09/12/18

Attitude = Altitude

How high you go in life sometimes is created by your attitude, your confidence. Economies have similar linkages.

How confident, how optimistic is American small business – the engine of new job creation in the US – today?

Turns out they’re very confident, very optimistic.

The National Federation of Independent Business has been tracking the optimism of its members for a long time, seventy-five years. They are the voice of small business.

Monthly, they survey their owners to gauge business sentiment.

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09/12/18

Jobs USA

Big Red Car here with a prayer on my lips for the Carolinas and the impending Florence hurricane. Evacuate if y’all are along that coast. Do not risk your life to ride it out.

So, one of the most interesting elements of the current economy is the status of jobs and job openings. Unfortunately, we do not have sufficient data to track this back through prior business cycles because the data was simply not collected back in the day.

There are four data points of interest:

 1. Job openings – positions for which a company is seeking an immediate hire

 2. Hires – former job openings for which a company made a hire

 3. Quits – current employees who voluntarily left a job with a company

 4. Layoffs and discharges – company terminated jobs and firings

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08/28/18

NAFTA – Rebranding?

Big Red Car here on a cloudy Texas day. Don’t get me wrong, it’ll crack 100F, but it’s a little cloudy today.

So, the big news on trade coming out of Washington and Mexico City is that the US and Mexico have agreed on a “new” trade deal. Have they?

The new deal is a bi-lateral deal between the US and Mexico. Mexico is on the verge of inaugurating a new president (1 December 2018), so the timing is a little dicey. The outgoing Mexican President, Enrique Peña Nieto, will have to obtain approval from the Mexican legislature. He is more likely to be an ally given his long history with the negotiations.

President Trump, reiterating his historic disaffection with NAFTA, has taken to calling this bi-lateral agreement the US-Mexico Trade Agreement.

Image result for images trump trade

“Yeah, so I told you I would re-negotiate NAFTA and, with Mexico, I have. Now, we need to get Canada into the deal. I can do it.”

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08/22/18

Universal Basic Income

Universal Basic Income, Big Red Car? Huh?

Big Red Car here lobbying for a paint job while talking up the latest experiments in the Universal Basic Income – also known as basic income, basic income guarantee, basic living stipend, or universal demogrant. They are all the same thing.

Advocates of UBI have for years sold the idea as a campaign to “eradicate poverty” while others have championed it as a means of unlocking the creative potential locked deep within all of us.

Those who lean right may consider it as a means to consolidate and eliminate all other welfare programs and thereby make government welfare more efficient.

You can get a discussion on a lot of different implications including poverty, unlocking potential, freedom from wage slavery, reducing crime, a response to technology and automation unemployment, welfare administration, gender equality, the recognition of uncompensated home work by women, and a ton of other ideas.

Please take a second to identify your thoughts on the subject.

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08/4/18

Employment Structural Change

Big Red Car here on a Saturday morning getting ready to go out for blueberry pancakes at the Counter Cafe.

I have always been interested in delving beneath the covers of employment in the United States. The average person focuses on BLS (Bureau of Labor Statistics) U-3 – the widely reported level of unemployment which is currently at 3.9%, but that paints a very shallow picture of the employment status of the economy. Perhaps, an overly optimistic one.

Let me give you the bottom line first – the US economy is undergoing a huge structural change as the Baby Boomers begin to retire and younger folk have a different attitude toward employment.

I have often observed that the prospect of long term, stable employment is a thing of the past and the “gig” economy is here to stay. Talking to you, Mr. Internet.

My favorite source of useful data and analysis is dshort.com which is run by Doug Short, PhD, under the banner of Advisor Perspectives. You should be reading this guy’s stuff. The best in the business.

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07/28/18

India GDP

India GDP, Big Red? Huh?

Big Red Car here on a sunny Saturday in the ATX – On Earth As It Is In Texas!

Yeah, it’s going to be a warmish day, up to 100F. Yawn!

So, in the discussions about US GDP, the Big Red Car (huge fan of India) did some research on India. Did I tell you I am a huge fan of India as a country, as an ally, as a market? Love India.

India is a huge country with 1,354,000,000 people. The US has at least 1,000,000,000 fewer people.

US GDP is closing in on 20 Trillion dollars ($20,000,000,000,000) annually, while India has a GDP of $2,597,490,000,000.

Wow, look at that growth! In ten years they have grown by a factor of more than twenty!

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07/27/18

GDP Growth 4.1% – do not overreact

GDP, Big Red Car? Huh?

Big Red Car here on a lovely, warm Texas summer day – sun shining and headed to 101F. Ahhh, summer!

Something else which is hot is the economy. It is hot as evidenced by today’s GDP number which shows growth in excess of 4%. This is Q3 2018 (April, May, June 2018). US starts its fiscal year in October, but you knew that, right?

Couple this with low unemployment, high job growth, the beginning of real wage growth, increased capital spending, and some progress on the issue of trade and it is easy to see why the President was in the Rose Garden taking a victory lap.

When pressed to explain why growth has begun to accelerate, President Trump and his economic advisers pointed to reductions in regulations, the tax cuts, and the beginning of work on trade. They had a few other things, but those are the big ones.

The most important thing is that the White House is trying to create a fertile environment for growth. That is more important than many of the elements.

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06/7/18

Employment

Employment, Big Red Car – what about employment?

Dear reader, US employment and unemployment are both headed in the right direction, but there is a concern we need to discuss.

We need to discuss the Labor Force Participation Rate. Do you know what that means?

The LFPR is the percentage of folks aged 16-64 (the labor force) who are currently employed or seeking work.

Here is a picture of what that looks like today with our 3.8% unemployment rate. Notice, in particular, the comparison between our current LFPR/unemployment rate and the Jan-Apr 2000 all time high LFPR. Therein lies the story.

LFPR

Credit Doug Short over at Advisor Perspectives for this great chart. Read his stuff at dshort.com.

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