For many years, I have maintained that our nation’s greater problems are societal in nature, not necessarily economic. While the two are inexorably connected, we measure economic activity with calculations, equations, assumptions and estimates. After all, if the top 25% grows 10% each year, everyone else can stagnate and the Gross Domestic Product (GDP) reading will be 2.5%.
That isn’t a bad year in aggregate, is it? Clearly, that is debatable.
The economic data over the last, say, 12-months has been, shall I say, unusual.
Overall output has increased more than many had forecasted. Further, the labor markets remain tighter than they should be at this point in the cycle. Shoot, the official Unemployment Rate is a miserly 3.5%, just 0.1% higher than the 30-year low.
How can we be glum about that?
Unfortunately, thanks to inflation, the average American worker has seen their purchasing power decrease over the last several years. The yield curve has been inverted for a quite a while, and that is usually not a good omen. Then, there are the recent bank failures and dreadful regional purchasing managers indices (PMI). To that end, this week’s Philadelphia Fed Business Outlook Survey was a disastrous (31.3).
While that number might be Greek to many, it is the 22nd worst monthly observation over the 55 years of the survey’s existence. Trust me, that isn’t good.
Still, these are all nothing more than data points representing a snapshot in time. They don’t truly reflect the human equation or, I would argue, the true state of affairs in the country.
To be certain, today, people will fall in love. Some will have their first kiss. Children will come into the world. Families and friends will reunite after too much time apart. After all… the sun came up in the East this morning. There is so much good in the world, truly.
However, how does one explain the surge of violence in our country? The spate of mass shootings which seem to be occurring with greater frequency? The increase in reported crime statistics, with the understanding many more will go unreported? The surge in homelessness in just about every major city? The breathtaking increase in fatal drug overdoses, which have quintupled since the start of the century? The general acrimony and increasing distrust in all of our institutions? The intentional divisiveness?
Yes, the economic data says one thing, but the societal data is saying something else. Namely, we aren’t hitting on all cylinders. What’s more, we all know it.
There is an expression which I think sums up the current state of affairs:
“What you allow is what will continue.”
If so, what are we doing about these things? Are we addressing them effectively? At first blush, it would appear we aren’t.
Perhaps it was my recent trip to New Orleans which took the sleep out of my eyes. Maybe the shooting in Dadeville, just down the road from Birmingham, hit more of a nerve than others. It could be this past week was the proverbial straw which broke this camel’s back.
So, why are we allowing these things to happen? Sure, some apologists might argue the frequency of these things in a country our size is statistically insignificant. Does that make it right? Why are we allowing such lawlessness? Drugs to stream across our borders in astonishing numbers? The Sacklers to remain incredibly rich? Children to go through school without learning to read? Mental health to continue to fall through the cracks for so many in our society?
I don’t have the answer other than to say it takes guts to make difficult decisions. Interestingly, no matter how fat the U.S. gets, guts seem to be in short supply. This is especially true in our collective leadership. Everything seems too political, and people are afraid to speak their minds. How un-American does that seem to people of a certain age?
Clearly, I am venting my spleen here today. However, maybe that is what I was supposed to do. Maybe if enough of us channel Howard Beale and proclaim “I am mad as hell and not going to take it anymore” someone in the halls of power will take notice. Maybe.
Whew. I wish this had made me feel better, but it didn’t.
In the investment industry, we focus on the economic life cycle, monetary policy, fiscal policy, the slope of the yield curve, corporate earnings, the strength of the labor markets and a host of other things. To be sure, these things are very important. Shoot, a correct analysis of the data can even lead to significant returns.
However, there is far more to it than that.
Currently, as I stated in the first paragraph, our nation’s greater problems are societal in nature, not necessarily economic. We tend to expend a lot of time and energy on the latter and not what we need on the former. As for that, we throw money at our problems and hope they go away. But they won’t, because we continue to allow them to happen.
With that said, understanding this has been something of a downer this week, I sincerely hope you have a great weekend. Things will get better, they always do, but we have to make it thus.
So, do some small act of kindness for someone tomorrow or the next day. Let’s get this snowball rolling one small flake at a time.
Thank you for your continued support. As always, I hope this newsletter finds you and your family well. May your blessings outweigh your sorrows on this any every day. Also, please be sure to tune into our podcast, Trading Perspectives, which is available on every platform.
John Norris – Chief Economist and Rabble Rouser
Thank you for your continued support. As always, I hope this newsletter finds you and your family well. May your blessings outweigh your sorrows on this any every day. Also, please be sure to tune into our podcast, Trading Perspectives, which is available on every platform.