Our world appears more chaotic by the day. Some people enjoy the chaos, especially those who are looking for cover for their own misdeeds. Others are horrified by it, as they rely on a stable world to manage their vulnerabilities and look after their family.
What has caused this chaos? In a certain sense, it’s globalism. A world closer together is a world with seven billion neighbors and a lot more complex than a small town of 10,000. But globalism, as a concept, is a big word which easily hides important details. It’s a cop-out, a big term that shades more than it illuminates.
I have come to believe that what causes chaos is the move to a genuine market-based world from an industrial world. Attempts at understanding and controlling the world using old industrial models are failing terribly. The move to marketism is not defined by globalism, as it was, but defines globalism and the increasing irrelevance of nations as we know them.
Good news! The economy added 313k jobs in February!
Like all news, we need some kind of reality check first. Did it really? The long and short of it is that, as always, the ADP employment report is less noisy and thus more accurate. It had a gain of 263k jobs in February, which is probably the right number. Still very good news all around.
But is good news actually bad news? Along with the jobs report we have the increase in wages, which stands at a modest 2.6% over the last year. Does that mean inflation is tamed? We will see what the markets think.
We have in front of us a big week. This may determine the course of the next year or so in the stock market, the economy, and in politics.
A lot is about to happen. Let’s run it down, day by day.
We’ve made the Barataria position very clear – that current federal policy is doomed to trash the stock market and somewhat damage the overall economy. That wasn’t talking about new tariffs, however. As the mechanism for screwing things up shifts, the predictions as to how it will all go down have to shift.
So here we are, trying to make some sense of the senseless. It’s more of a crapshoot every day.
A busy day calls for a repeat. This piece from two years ago demands a revisit in light of the potential for inflation now that we are approaching full employment and wages are indeed rising.
Is technology a net creator or destroyer of jobs? The question is as old as the Industrial Revolution, when workers in mills found themselves put out of work by large industrial looms. In France, they threw their shoes (sabots) into the weaving machines to destroy them – the origin of the term “sabotage”. The protests didn’t stop the machines, however, and the workers had to find something else to do in an ever-changing economy where machines did more and more work.
Today, the pace of technological change is faster than ever, with new gadgets coming into our lives constantly. Automation is also transforming our lives, with new robots and artificial intelligence replacing workers constantly. Are today’s productivity gains tomorrow’s unemployment? Increasingly those who study technology in our lives and the popular media are coming to the conclusion that yes, workers are net losers in the race against tech. And this is not a partisan issue.
Inflation is back. What’s left to see is what anyone does about it.
The Consumer Price Index (CPI) for January came in at a strong 2.1% over the last 12 months. That’s above the target rate of 2.0% set by the Federal Reserve for the fourth month in a row. There will be attempts to explain it away in various ways. In the noise that will be created over this what will count is action by the Federal Reserve one way or the other.
Arrests by Immigration and Customs Enforcement (ICE) were up in 2017, but not as dramatically as you might think. What has increased is the visibility of these arrests and the fear that they bring. It is generally believed, without only scant evidence, that undocumented immigrants are leaving the US in large numbers. This would continue a downward trend which started in 2007.
Some people might cheer this action, but as a whole the economy probably isn’t. Undocumented workers do jobs that no one else wants to, for the most part. Their absence means that work is not being done and wages are rising rapidly in areas that have depended on cheap labor for years. There may be signs that this is accelerating and will ultimately spark a high rate of inflation and even shortages.