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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04/25/18

Tariffs and the American Market

Tariffs, Big Red Car? Really?

Big Red Car here thinking about tariffs. I am sure you are interested in tariffs. They are an effective tool to control access to the world’s best and biggest market – the United States of America. That is the big win for the rest of the world – access to our market.

Until 1913, tariffs also funded our government, before the advent of the income tax. They are an important element in the history of the US.

As you can see, the US had high tariff rates until the time of the World War II Era Bretton Woods Agreement. Starting in 1970, the US lowered its tariffs dramatically in support of notions of free trade.

Free trade should, also, be fair trade. As you can see, during times of higher tariffs, the US trade balance was positive. Since the advent of lowered tariffs, the US trade balance has gone and stayed negative.

I support the Trump admin’s efforts to drive equilibrium back into the trade balance with the strategic use of tariffs.

But, hey, what the Hell do I really know anyway? I’m just an American made Big Red Car. Be good to yourself and think about tariffs, free trade, and fair trade.

 

 

 

 

04/6/17

Valuation Mojo — Tesla v Ford v GM

Big Red Car here on a lovely Thursday in the ATX. On Earth as it is in Texas! Today, we talk valuation mojo. What?

So, the Big Red Car is ciphering about the market caps and other data of car companies. “Some interesting stuff, Big Red,” said NOBODY ever. [“Hey, I resent that,” sayeth the Big Red Car.]

So, ┬áhere you have three car companies: Tesla, Ford, and General Motors. Three companies who are struggling to make a profit — or are they?

Tesla pic

Sexy Tesla enjoying the ocean air at sunset?

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08/3/16

Trade — Fair, Free, Trump Trade

Today we speak of trade — fair trade, free trade, Trump trade.

It has been a little time since your Big Red Car has posted. Please accept my apology. I will do better in the future.

So, here we are with the issue of trade becoming a big argument in the Presidential election of 2016.

One candidate, Crooked Hillary, was/is for TPP (the TransPacific Partnership) while Donald Trump has been a huge critic of all trade deals suggesting they are one of the root causes of the offshoring of American jobs. Crooked Hillary is now not so much for the TPP and other trade agreements because a focus group told her her opinion.

Let us reason together, beloved readers, and see what a few facts may throw on the situation.

We shall focus on the famous Maquiladora economy on the Mexican side of the border with the United States.

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05/12/16

Recovery? Won’t Get Fooled Again

Recovery. Talking recovery today.

Big Red Car here. I’m vexed. People think that the economy is doing fine or, worse, that it is headed in the right direction. It is not.

Let me tell you why. First, say: STRUCTURAL CHANGES to the ugly face of employment.

There are four things we need to look at: total unemployment, unemployment for 25-54 year olds, the Labor Force Participation Rate for the same 25-54 year olds, and Employment-to-Population ratio for the same 25-54 year olds.

So, the hypothesis of this post is this — while America has been engaged in the weakest recession recovery dynamic in the history of the United States, the job market and the structure of our employment force has changed STRUCTURALLY.

A historic example of something like this was the wholesale introduction of women into the work force in the early 1980s. It changed things. Forever.

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04/18/16

Oil, Keep An Eye on Oil

Big Red Car here with gasoline prices in the ATX now at a low of $1.69/gallon at Sam’s Club in South Austin where it was about $1.49/gallon less than two months ago. It’s all about the price of oil. Wow!

Still, that is historically cheap.

Big news in the last few days out of Doha — the OPEC + Russia countries were unable to agree to freeze oil production at current levels through the end of 2016.

Saudi oil pic

The fly in the ointment?

You guessed it — Iran.

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