Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: TobagoJack who wrote (47933)	4/3/2004 11:19:45 PM
From: AC Flyer	Read Replies (7) of 74559

>>... but no good jobs? or at least none as good as old jobs?<< This is a myth, Jay, that suits a certain political agenda to promulgate. Real incomes in the US have shown very solid gains over the last several years - combined with deflation in the prices of manufactured products, this has meant significant gains in purchasing power for US consumers. >>... but there is no inflation? or at least the sort of inflation that mean higher prices?<< No...there is no inflation, with the exception of spot shortages of some commodities in some locations. Manufacturers have no pricing power due to the global capacity glut in just about every industry. The big picture for the US requires a little imagination to understand. Two powerful forces - (1) a strong cyclical recovery and (2) high productivity, are in a tug-of-war. The cyclical recovery is creating jobs while high productivity is destroying them. The net result is familiar to any engineer, with a curve (1) overlaid by a straight line (2), summing to an extended curve. We've been bumping along the bottom for a while with minimal net job creation, but (1) is beginning to prevail. This has been obvious in the household survey for a while, which has been running strongly ahead of the establishment survey. As always, small business is shouldering the major burden of job creation. The next few months will be the last great buying opportunity for US equities this decade. I don't expect to convince you, however.

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