.
hmm, 2008 was the low at 5MBPD and we're up 50% (!), now at 7.5MBPD:
ReplyDeletehttp://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRFPUS2&f=A
This puts us back on the other side of Hubbert's Peak, 1965 or so.
Tight oil might fall off faster than big elephants, but $90B/yr not going overseas is a nice dividend.
'course, fat lot of difference if that money doesn't ever recirculate in the paycheck economy, from whence it came.
Troy,
ReplyDeleteFrom your link (bullish Sebastian quotes from May of 2008, 6 months into the recession!):
I consider this more proof that simply following the numbers instead of a subjective opinion is the best way to be "right"
Who continues to be both unfailingly civil and correct about "no recession."
Hahaha! That was the pre-recession (during the recession) Sebastian talking. Perhaps it really was sarcasm. Note the quotes around the word right.
He now claims that he's changed though. His new plan involves following the numbers instead of using subjective opinions again.
Unfortunately, it goes through an "ignore all bad numbers" subjective opinion filter first of course. What's left is then once again offered up as proof, lol.
For what it is worth, he sees slow and steady progress. I see a lot of concerning upside down parabolas and declining linear trends over the past few years. One of us is very wrong.
Another difference is that I know my opinions are opinions, especially concerning predicting the future based on trend lines. He's convinced all his opinions are facts though. The arrogance of that amazes me, especially after offering up some of the worst economic opinions heading into *and* during the Great Recession. Most people would have been humbled by that. Go figure.
Troy,
ReplyDeleteTight oil might fall off faster than big elephants, but $90B/yr not going overseas is a nice dividend.
It is. We really don't want to be seeing $200 oil unless wages double *and* employment grows.
'course, fat lot of difference if that money doesn't ever recirculate in the paycheck economy, from whence it came.
In my opinion, that is exactly what separates the eternal optimists from the cautious realists. Where the money goes is *very* important.
You and I both have the same concerns in a lot of ways. I do not like where the money keeps flowing.
Take the flow when purchases are made on Amazon compared to when they are made at the mall. Malls hire retail salespeople. Malls have food courts that hire people. Driving to malls boosts mileage which boosts auto production and auto repair employment.
It's certainly more efficient to buy through Amazon and we should all therefore be better off in theory, but as you say...
'course, fat lot of difference if that money doesn't ever recirculate in the paycheck economy, from whence it came.
Indeed! Sigh.
As a saver, gamer, introvert, and one who values free time, I know that I have some serious biases that might make me too pessimistic about our long-term future. I try to factor them in but it is very hard to do. I'm actually the economy's worst nightmare.
ReplyDelete1. As a saver, I don't make many discretionary purchases, nor will I ever more than likely. And when I do make purchases, I tend to patiently wait for a good sale.
2. As a gamer, I tend to get 300+ hours of recreational enjoyment for less than $50 (sometimes much less). Enough said.
3. As an introvert, I don't feel the need to visit this country's many restaurants all that often (much less than most).
4. As one who values free time, my dream day involves hiking on a trail with our dog Honey in the summer. It doesn't get much better than that. Unfortunately for others, it doesn't exactly stimulate the economy.
There is nothing the Fed can really do to entice me into boosting this economy. At best, it can get me to hoard goods I will need in the future. Been there, done that. Now what? They brought some of my future demand into the present. It will therefore be missing in the future.
Good thing I am the exception. My behavior is bad for this economy and I genuinely apologize. I'm not going to change though, and if it comes right down to it, shame on the economy for needing me to. It certainly wasn't always that way. I'm certainly living far more "on the grid" than most were several hundred years ago.
I saw this chart at Econobrowser.
ReplyDeleteMedian household income has been falling during this productivity boom - fewer manufacturing workers, greater income generate but less income distributed.
Manufacturing is irrelevant in the financialconomy.
ReplyDeleteThat is unless there are substantial tax breaks involved.
What gets me is that the GOP has to pivot 180 degrees to stop digging the hole digger for the middle class.
ReplyDeleteThis is what really scares the * out of me.
Japan's macro problems are kinda harder to solve, and their politics are really bad right now, but their electorate isn't locked down into warring camps like ours.
Re-instituting biblical morality, gun rights, pro life, generational 'inner city' poverty, millions of immigrants taking over -- these political footballs do not exist there.
Our problems are solvable, but we need an honest system to solve them.
And that, we do not have. I think we lost it in 1994, when the electorate threw out those tax-raising Dems and went for the GOP BS story.
2006-2010 was a brief window when the electorate out of desperation shifted to the blue team, but 1994-2014 has been run by the GOP one way or the other.
http://en.wikipedia.org/wiki/113th_United_States_Congress#Major_legislation
(crickets)
I need to figure out where I want to be in 2020 and work back from there. 2020 Olympics may be a sign, LOL
Luke The Debtor,
ReplyDeleteless income distributed
That pretty much sums it up. Sigh.
