The Trick to a Sustainable Economy

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Here's the theory. We need to add drinking jobs at least as fast as we lose manufacturing jobs (per capita, so job growth can keep up with population growth). 0% is therefore the goal. Achieve that and the world is our oyster! We've been doing great since November of 2010. That's nearly 3 years of solid performance. Let's hope we can sustain it permanently this time!

Hey, I never said it would be easy over the long-term. As seen in the following chart, there may be a chance though.


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Heavy drinking data from 1993–2000 represent all respondents aged 18 years and older who report an average of 2 or more drinks per day (i.e., 60 or more alcoholic drinks a month). Data from 2001–2009 [2001-2012] represent all male respondents aged 18 years and older who report an average of more than 2 drinks per day and female respondents aged 18 years and older who report an average of more than 1 drink per day.

Thanks to the increased frequency of hangovers brought on by exponentially increasing heavy drinking, the future's too bright. I gotta wear shades. Sigh.

See Also:
Sarcasm Disclaimer

Source Data:
St. Louis Fed: Custom Chart
CDC: Alcohol Usage Trends

It's Hump Day!

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This linear trend failure is making a most spectacular recovery! What a rare treat in this brave new era of trend failures!

Nixon Shock

To prevent a run on the dollar, stabilize the US economy, and decrease US unemployment and inflation rates, on August 15, 1971, Nixon issued Executive Order 11615, pursuant to the Economic Stabilization Act of 1970, which imposed a 90-day maximum wage and price ceiling, a 10% import surcharge and most importantly, "closed the gold window", ending convertibility between U.S. dollars and gold.

August 04, 2011
Bloomberg: The Nixon Shock

According to Burns biographer Wyatt Wells, Nixon issued his appointee some blunt instructions: “You see to it,” Nixon said. “No recession.”

In hindsight, good luck on that one Burns!

And the anguish that Burns felt is Ben Bernanke’s unfortunate inheritance.

Good luck to you as well Bernanke!

August 6, 2013
More Than a Quarter of Fast-Food Workers Are Raising a Child

(The Bureau of Labor Statistics, for its part, reports that median age of "combined food preparation and serving workers," a category that includes your average McDonald's hand, is about 29).

The following chart shows the additional percentage of 16- to 19-year-olds employed in July compared to those employed in January of that same year.


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The long-term pressure is clearly to the downside, and that means that summer jobs have definitely become an endangered species. Of course, that's also true of employment in general for this age group. The jobs just aren't there. And in my opinion, no amount of optimistic wishing is going to make them magically reappear either, especially over the long-term. Sigh.

Source Data:
St. Louis Fed: 25- to 54-Year-Old Workers / 55+ Year-Old Workers
St. Louis Fed: 16- to 19-Year-Old Employment Rate

The Age of Chaos (Musical Tribute)

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From 1993 through 1999, one could estimate with great precision how much money was being spent on office construction simply by knowing how the stock market was doing.

From 2000 through 2007, one could still make a reasonably accurate estimate.

From 2008 to present, this device could have done better.


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OUTLOOK NOT SO GOOD!

Source Data:
St. Louis Fed: S&P 500 vs. Office Construction Spending
St. Louis Fed: Employment Level - Sales and Office Occupations

Absolute Faith in Monetary Policy (Musical Tribute)

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Source Data:
St. Louis Fed: Custom Chart

The Sure Wild Thing!

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Source Data:
St. Louis Fed: Custom Chart

The Year 2092

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Assuming that the Fed has permanently put a stop to all future recessions and recent trends can therefore remain in place, then 2092 is looking to be quite the year! That's when residential construction employment per capita will have made a full recovery!

I'm only bringing it up because, as seen in the following link, party hats are still in such short supply! Reserve yours early!

September 1, 2013
America resilient 5 years after worst GDP loss since ’30s

The signs of resilience are everywhere: Households continue to spend. Businesses are investing and hiring. Home sales are rebounding, and the automobile industry is surging. Banks have healthier balance sheets, and credit is easing. All this coincides with the economy shedding the excesses of the past, such as unmanageable levels of consumer and corporate debt.

Sales are "surging" as we shed the excesses of the past! And credit is easing so we can borrow even more! Hurray!

“We are in a much better place than we were five years ago,” said Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pa. “Consumers are feeling much, much better; certainly investors are.”

It is Mark Zandi's vast knowledge of the inner workings of our economy that I admire most. Take his decision to purchase Florida real estate near the peak. Genius! What a relief it must be to him, both as a consumer and as an investor, to directly participate in one of the healthiest and most robust dead cat bounces in all of recorded history! Is it any wonder he's filled with such optimism?


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See Also:
When "Sure Things" Break Part II (Musical Tribute)

Source Data:
St. Louis Fed: Residential Construction Employees per Capita
St. Louis Fed: Florida House Price Index / CPI

Stock Market Risk

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As seen in the chart, the unsustainable exponential growth party ended in the first quarter of 2000. In my opinion, those who think our problems all started during the Great Recession are therefore quite mistaken.

Welcome to the new normal! It involves all kinds of exponential trend failures!

Since 2000, we've revisited the median twice. Let's hope we don't revisit the realistic worst case (as seen in the 1950s and 1970s). I say realistic worst case in that historical perspective rear view mirror looking way. Should you be looking out the front window, your realistic worst case may vary!

For what it is worth, I've been permanently bearish since 2004. As a retiree, I no longer have any desire to swing for the fences. I just don't think this economy can support sustainable fence swinging any longer, not that it ever really could. As seen in the chart, the 1980s and 1990s were just an unsustainable exponential growth illusion of prosperity. Those expecting to go back to that era are far more optimistic than I could ever be (especially from these already elevated levels).

This is not investment advice.

See Also:
Stock Market Analysis - The Bearish Case

Source Data:
St. Louis Fed: Custom Chart

Auto Sales vs. Miles Traveled

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Oh, yeah. Totally sustainable.

See Also:
Sarcasm Disclaimer

Source Data:
St. Louis Fed: Custom Chart