Teuton Resources Corp V.TUO

RE:RE:Producer Price Index

[stockzorg]

LonghandStrong wrote:

it doesn't feel transitory, that's for sure. There isn't much talk yet on main Street of upward pressure on wages, but I think that when this becomes the topic of discussion in the taxi cab that its here. However, that being said, what's the "real" unemployment rate .... 10% (a guess). Take out the early retirements and shrink the denominator, 6%? Back almost to the reported #'s. I feel that this is very much supply side inflation that we are seeing, viz, coiled spring of demand built over the lockdown, unwinding, bottle necked at the supply side. Indicated by balance of payments, Canada for example, did you see the import #'s? Many of the core goods that we see price rises in, can add supply quickly, and anecdotally we can perhaps use sawmill restarts in BC as an example. When warehouse space under contract starts to jump, and industrial build starts begin to jump, I.e. the bigcos start making permanent supply side increases, thats when it begins. Like anything though, it will be hardest on the little people. A sawmill restart doesn't = higher real wages, there's enough labour at current unemployment to go around. Unskilled labor is at a surplus right now, the grocery store clerk doesn't have any leverage. Trades, etc. Lots of short term pressure, but as soon as the starts begin to cool, we'll its bidding wars and RFP season again, and down goes that hourly. Commercial vacancies are through the roof in major centres, downtown towers, will the inevitable downward pressure on those rents offset any gains in labor input costs? Most of us seem to only see one side of the coin, but its unique times, there are upward and downward pressures on lots of different things. In my bus for example, rents are locked, rates are low, and customer demand is up. We reduced headcount and got more efficient, more with less qt start of the pandemic, and aren't rehiring. The upward pressure on wages is offset by this. There are however increases in sundries, 4% on equipment as an example, and this will for sure in time be past on to the customer. In the end though, thumb will be firmly pressed on costs and the rich will get richer.

For most of your observations, in the specific areas you mention, we can agree.  My view is USA centric, and many of the observations I have relate to government initiatives and post pandemic changes that could result in much higher levels of economic activity or prices or wages (these things don't always happen at the same time when the government gets involved).  One government initiative is the experiment in Modern Monetary Theory we're involved in.  Over the past 12 years, higher debt has not resulted in any inflation, mostly due to the cap on labor costs from outsourcing our production to the lowest wage environments (mostly China but there are several others).  I'm not sure that works going forward.  Also there's the nasty tactic we've used in the past of running up large debts, then paying them off in much cheaper dollars by allowing inflation to escalate and the U. S. dollar to tank.  Monitizing is in the news again lately.

Another government initiative is conversion from fossil fuels to renewables.  This is not only supported by $Trillions by the government, but I'm also seeing huge investment commitments on the part of industries (auto, energy, etc.).  Because fossil fuels will not go to zero before the new investments occur I see a large increase in overall economic activity over several years.  A third initiative is the minimum wage (and perhaps the idea of a UBI), which is how the lower paid workers may experience the increases needed to move the wage needle.

Down in the details there will be ins/outs.  Commercial real estate is a problem area I agree.  Sawmills will be popping up like crazy to support the building boom outside the cities.  Most sectors will revert to "normal" activity, but another government initiative is to raise the corporate tax rate by maybe 7% - some of that will find its way into higher prices, along with increases in commodity costs that don't exactly come all the way back down to where they are today.

What's the real unemployment rate?  It would take a book and even then I'm not sure.  Let's start with 6%, then add 5% for the decline in the workforce participation by folks of working age since the year 2000?  11%?  The problem with this is again in the details.  Since 2000, more women have entered the workforce - greater participation.  The lower participation has been entirely composed of males in "prime working age" 18-55, as their jobs have gone overseas.  Not sure the current environment will allow that trend to continue.  If it does, we get another populist President shortly.  The current President stresses that new jobs will be domestic for his primary objectives like Infrastructure.  We'll see.

Completely agree the rich will get richer :>  See Thomas Piketty (Capital in the 21st Century) for all of those gory details - he has posted all of his data online.