Fantastic Economic News

6/10/2021

Robert I. Winer, M.D.

A quick run through of the data and a few preliminary explanations for optimism

1] The GDP boom combined w fantastic job growth yet together we're not yet able to expand the economy fast enough to meet the need is the first piece of fantastic news

Let's start reviewing the metrics: payrolls have had a substantial ↑ of 1.6 million in 2021 Q1.3 to Q2.2,  and YTD ↑ 1.7% through 2021 Q2.2.

2] Retail sales, factory orders and housing sales are all moving about as fast they can but there’s not enough throughput in the economy to meet the demand. So, at present, supply is insufficient. 

And because of consumers optimism (declining covid rates and opening of retail, restaurants, entertainment, sports, etc.) combined with money to spend in a system performing as best as it can, expect continued consumer prices to rise for at least through 2021 Q3.

2] w inflation-adjusted annualized GDP @ 5.3% YTD through 2021 Q2.2, we're performing at the typical growth rate of Emerging Market Economies. Here I'll go out on a little limb and suggest that a boom could come to the Mississippi River Region, particularly IOWA, MISSOURI AND THE STATES TO THEIR WEST: NEBRASKA AND KANSAS Why? Great transportation that's cost effective, relatively speaking an eager and competent labor force, open space to expand, ready markets in the midwest and south, and a national will and regional desire to re-shore manufacturing in light of the various shortages during the height of Covid. My sense is a ten-yr. window of big growth in the above mentioned areas. Here's a map 

Nebraska highlighted

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Mississippi River Border

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3] MORE GOOD NEWS: Current U.S. Labor Bureau metrics show we’re hitting a home run in productivity ↑ at a  remarkable 4.1%  – 

𝚫 T ^{Q1 2021 comp. to Q1 2020} 

And this is more impressive since the productivity change measurement begins from the pre-Covid period — it’s a fantastic sign for the United States and a strong reason to believe that American ingenuity has once again risen to the occasion during a period of extreme adversity. 

Productivity is here calculated by utilizing the spread between the 5.3% GDP and job numbers.

Drilling down on the numbers (kudos to WSJ's Greg Ip for his recent article) a typical transitional recovery period of the 𝚫 between economic recession and expansion is: a] slowness to cut jobs, b] slowness to begin new hires, and c] decline in productivity w slowness in the velocity of improving metric. 

Instead OUR "ABC" has been "fast-fast-fast." How about that for more good news?  

It seems to me that the data presents good evidence that we’re in the beginning of a new significant economic expansion and urges me to say that our questions should now be: 

1 How fast will it be? 

2 How deep will it go? and 

3 How long will it last. 

The data right now support a reasonable expectation of a 3-5  yr. expansion at a minimum.

Thus far the U.S. population “on the ground” as a whole is “feeling” the numbers. 

People seem to want to get ahead of the numbers and they’re starting to run to buy.  People are feeling the tremendous optimism and have become bolder to ask for wage increases and signing bonuses. More feel it's a time to get in on the economic gains that’s are beginning. 

It seems to me that it's highly likely that in next 12-36 months they’ll be continued job growth as well as a simultaneous new and sustained demand in the robotic industry to supply manufacturer, which will further increase the gains we've seen in productivity.

All of this has created a tremendous national optimism at a time when we’ve experienced devastating loss of life and suffering of mind and body. May the good news continue!