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Tag Archives: US

The 20 Fastest Growing Jobs in the Next Decade

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Source : Visual Capitalist

Charts: U.S. Consumer Credit Climbed in June 2022

Source : Bloomberg

Infographic: The Salary You Need to Buy a Home in 50 U.S. Cities

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Source : Visual Capitalist

Chart: American’s Biggest Inflation Concern

Source : Statista

Chart: U.S. New and Used Vehicle Prices Have Soared Since the Start of the Pandemic

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Source : GRID

Charts: U.S. New Home Sales and Prices Down In June

Source : ZeroHedge

The Economy Needs a Volcker Moment

Connor Mortell wrote . . . . . . . . .

Readers of the Mises Wire are most likely familiar with the Volcker moment. This was when former Fed chair Paul Volcker, in the face of steep price inflation, skyrocketed rates to nearly 20 percent. While critics of the Volcker moment complain that such a move also skyrocketed unemployment to almost 11 percent, it cannot be ignored that the price inflation was finally reined in. Not only did we see the benefit in reduced inflation, but Austrians have an answer regarding the unemployment.

Austrian business cycle theory very simply explains this. While ceteris paribus, this unemployment number looks absolutely devastating, the reality is that it was inevitable. These jobs evaporate with inflation not because there is some mathematically divine connection between inflation and unemployment, but rather because the demand for these jobs was artificially created by the inflation misleading entrepreneurs to misread price signals.

While we should still mourn for those who lose their jobs—because it is undisputedly painful—we must also recognize that to see this as a widespread economic loss is to fall into the broken window fallacy, as French economist, Frédéric Bastiat has explained, when a window is broken:

The reader must take care to remember that there are not two persons only, but three…. It is this third person who is always kept in the shade, and who, personating that which is not seen, is a necessary element of the problem. It is he who shows us how absurd it is to think we see a profit in an act of destruction. It is he who will soon teach us that it is not less absurd to see a profit in a restriction, which is, after all, nothing else than a partial destruction. Therefore if you will only go to the root of all arguments which are adduced in its favor, all you will find will be the paraphrase of this vulgar saying—what would become of the glaziers, if nobody ever broke windows.

Bastiat explained that if nobody ever broke windows, then unemployment among glaziers would skyrocket. But this is no reason to keep breaking windows, because the people paying the glaziers would have been purchasing other more valued things—in Bastiat’s example, shoes—and now these other purchases never occur and become part of what Bastiat calls the unseen.

The same is true of employment from inflation. If we were to stop inflating, then the jobs created by inflation would disappear. But this is not reason to continue inflating. We are not profiting from inflation because these jobs exist. Rather these jobs are channeling resources from more valued means that we cannot possibly see in the face of this brutal inflation.

Seeing now that Volcker did control inflation by hiking rates and that the unemployment response does not carry the weight one may expect, we now can look at the 9.1 percent Consumer Price Index (CPI) inflation and understand that this is a terrifying number and that even if June’s 75 basis point rate hike is the highest we’ve seen since 1994, it is not nearly enough: it is time for a Volcker moment. ZeroHedge has previously reported that to have a Volcker moment, we would need to raise rates above the CPI rate, as Volcker in fact did.

That would mean that we need much higher increase than a measly 0.75 percent, we’d need a rate over 9.00 percent! In fact, if we were to look at the CPI as it was calculated back in Volcker’s time, we’d need a rate over 20.00 percent. This year we have seen record-breaking rate hikes compared to recent history, but they are not nearly enough.

A genuine Volcker moment would bring about serious economic hardship, which makes it hard to advocate. However, before long, the absence of such a moment will cause even more serious and much more prolonged economic hardship. It is time.

Source : Mises Institute

Infographic: The Top U.S. Exports by State

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Source : Visual Capitalist

America Was in an Early-Death Crisis Long Before COVID

Ed Yong wrote . . . . . . . . .

