RE:A glimmer of hope Obscure1 wrote: I have been grinching for years about how corporate America has shipped its manufacturing jobs to China and its IT jobs to India for years. Wall Sreet's instatiable appetite for higher earnings has lead to the slow destruction of the backbone of America.
It is pretty much a given that the US auto industry is going to lose most if not all of the 1 million jobs working directly for legacy auto makers as they are replaced by EV's.
What is far more important in my mind is what happens to the 8 million jobs associated with the legacy auto makers who actually make the stuff that goes into cars. The legacy auto makers don't actually make anything other than engines as they simply assemble parts provided by others. Hence the 8 million ancilliary jobs versus the 1 million core jobs in the auto industry.
The legacy auto makers smugly sat around ridiculting Musk for 15 years. Now, if GM and Ford and Stellantis (who took over Chrysler) are to survive the transition to EV's, it will be on the back of the grants and rebates that Biden has created which begin in earnest on January 1st.
As much as it is impossible to like pretty much anything that Biden has done in the past two years, the following jobs report offers a glimmer of hope for manufacturing in the USA. Maybe Biden will be able to rebuild America if he doesn't bury it to death in the process.
Friday’s September jobs report showed US manufacturers added another 22,000 workers in September, increasing employment in the sector by nearly 500,000 over the course of the last 12 months.
The nearly 13 million workers employed in US factories make up the industry’s largest workforce since the Great Recession caused employment in the sector to plunge more than a dozen years ago. Since April, manufacturing employment has been growing at about a 4% annual rate, the fastest sustained pace of growth since 1984, when the sector had more than twice as large a share of US jobs.
And employers say they now are scrambling to fill even more jobs. The sector has had about 800,000 openings for most of the last year, despite the hiring binge, according to the Labor Department’s report. J Powell keeps talking about JOBS. He is intent upon killing the job market as a means to slow inflation.
Maybe Powell should listen the likes of Cathie Wood and others who are imploring the FED to apply the brakes to further interest rate hikes to let America sort things outnaturally rather than crushing families and the country itself.
Great discussion!! This Board is really special...
I know this will come as a complete surprise to you but I do have a few thoughts on the matter (lol)
Part of the problem facing Powell centres around the following...
1...over the last 20 years, the labour force participation rate has fallen from around 68% to 62% so it actually takes less business activity to get the unemplyment down to a level where there would be inflationary pressures from the jobs market. We are already seeing some of this pressure and the 800K or so job vacancies are also a threat to higher wage inflation
2....the Biden Administration over the last year or so has passed bills amounting to trillions of dollars which, for the purposes of the discussion here, are doing two things. One encouraging more people to stay home and collect Government money and two present a huge stimulative effect on the economy. Both of these combined together present a threat to future price stability.
3....the Biden Administration policies and especially those linked to the "Green New Deal" have the effect of lowering future productivity growth and perhaps even stopping the growth in US productivity which in turn means more inflation in the future.
All of these factors present a worry to Powell in that he doesn't want inflation from these effects to get out of hand.
The other thing I suspect Powell is worried about and actually Cathie Wood touched on it but in my opinion the wrong way around is inflationary expectations. Cathie said in the video that leading up to Volcker we had inflationary expectations entrenched and right now we don't so we don't need to raise rates. The first part I agree with. The problem in the 70s was that Fed policies and fiscal policies allowed those inflationary expectaions to get entrenched and I believe that Powell sees that that was a mistake back then and doesn't want the same thing to happen now. So contrary to Cathie Wood, I think Powell has no choice but to raise rates before inflationary expectations get entrenched or we may actually see a repeat of 1981/82 which would be really really bad.
The irony in all this that Biden will blame the Fed for the problems when if he had left well enough alone and not got trillions in deficit spending through Congress, the inflationary pressures would be a lot lower and the Fed wouldn't have to raise rates by as much as it has and likely will over the next few months and a soft landing would have been possible.