Or choose individually:
- Tim Geithner’s Amazing Trade
- The Military: Another Spiraling Government Jobs Program
- How America Will Beat Back China With Its Killer labour Force
- Today’s ISM Manufacturing Report Screams Inflation
- And Now It’s Clear That Obama Is Mopping The Floor With Bush On Jobs
Here it is in all its glory: Tim Geithner's most-excellent trade.
By dumping its stake in Citigroup, The Treasury is expected to net some $8 billion on behalf of the taxpayer.
(Though, it turns out, Geithner would have made more selling in August)
The government spends billions of dollars more on it every year, and per person costs are increasing even faster. The results are mixed, but there's no slowing down.
No, it's not health care or social security. It's defence.
The White House has requested $708 billion for fiscal year 2011 and defence spending is scheduled to increase each year, even as wars in Iraq in Afghanistan deescalate. Of course, bravely serving in the military or working under the Department of defence isn't a handout, but it's another massive sector of the economy that's keeping tons of folks employed who might otherwise be home looking for work.
There's an enormous yet simple reason why America will remain an extremely powerful nation out to 2050. It's demographics.
Thanks to a relatively high fertility rate, plus a rich culture of immigration, America is set to grow its population by another 100 million people through 2050. This is based on U.S. census projections and is supported by other projections as well via New Geography.
Over the next four decades, America will grow its labour force, ie. its productive population, by a whopping 42%, as shown below.
Meanwhile, China's labour force will shrink by 10%, Europe's will shrink 25%, and that of Korea and Japan's will shrink by horrendous amounts.
See, China's labour force has been growing very fast lately, which has helped it stun the world, but this growth is set to peak and then start falling by the middle of this decade. So be prepared for the hype to die down by about 2020, even though China will of course keep developing.
In contrast, from about 2015 onwards, the U.S. will start showing how its national model isn't so bad after all.
China will have to increase worker productivity faster than the fall in its labour force each year just to tread water when it comes to GDP. Meanwhile the U.S. could have zero productivity gains over 40 years and yet achieve a 42% larger economy by 2050. Thanks to healthy demographics.
China might be able to overtake U.S. GDP since it's easy to increase productivity quickly when coming from a low base, but at worst, the U.S. will still be a close #2 with few other contenders in the world. All the while having a far higher GDP per person than China. So net-net, the China Challenge won't be so bad, and in fact the U.S. will likely come out looking very strong.
Today's ISM Manufacturing index result blew away expectations, hitting 59.6 vs. an expected 57. March ISM data shows the fastest U.S. manufacturing expansion since July 2004.
Yet hidden underneath the powerful headline ISM number is an even more powerful break-out by the ISM Prices sub-index, which is a component of the total ISM.
As shown by the black line below, the ISM Manufacturing Prices index jumped 8 points in March, to 75 from 67. This signals a sharp rise in inflationary pressure. According to the ISM, 17 industries reported paying higher prices on average in March and no industry reported paying lower prices.
Furthermore, as shown below by the Producer Price Index (PPI) for crude materials in orange below, a rise in the ISM Prices Index makes a rise in the PPI highly likely, as highlighted by Waverly Advisors. This means we should expect more confirmation of inflationary forces in the near future.
Which means you can pretty much put the final nail in deflation's coffin. The real threat is inflation, especially given the recent liquidity-bias of the U.S. fed, and today's ISM result has moved Ben Bernanke one step closer to pulling the trigger on interest rates.
This way of presenting the jobs data comes straight out of Nancy Pelosi's office, so all caveats apply... but it's obvious: Obama is now killing Bush on jobs.
And though the stats are problematic for all kinds of reasons, Republicans will have a tough time denying that several more months like March won't ultimately help Democrats come November.
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