Jacob Bor has been thinking about a parallel universe. He envisions a world in which America has health on par with that of other wealthy nations, and is not an embarrassing outlier that, despite spending more on health care than any other country, has shorter life spans, higher rates of chronic disease and maternal mortality, and fewer doctors per capita than its peers. Bor, an epidemiologist at Boston University School of Public Health, imagines the people who are still alive in that other world but who died in ours. He calls such people “missing Americans.” And he calculates that in 2021 alone, there were 1.1 million of them.

Bor and his colleagues arrived at that number by using data from an international mortality database and the CDC. For every year from 1933 to 2021, they compared America’s mortality rates with the average of Canada, Japan, and 16 Western European nations (adjusting for age and population). They showed that from the 1980s onward, the U.S. started falling behind its peers. By 2019, the number of missing Americans had grown to 626,000. After COVID arrived, that statistic ballooned even further—to 992,000 in 2020, and to 1.1 million in 2021. Were the U.S. “just average compared to other wealthy countries, not even the best performer, fully a third of all deaths last year would have been prevented,” Bor told me. That includes half of all deaths among working-age adults. “Think of two people you might know under 65 who died last year: One of them might still be alive,” he said. “It raises the hairs on the back of my neck.”

These counterfactuals puncture two common myths about America’s pandemic experience: that the U.S. was just one unremarkable victim of a crisis that spared no nation and that COVID disrupted a status quo that was strong and worth restoring wholesale. In fact, as one expert predicted in March 2020, the U.S. had the worst outbreak in the industrialized world—not just because of what the Trump and Biden administrations did, but also because of the country’s rotten rootstock. COVID simply did more of what life in America has excelled at for decades: killing Americans in unusually large numbers, and at unusually young ages. “I don’t think people in the United States actually have any awareness of just how poorly we do as a country at letting people live to old age,” Elizabeth Wrigley-Field, a sociologist at the University of Minnesota, told me.

Although Bor’s study has yet to be formally reviewed, Wrigley-Field and five other independent researchers vouched for its quality to me. “The paper is extremely important, and the researchers who produced this know what they’re doing,” Steven Woolf, a population-health expert at Virginia Commonwealth University, told me. “It builds on, and considerably expands, what we’ve already known.”

Several studies, for example, have shown that America’s life expectancy has tailed behind other comparable countries since the 1970s. By 2010, that gap was already 1.9 years. By the end of 2021, it had grown to 5.3. And although many countries took a longevity hit because of COVID, America was once again exceptional: Among its peers, it experienced the largest life-expectancy decline in 2020 and, unlike its peers, continued declining in 2021. But Bor says that people often misinterpret life-expectancy declines, as if they simply represent a few years shaved off the end of a life. Someone might reasonably ask: What’s the big deal if I die at 76 versus 78? But in fact, life expectancy is falling behind other wealthy nations in large part because a lot of Americans are dying very young—in their 40s and 50s, rather than their 70s and 80s. The country is experiencing what Bor and his colleagues call “a crisis of early death”—a long-simmering tragedy that COVID took to a furious boil.

In every country, the coronavirus wrought greater damage upon the bodies of the elderly than the young. But this well-known trend hides a less obvious one: During the pandemic, half of the U.S.’s excess deaths—the missing Americans—were under 65 years old. Even though working-age Americans were less likely to die of COVID than older Americans, they fared considerably worse than similarly aged people in other countries. From 2019 to 2021, the number of working-age Americans who died increased by 233,000—and nine in 10 of those deaths wouldn’t have happened if the U.S. had mortality rates on par with its peers. “This is a damning finding,” Oni Blackstock, the founder and executive director of Health Justice, told me.

The crisis of early death was evident well before COVID. As many studies and reports have shown, since the turn of the 21st century, “midlife ages are where health and survival in the U.S. really go off the rails,” Wrigley-Field told me. “The U.S. actually does well at keeping people alive once they’re really old,” she said, but it struggles to get its citizens to that point. They might die because of gun violence, car accidents, or heart disease and other metabolic disorders, or drug overdoses, suicides, and other deaths of despair. In all of these, the U.S. does worse than most equivalent countries, both by failing to address these problems directly and by leaving people more vulnerable to them to begin with.

