Confounding and Confusing Events 11/22/21
John Deere’s union ratified a six-year contract ending a prolonged strike, which began on October 14th. The package contained a 10% wage hike, one-time bonus of $8,500, and a 5% raise in 2023. Obviously, those are significant pay increases, and reflect the need for employers to increase wages to recruit and retain workers. This wage package clearly will contribute to inflation, which is something of a double-edged sword.
Increased retail sales appear to have been set in motion by the typical holiday spending that occurs around this time of year and many of the big retailers reporting higher sales and expectations for a solid finish to the year. When you add together retail stores, on-line sellers and restaurants, the retail spending rose on a seasonal adjusted basis 1.7%, compared to the previous month. This reflects an elevated spending level that has been increasing since late 2020. J. P. Morgan is predicting as one of the effects of this spending surge that their estimate is that the GDP would increase about 5% which is up from a 4% forecast. All of this is in spite of inflation fears.
It has been recently reported that Iran is boosting its nuclear efforts according to diplomatic reports. The UN Atomic Watch Dog has been unable to monitor Iran’s sites which has allowed Iran to resume production of equipment for advance centrifuges which adds a complication to the proposed nuclear talks between the United States and Iran. This production appears to allow Iran to manufacture 170 advanced centrifuges. This is not a good sign either for the talks, or for stability in the Middle East.
Ford Motor has announced a partnership to assure a steady flow of US made chips, which are crucial to its automobile production. The agreement with Global Foundries, although non-binding at this juncture, was to collaborate on the development of chips for Ford vehicles, and specifically to expand US chip production, although they are a long way away from an actual plan that they can implement, at least they are working towards that which should be a benefit. not only to Ford, but also to the auto industry in general.
The supply chain dilemma, which is facing many sea ports in terms of processing, continues and is creating an equally problematic dilemma for exporters. This is particularly true for farmers who send substantial amounts of their products overseas, as getting those products on to ships and out to their destinations has become more and more difficult. The milk producers in California, as an example, have suffered tens of billions of dollars in losses as the result of this dilemma. One can assume that this will have a ripple effect as it will impact other AG producers’ ability to get product to market becomes more problematic with resulting losses which spill over into equipment and supply purchases potentially creating a significant economic downturn in the AG industry.
The Canadian trade surplus widened in September to $1.9 billion as the Canadian economy continues its success in terms of exports. Certainly, increasing gas prices are helping, but other commodities are also seeing an uptick leading to the increase in exports and a widening favorable balance of trade. This is certainly good news for Canada, and may ultimately be good news for the United States.
I mentioned last week the actions taken by the 5th Circuit Court of Appeals, and I am wondering now whether or not they would be open to challenges to seat belt regulations, small pox vaccinations, polio vaccinations, etc. All of those things have been at one time or another, or are still mandated by government. Again, I think the simple solution to all of this is to permit people not to wear seatbelts, to ignore all vaccines, etc., but should they contract the disease or be injured, and seek healthcare, they should be denied it. There is no reason we should waste our resources on people who feel that they do not need to assist the community at large in controlling diseases and injuries.
The record number of individuals who left their jobs in September, as previously noted in my commentaries, was 4.4 million people. As those numbers are dissected, it appears that 3 out of 10 are considering leaving their jobs which is consistent with historical trends, but across demographics and occupations, those numbers tell a somewhat different story. Front line and low wage positions typically see high rates of turnover, and that is even true today. In addition, 63% of female middle managers said that they intend to stay in their jobs next year, a drop from 75% in 2020, while 58% of women in non-managerial rolls said the same. Employees in front line and low wage jobs, particularly in food, retail, and hospitality, indicate that 37% are thinking of quitting which is up from 27%, an average over the past 5 years. The survey also focused on specific demographics, such as black employees and Asians whose numbers were 35% and 40%, compared with white employees at 26%, while historically the first two groups had quitting rates of 30%, which was consistent with the general workforce. The main reasons for these trends are the continuing childcare crisis, and increased household savings which has made working less necessary, and of course, you have the labor market where job openings outnumber applicants by significant percentages. This creates an interesting job picture, and obviously, one needs to delve into the detail in order to get a handle on what is going on.
I don’t know about you, but I’m not fond of traffic circles. Who knew that by going in circles you can save gasoline? In the aggregate, you can save 20,000 gallons of fuel annually, thus, decreasing emissions.
The Atlantic posted that the next turn for COVID hinges on three unknowns: our aggregate immunity from vaccine and as the result of surviving COVID which is 73%, and that doesn’t go higher; will healthcare workers stay on the job, or leave - they are departing in large numbers now; and will new variants emerge? I provide this information solely to raise the issue. It is unfortunately a “who knows” situation.
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.
The views expressed by commentators are solely those of the authors. They do not necessarily reflect the views of this station or its management.