Confounding and Confusing Events 10/18/21
The United States announced this week that in November the US, Canadian and Mexican borders would be opening. The exact timing is to be determined, and the precise protocols will need to be explained, such as what proof will be required to enter or reenter the United States. In addition, this may not be the panacea that it initially appears to be as Canada still has somewhat restrictive requirements for individuals returning to Canada, including the need to be tested even if you have been vaccinated. The only way in which we will return to free-flowing commerce is for Canada to drop the requirement for testing, and any other restrictions that will inhibit people coming down for a day, or even overnight. If Canada holds fast, we may not see many of our Canadian friends anytime soon.
The IMF recently cut its worldwide growth forecast due to continuing supply chain issues, labor shortages, raw materials, and inflation. These three elements are largely interconnected because one of the issues facing business is the fact that the supply chain interruptions of the sourcing of raw materials, the movement of goods between manufacturers to finish products, and then the product’s transportation to the marketplace. Ultimately, we need to solve the supply chain issues, which it appears President Biden is attempting to do in concert with several large corporations as well as the Port of Los Angeles which is now going to be open 24/7 in the hopes of reducing the supply chain bottleneck.
Inflation appears to be continuing, although Secretary Yellen indicates that this is largely caused by the supply chain issues discussed above, as well as a huge surge in demand. We are also seeing increased wages in some industries which fuels inflation, but at the same time this is good for those who are receiving wage increases. Reports this week indicated retail sales were increasing in part because of shortages and demand. This is a complex problem that is worldwide as my comments above indicate relative to the IMF, and will largely only be resolved once the supply chain issues are resolved.
The news continues to be consumed with the Gabby Petito murder that was evidenced by the major channels recently spending five minutes on the story. I certainly feel for the Petito family, however given the number of people, in particular women, who are murdered it seems that this is getting disproportionate coverage and leads me to the conclusion that there is something seriously wrong with the networks and viewers if this is such great interest. This entire story is befuddling to me.
The jobs report this week indicates that there was steady but slow increases in non-farm payroll and continues at a pace which is, again, far less than the number of jobs that are available. There is still no explanation coming from either government sources, independent economists, nor labor experts to the why. Unemployment insurance claims were down and workers quitting was up. One interesting note is that many are taking early retirement thus decreasing the pool of workers in general but also experienced workers. Are the baby boomers finally exiting the workforce? This could be a dramatic change for our economy.
A headline this week stated that employees were resigning, which if the headline was all you read, it would not tell the full story and leave one with the impression that people were simply abandoning jobs with no other employment in sight. In fact, the story indicates that many of those leaving employment are doing so for higher paying, steadier jobs. Obviously, given the number of jobs that are available, people’s ability to leave and go to a higher paying job, and, in many cases, a job with better working conditions is readily available. Misleading headlines are very problematic, and tend to create further divisions in our society because few, if any, are reading the full story.
A bit more of Canadian humor was found in a small town in Ontario on a business billboard which read, “Support our Right to Arm Bears”. Did your mind trick you into reading “Bare Arms?”
Bank profits are soaring, particularly for JP Morgan and Goldman as merges and acquisitions are intensifying. This is one more sign that cash hoards are being spent as we come out of the recession and that both mid-term and long-term confidence is up.
Bill Owens is a former member of Congress representing the New York 21st, a partner in Stafford, Owens, Piller, Murnane, Kelleher and Trombley in Plattsburgh, NY and a Strategic Advisor at Dentons to Washington, DC.
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