Consider how many years the missing Americans would have collectively enjoyed had they survived—all the birthdays and anniversaries that never happened. In other rich countries, the total “years of life lost” have flatlined for the past five decades. In the U.S., they have soared: In 2021 alone, the 1.1 million missing Americans lost 25 million years of life among them. That number doesn’t account for the events that preceded many of these deaths—the “years of disability, illness, and loss of human potential, creativity, and dignity,” Laudan Aron, a health-policy researcher at the Urban Institute, told me. And, especially in the case of middle-aged deaths, they left behind young dependents, whose own health might suffer as a result. The sheer number of missing Americans, and the “profound ripple effects” of their absence, are “really hard to wrap one’s head around,” Aron said.

These staggering numbers also help contextualize COVID’s toll. The coronavirus caused the largest single-year rise in mortality since World War II, becoming the third leading cause of death in the U.S., after only heart disease and cancer. But this enormous tragedy unfolded against an already tragic backdrop: The number of missing Americans from 2019 is larger than the number of people who were killed by COVID in 2020 or 2021. This isn’t to minimize COVID’s impact; it simply shows that in the Before Times, America had “very successfully normalized to an extremely high level of death on the scale of what we experienced in the pandemic,” Justin Feldman, a social epidemiologist at Harvard, told me. And when COVID drove those levels skyward, America proved that “we’ll accept even more deaths compared to our already poor historical norms,” Feldman said.

Such deaths, though obvious on a graph, are hidden from Americans with social privilege. In the summer of 2020, Bor remembers having an outdoor barbecue with a friend who grew up in a low-income housing project. “At that point, six months in, he knew six people in his close circle who had been killed by COVID,” Bor told me. “I still don’t.” The fact that half of the working-age Americans who died last year should still be alive “isn’t visceral if you haven’t lost anyone,” he said.

The current mortality crisis was long in the making. In terms of mortality, America’s peer countries—many of which had been hammered by World War II and its aftermath—began catching up with it in the mid-1970s before overtaking in the early 1980s. That was a pivotal era, when globalization, automation, and a growing service industry led to huge losses in mining, manufacturing, and other blue-collar sectors. The U.S. profoundly failed to protect its citizens from these changes. Its social safety net—state assistance for parents, or people facing job, food, or housing insecurity—was meager; its public-health system was languishing after decades of underinvestment; and unlike every other wealthy country, it lacked universal health care. These factors “privatized risk,” Bor and his colleagues wrote in their paper, “tying health more closely to personal wealth and employment.” As labor unions declined and minimum wages stagnated, more Americans had fewer resources to lean on if their health declined. Poorer Americans already lived, on average, shorter lives than rich ones, and that gulf started to widen.

Other particularly American choices exacerbated the stresses on the health of the country’s citizens, again weighing more heavily on less wealthy people. A growing mass-incarceration industry punished them. A deregulatory agenda that began with Ronald Reagan’s administration left them vulnerable to unhealthy foods, workplace hazards, environmental pollutants, guns, and opioids. “America basically says: If you’re poor, you don’t have access to safe choices,” Bor told me.

Factors like social inequalities and frayed social safety nets are the fundamental weaknesses of American society, which more specific problems like opioids, metabolic disorders, and COVID exploit. During the pandemic, for example, poor and minority groups were more likely to be infected because they lived in crowded housing, distrusted medical leaders, and couldn’t work from home or take time off when sick. And instead of addressing these foundational problems, policy makers instead focused on personal responsibility.

America’s drastic underperformance in health also stems from its history of segregation and discrimination. Racist policies have obviously harmed the health of minorities. But as the policy expert Heather McGhee and the physician Jonathan Metzl have independently argued, elites have long marshaled the racial resentment of poor white Americans to undermine support for public goods that would benefit everyone, such as universal health care. Per Frederick Douglass and other Black leaders, “They divided both to conquer each.”

