November/Early December 2021
Introduction
New jobs created in the United States in November were 300,000 below the expected number of 510,000. The November number came in at 210,000, leaving many economists scratching their heads. On the bright side the labor force participation rate increased to 61.8 percent in November with the unemployment rate falling from 4.6 percent to 4.2 percent. To many it seems odd that the U.S. unemployment rate could drop from 4.6 percent to 4.2 percent with a disappointing number of new jobs being created by corporations in the United States. It is important to note that monthly new jobs data is derived from a monthly survey of American employers while the survey to derive the monthly U.S. unemployment rate is conducted by surveying American households. Perhaps what we are seeing is not inconsistency in surveys or data, rather an increase in entrepreneurship across the United States. The almost half percent drop in the unemployment rate could be signaling that hundreds of thousands of Americans have decided to start their own businesses and work from home, thus the impressive number via the recent survey of households by the U.S. Department of Labor. We will follow this closely in the months ahead.
Key October / November Data
Positive and Negative Signs
The Dow Jones Industrial Average (DJIA) has fluctuated between just over 32,200 and roughly 36,200 this year. It recently closed at just under 35,700 and is being greatly influenced by government spending, potential tax increases on corporations, and the ebbs and flows of the COVID-19 virus and its variants. With good news on the severity of the Omicron virus, the market seems poised to finish December on strong footing. The S&P 500 and the NASDAQ seem to be following similar paths as well. Gold is just under $1,790 and has fluctuated within a $300 range throughout the year. Gold, which is a traditional barometer for inflation is up roughly 7 percent from its year-to-date low, while the Ten Year Treasury Bond Yield is not yet in traditionally-labeled inflationary territory at 1.48, yet it’s almost double its 52-week low. Finally, the Conference Board reported that its Consumer Confidence Index fell to 109.5 in November – its lowest level since this past February and down from 111.6 last month. The Conference Board noted that consumers purchased fewer homes, automobiles and major appliances, and the price growth in the purchase of homes declined in September and is currently showing weakness nationally.
Current Issues
A list of concerns for the U.S. economy now and moving forward:
The U.S. inflation rate is currently running at 6.2 percent and is expected by many economists to go higher before it begins to decline late in 2022. Even Federal Reserve Chairman Powell now believes inflation is no longer “transitory.” To make matters worse, a recent report by the Federal Reserve Bank of St. Louis shows that the U.S. dollar purchases roughly 28 percent of what it did in 1980. The root cause of our current inflation and decline of the purchasing power of the U.S. dollar is inconsistent – and often irresponsible – monetary policy on behalf by the U.S. Federal Reserve Bank and excessive government spending from Washington, D.C.
Total U.S. deaths from COVID-19 since the crisis began in late 2019 now totals more than 790,000, with U.S. cases surpassing 49 million. What is probably most disappointing is America has had more deaths in the United States in 2021 than we did in 2020. Vaccines and prophylactics have made a tremendous difference with the largest percentage of deaths in 2021 coming from those that are yet to be vaccinated. Nearly 60 percent of Americans have been vaccinated, short of the Biden Administration’s goal of 70 percent by summer of 2021. The new Omicron variant seems more contagious, yet less lethal than its Delta predecessor.
The U.S. national debt recently surpassed $29 trillion with total state and local debt adding another 3.3 trillion dollars. Current U.S. national debt is now 125.92 percent of U.S. GDP and is almost $230,000 per U.S. taxpayer. This near-historically high U.S. national debt makes it extremely difficult for the United States to deal with future crises such as another pandemic, a recession or depression, or God forbid, a military conflict with Russia or China and/or instability in the Middle East.
We find it disappointing and wholly inconsistent that the Biden Administration leaves our border wide open for people from numerous countries not limited to Central and South America to enter the United States with little to no validation as to the person crossing the border’s health status or threat status to the United States. It is an insult to the American population in general that we even propose a travel ban on eight southern African countries, while leaving our southern border porous and unprotected.
Current U.S. regulations such as new limits on federal land relative to oil drilling, the shuttering of the Keystone XL Pipeline, proposed COVID-19 restrictions at the local, state and/or federal level, proposed Green New Deal regulations, proposed taxes on corporations and the wealthy, are and/or will make the U.S. economy less flexible, less dynamic, and overall less productive. With numerous employers of all sizes across the country reporting labor shortages and more than ten million jobs unfilled, U.S. economic growth in 2022 is certainly poised to decline.
When one melds U.S. economic and foreign policy together, the result is a confusing mish-mash of contradictions. To our allies and those around the world, we show little consistency of thought or strength in our foreign policy. On the one hand, we are limiting our ability to produce energy for ourselves and to export to allies around the world, due to our limits to drilling on federal land and pipeline construction. Simultaneously, as we reduce our production, we are giving countries like Russia and Iran the ability to produce more and higher priced oil, which they can use the profits from to threaten the Ukraine in the case of Russia or Middle Eastern allies like Israel, in the case of Iran.
Conclusion
We fear our record national debt and proposed new growth in the size and scope of our federal government, if allowed to continue, will ensure the slow and gradual decline of the U.S. economy in the months and years ahead.