Rob Dawg,
ReplyDeleteManufacturing is irrelevant in the financialconomy.
But... but... we have achieved auto-auto-autonomy!
We are "free" to borrow all the money needed to buy an "auto" made by "automated" robots!
Heck, we might not even be required to fog a rear view mirror (again), lol. Sigh.
Gallows humor. :(
Troy,
ReplyDeleteI need to figure out where I want to be in 2020 and work back from there.
World War 2 started in 1939. That was roughly 5 years after we entered ZIRP. In theory, 2020 would be roughly the same as 1945 back then.
There were quite a few Americans wanting to head over to Japan in the days leading into 1945. My dad was one of them. He served on a US battleship, lol. Sigh.
It's just more gallows humor. I could not resist. ;)
And the 1940 Olympics was supposed to be in Tokyo, LOL. Cancelled in early 1938 after the row with China grew into a wholesale invasion.
ReplyDeleteBut these days both countries are united in their love of our debt, which China showing ahead in the demonstration:
http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt
so I don't see how we could pick sides like we did in the 1930s.
Troy,
ReplyDeleteAnd the 1940 Olympics was supposed to be in Tokyo, LOL.
Wow. That's great trivia! I had no idea, lol.
I believe that it would take a world war to destroy all this excess industrial capacity around the world. I mean, isn't that how it was done in the past?
So what happens in a world where a world war could easily end all life as we know it? We are well into uncharted territory.
I'm definitely not predicting a world war by the way. I'm just trying to figure out what the global economy will look like without one.
What would have happened in the 1940s if there had been no war?
Would there have even been a baby boom? Would there have been an inflationary 1970s? How much did the war boost the participation rate of women in the workforce?
These are mostly rhetorical questions for me, but I do have opinions that you can probably guess.
We definitely live in interesting times.
The amount of capital we worked like dogs to manufacture 1940-45 could have been consumer goods instead.
ReplyDeleteThe oil we burned chasing the Japanese back to their home islands could have been used for peaceful, wealth-accreting applications.
And then we get into all the capital stock destroyed in Europe, from Brest to Stalingrad.
Japan had a young industrial base and what they had was of peripheral quality, so our B-29 visits were almost something of a favor anyway.
They lived in paper cities and had discarded much of their pre-modern cultural properties as irrelevant trash anyway, so the loss to Japan wasn't as great as what France and Germany suffered.
Economics is weird. Having what you need is all you need, yet if everyone has what they need, no trades can be made.
I'm writing this on a 5 year old laptop, I cleaned out the fans last week and I think I'll get another year use out of it, bringing its per-hour TCO down to ~10c . . . thank you nameless assembly workers in Shenzhen!
If you really want to get a sad:
ReplyDeletehttp://research.stlouisfed.org/fred2/series/FDEFX
taking everything over FY00 as waste, that's $3.6T of misinvestment.
$30,000 per household.
Basically we could have bought everyone a new solar roof or $30,000 in other energy-saving capital investment, like new fleets of CNG-fueled buses, etc etc.
I do think what we did to ourselves 2002-2006 killed this nation as a going concern, because we are politically unable to mitigate the mistakes -- to fix the mistakes requires admitting they exist, and to admit they exist brings up the question of who committed them in the first place.
So we get BS accretion instead.
Troy,
ReplyDeleteEconomics is weird. Having what you need is all you need, yet if everyone has what they need, no trades can be made.
And then there's the part where we go after what we want, and if we don't currently have what we need to get what we want then we simply borrow against what we will someday potentially have (plus interest of course) in order to get what we want. Instant gratification!
The "potentially" word is its own risk of course. Those NINJA loans were a bit on the optimistic side, to say the least. The "plus interest" part is as well, since excess interest paid can be very unhelpful over the long-term (unless one believes a tapeworm is generally helpful).
to fix the mistakes requires admitting they exist, and to admit they exist brings up the question of who committed them in the first place.
Agreed. Further, not admitting the mistakes allows us to pretend that the economy will continue to grow like it has over the last 200 years. Wouldn't want to undermine consumer confidence by suggesting that something has broken. Best to just sweep it under the rug and hope nobody notices. Or better still, simply finger point at the political party currently in power each time it does break and further polarize this country. Sigh.
growth is overrated.
ReplyDeletewell, given we're going to have 30% more people here in 2050, maybe not.
Sweden's teen pregnancy rate was 30% ours in the mid-1990s, and at 2/3 ending in abortion their teen pregnancy abortion rate is 2X ours.
Easier running a welfare state if you can avoid the Malthusian element.
Troy,
ReplyDeleteEasier running a welfare state if you can avoid the Malthusian element.
No joke. :(