COVID, for example, disproportionately killed Black, Latino, and Indigenous Americans—a trend that, when highlighted to white people, reduces their concern about the pandemic and their support for safety measures. But in 2021, young white Americans still died at three times the rate of the average resident of other peer nations, while young Black and Indigenous Americans died at rates five- and eightfold higher, respectively. “There are thousands of racial-disparity studies that compare Black people to white people—but white Americans are a terrible counterfactual,” Bor told me. They’re frogs in the same pot, boiling more slowly but boiling nonetheless. By using them as a baseline, we ignore how “everyone is harmed by the status quo in the U.S.,” Blackstock told me, while also underestimating how dire things really are for people of color. (The same problem applies to income inequality: White Americans living in the richest 1 percent of counties still have higher rates of maternal and infant mortality than the average residents of wealthy countries.)

So, “what happens now?” Bor asked me. “Are we going to have 1 million missing Americans a year, every year, going forward? Or more?” His study doesn’t suggest a reason for optimism, but it does provide a defense against nihilism. The entire concept of missing Americans is rooted in a comparison with other countries, which shows that these early deaths aren’t inevitable. The U.S. could at least start moving in the direction of its peers by adopting policies that work elsewhere, such as universal health care, minimum-wage increases, federally required paid sick leave, and better unemployment insurance.

But “the inability of our politics to generate policies that manage health threats is grim,” Bor said. None of the weaknesses that COVID exposed have been addressed; some, like the chasm-sized health gaps between rich and poor or white and Black, have been widened. Vaccines significantly reduce the risk of dying from COVID, but their power is blunted by low uptake, new variants, the lifting of almost all infection-thwarting protections, and the looming loss of COVID funding. Reactionary laws that hamstring what public-health departments can do in emergencies will make the U.S. vulnerable to the new viruses that will inevitably assault it in future years. America’s already underperforming health-care system has been badly battered by the pandemic, and weakened by waves of health-care-worker resignations. In recent months, the Supreme Court has constrained both gun and carbon-emission regulations, while clearing the road for states to restrict or ban abortions—a move that could easily boost America’s already sky-high maternal mortality rates. The climate is still changing rapidly, exposing people who have no choice but to work outside to the ravages of heat.

As much of the country returns to normal, Bor’s study makes plain what normal actually meant—and, as I wrote in 2020, that normal led to this. “A lot of Americans may be under the impression that we had a bad go of it during COVID, and once the pandemic is over, they can go back to having the best health in the world,” Woolf told me. “That is a gross misconception.”

Source : The Atlantic

The Fed vs. the Economy in the U.S.

James Rickards wrote . . . . . . . . .

Right now, it’s basically a case of the Fed versus the economy. You might say, “Wait a second. Isn’t the Fed supposed to help the economy?”

Well, not exactly. They may want to help the economy, but helping the economy actually isn’t job one. Job one is helping the banks. The Fed was essentially created to prop up the banking system and prevent bank runs.

Everything else it tries to accomplish, such as price stability and maximum employment, comes second.

So it’s not clear that the Fed’s always aligned with the best interests of the economy. People don’t realize that, but it’s important to keep in mind.

Everyone knows the Fed’s raising interest rates right now. But which rates? The rate that the Fed actually raises is called the fed funds target rate. And what is that?

That’s the rate at which banks lend to each other to meet their reserve requirements on an overnight basis. Fed funds are amounts that banks lend to each other to meet overnight reserve requirements.

It’s an extremely short-term rate. The Fed targets that rate as a way to control the money supply and perhaps tweak inflation or achieve other economic goals.

The Fed Is Targeting a Rate That No Longer Exists

I don’t want to get into the mechanics of the banking system, but here’s the essential point I want to make:

There hasn’t been a real fed funds market for about 12 or 13 years, ever since the Fed began flooding the system with money during the Great Financial Crisis. Today, reserves are close to an all-time high.

In other words, the banks have excess reserves. Their actual reserves are multiple trillions of dollars in excess of the requirement. So there is no shortage of reserves.

There’s no overnight lending for reserve requirements, because all the banks have excess reserves.

So the Fed is targeting a rate that doesn’t exist anymore. Why are they doing it?

Banks aren’t lending to each other, but they are lending to the Fed in the form of excess reserves. Those are deposits at the Fed, which the Fed pays interest on. So in a sense, the interest on excess reserves is a modern substitute for the old fed funds rate.

