There was no shortage of news this week. From the resignation of UK Prime Minister Boris Johnson to the assassination of former Japanese Prime Minister Shinzo Abe to the better than expected Employment Situation for June 2022 report to the continued turmoil in Ukraine to the incessant worries about the Federal Reserve, inflation, the Supreme Court and a potential recession. Frankly, it was yet another exhausting week in a year of exhausting weeks.
While it isn’t the focus of this week’s newsletter, I would be remiss if I didn’t mention this morning’s jobs report. As I wrote above, it was better than expected, at least the headline number was. According to the Bureau of Labor Statistics (BLS), the US economy created 372,000 net, new payroll jobs during June 2022. Job growth was mostly consistent across economic sectors, again mostly, and the official Unemployment Rate remained steady at 3.6%. Jobs Report
What’s not to like, huh? Well, the underlying numbers, specifically the Household Data, told a somewhat different story. This survey suggested the economy actually shed jobs last month, and the number of people not actively looking for work actually increased. How now brown cow? Indeed. If you really breakdown the report, it is almost as confusing as the remainder of the year has been.
With that said, one thing is certain. The Establishment Data, the 372,000 net new jobs, will keep the Federal Reserve on track to increase the target overnight lending rate another 75 basis points (0.75%) at the end of this month. Actually, one more thing is certain. By 2:00 EDT this afternoon, you will be able to fire an FIM-92 Stinger missile in any trading room in NYC and not hurt a soul. Everyone will have hit the bricks.
With that out of the way, today’s topic will be the lack of confidence Americans have in their public and private institutions. Intuitively, I would argue, this mistrust in our societal pillars is fomenting the societal unrest which has been so prevalent over the last several years. You could argue the latter is the cause of the former, and we could agree to disagree.
However, we would undoubtedly concur the current state of affairs can’t last indefinitely.
This week, Gallup released the results of its annual survey on the confidence Americans have in their major domestic institutions. Gallup Confidence. I won’t mince words; it is kind of a bummer. The following paragraph from the report sums it up perfectly:
“Gallup summarizes Americans’ overall confidence in institutions by taking an average of the ratings of the 14 institutions it measures consistently each year — all but small business and large technology companies. This year’s 27% average of U.S. adults expressing “a great deal” or “quite a lot” of confidence in those 14 institutions is three points below the prior low from 2014.”
Essentially, our nation’s self-confidence is at an all-time low. While the last two years have seen a sharp erosion, ‘we’ have largely been staring at our navel since 2004. Back then, our collective confidence in our major institutions was around 43%, and had hovered around that mark for about a decade or so. That was the last year above 40.
How have we gotten to this point?
I suspect the most popular answer would be “a fundamental lack of leadership” in the country. Next, and related, would probably be a near constant stream of scandals and screw-ups over the last two decades. After all, it seems we have stumbled and staggered from problem to problem, only to make things worse. Am I right?
While there might be some merit of truth to those assertions, you would almost have to come to the conclusion people have somehow changed over the last two decades. That we are more prone to errors and, dare I say, sin for some reason. That is if you will indulge me to use a theological concept.
That probably isn’t completely the case. But if not, what is?
According to Pew Research, in 2004, 63% of US adults reported using the internet. Of course, the internet was a little different back then. After all, only 25% of adults reported having a broadband connection at home. As such, a lot of folks using the internet back in the day were still using dial-up modems. If you remember, these made the ‘surfing the web’ less efficient and more time consuming than it is today. Further, there simply wasn’t the same amount of information available. Pew Internet Research
Then, there is the question of smartphones. You know, that thing you might be using to read this newsletter. Yeah, they didn’t really exist back then. At least, usage wasn’t as widespread. After all, as recently as 2011, only 35% of US adults said they owned a smartphone. Further, that same year, only 10% reported using a ‘tablet computer.’
Not surprisingly, social media was barely a thing in those prehistoric times. To that end, only 5% of US adults said they used at least one social media site in 2005. The number was still only 50% in 2011. But, think about it. If only 35% of adults had a smartphone in 2011, that means the remaining 15% of social media users were using a computer of some sort. Intuitively, that would have cut down on their usage.
This has a point, and you probably it coming.
I submit our confidence in our domestic institutions hasn’t ebbed primarily due to the foibles and follies of mankind. We probably aren’t THAT much different than we were. However, everyone now has 24/7 access to everyone’s screw-ups, faults, transgressions, indiscretions, opinions, unfortunate word choices, poor decisions, embarrassing photos, etc. The best part? All that stuff is out in the ether forever, or at least until massive solar flares take it all down.
In no uncertain terms, we get to see the so-called “warts and all” of our neighbors like at no other time in our species’ existence. This includes our public and private institutions. With this in mind, what is the old expression? Familiarity breeds contempt? What’s more, the addictive nature of social media has spawned a curious trend: oversharing, to an extent that would have been uncouth or boorish not long ago. In that regard, while people haven’t really fundamentally changed, their willingness to share has.
Clearly, this could be the topic for a graduate school thesis. Even more clear is this is a major societal problem, and one that is going to be difficult to rectify. After all, the 1st Amendment to the US Constitution clearly states:
“Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”
In essence, you can’t ‘legally’ throttle social media and our 24/7 access to information without violating the supreme law of our great country. So what can we do to stem the tide of this perniciousness? This is where it gets difficult.
You, me, we need to change our behaviors. We need to be willing to put the phones, tablets, and computers down. We have to want to stop sharing and staring at all the salacious information, reels, and whatever your call TikTok videos. For the vast majority of us, does it really matter how many followers we have on whatever social media platform it is? Are the number of likes, shares, and what have you going to make you a better person. Further, and be honest with yourself, don’t you feel better, less cynical, when you can put the phone down for a day or two?
Obviously, I have written on this topic in the past. However, it keeps coming back like a bad penny, especially when I read worrisome reports like the one Gallup released this week. Frankly, “it doesn’t have to be this way,” and the choice is ours.
In the end, if you need some helping breaking an addiction to social media and/or your smartphone AND you need a little help putting a smile on your face, make sure to watch THIS for some sage advice from Bob Newhart. It is the best you will hear on the topic, and you have to watch a bit to get to it. Hopefully, it will be a bright end to an otherwise exhausting week.
Thank you for your continued support. As always, I hope this newsletter finds you and your family well. May your blessings outweigh your sorrows not only on this day but on every day, and thank you, as always, for indulging me this week. Also, please be sure to tune into our podcast, Trading Perspectives, which is available on every platform.
Chief Economist
Please note, nothing in this newsletter should be considered or otherwise construed as an offer to buy or sell investment services or securities of any type. Any individual action you might take from reading this newsletter is at your own risk. My opinion, as those of our investment committee Investment Committee, is subject to change without notice. Finally, the opinions expressed herein are not necessarily those of the rest of the associates and/or shareholders of Oakworth Capital Bank or the official position of the company itself.