But this money is basically sterilized. It stays within the banking system without making its way into the real economy. That’s why all the QE the Fed engaged in after 2008 never led to consumer price inflation.

The inflation we’re seeing today has nothing to do with QE (more on that in a minute). Now people say the Fed’s raising interest rates. But it’s not that simple.

The Fed Has Limited Influence Over Long-Term Rates

The Fed really only controls that overnight rate. It doesn’t have that type of control over longer-term interest rates like those on the 10-year Treasury note, for example.

The Fed can target 10-year note rates to some extent with quantitative easing or quantitative tightening, through buying and selling them in the market. They can move the rate around a little bit, but that influence is limited.

The market for 10-year Treasuries is much, much larger than the Fed. It’s the deepest and most liquid market in the world.

So the Fed’s really targeting one minor rate, the overnight rate. It’s a really narrow target.

They don’t control long-term interest rates directly, nor do they have the capacity to do so.

So how does raising the fed funds rate reduce inflation?

The Supply Side

There are two major sources of inflation. There’s the supply side and there’s the demand side. Either one of them can drive inflation, but they’re very, very different in terms of how they work.

The supply side, as the name implies, comes from input. The supply just isn’t there. Farm prices are going up because fertilizer prices are going up, partly because of the war in Ukraine. Oil prices are going up because there’s a global shortage, and there’s disruption in supply chains.

Actually, I need to refine my comments about oil shortages. Rising gasoline prices don’t have all that much to do with the oil supply. There’s not a shortage of oil, but in the United States, there’s a shortage of refining capacity.

You don’t put crude oil in your gas tank, you put gasoline in your gas tank, or diesel, or jet fuel, which is basically kerosene. All of it has to be refined, and that’s where the bottleneck is.

Raising Rates Won’t Plant Crops or Increase Oil Production

So there are increasing shortages in some of the refined products, and that also accounts for today’s extremely high prices. And transportation costs go into the prices of everything.

So what can the Fed do about that? Nothing. Does the Fed drill for oil? Does the Fed run a farm? Does the Fed drive a truck? Does the Fed pilot a cargo vessel across the Pacific or load freight at the Port of Los Angeles?

No, they don’t do any of those things, and so they can’t fix that part of the problem. Raising interest rates has no impact on the supply side shortages we’re seeing. And that’s where the inflation’s coming from.

Since the Fed has misdiagnosed the disease, they are applying the wrong medicine. Tight money won’t solve a supply shock. Until the supply shortages are fixed, higher prices will continue. But tight money will hurt consumers, increase the savings rate and raise mortgage interest rates, which hurts housing.

The Demand Side

Then there’s demand-side inflation, called demand-pull inflation. That’s when people build inflation into their day-to-day behavior, when they think inflation’s here to stay.

They say, “Well, I was thinking of buying a new refrigerator. Better go get it today because the price is going up.”

The same logic applies to buying a new car, a new house, etc. The motivation to buy now accelerates demand because consumers think the price will only go up. These expectations can take on a life of their own and feed on themselves as people rush to the stores.

Supply can’t keep up, which is a recipe for higher prices. We’re not there yet. We’re not at the demand-pull side, but we’re dangerously close.

Are you running right out today to go buy a new refrigerator because you fear the price is going up? Probably not. You’re certainly aware of price increases; you see them at the pump and at the grocery store. But at least so far, that part of the behavior has not changed very much.

The Cure May Be Worse Than the Disease

Here’s the point: The Fed can’t create supply but it can destroy demand. If they raise interest rates enough, mortgage rates will rise and monthly payments with them. People will stop buying houses and credit card balances will rise because they’re paying higher interest. Financing starts to dry up, which spreads throughout the economy.

So the Fed can destroy demand, but only at the cost of the economy. It’s one thing if the inflation is coming from the demand side, but it’s not. It’s coming from the supply side, and the Fed can’t do anything about that.

They can destroy enough demand to maybe bring inflation down, but only by destroying the economy. And that’s the point. The idea that the Fed can squash inflation without squashing the economy is false.

I’m afraid we’re going to find that out the hard way.

Source : Daily Reckoning