Saturday, May 8, 2021

Up to the plate: Bad jobs report, inflation and supply chain fears

In an amazing display of deception, Biden declared after the Labor Department had its worst report in decades, “This month’s job numbers show we are on the right track.” He then went on to say how important it was to spend another $4 trillion on "jobs" and "recovery" programs.

House Speaker Nancy Pelosi stated, “The disappointing April jobs report highlights the urgent need to pass President Biden’s American Jobs and Families Plans,” referring to the additional $4 trillion of spending bills now being proposed.

As one commentator stated: "We are witnessing a witches’ brew of stupidity that, taken together, amounts to the American people piling on yet more debt for the privilege of stopping an economic recovery."

The U.S. economy added just 266,000 jobs in April after economists predicted it would add a million, according to a Department of Labor report released Friday morning. The U.S. remains nearly eight million jobs short of the 2020 peak that the economy reached prior to the pandemic, the report showed.

“The disappointing jobs report makes it clear that paying people not to work is dampening what should be a stronger jobs market,” U.S. Chamber of Commerce chief policy officer Neil Bradley said in a statement Friday morning.

The weak number caused investors to believe easy monetary policies will stay in place for longer, and may provide a boost to President Biden's economic stimulus agenda. The dollar slumped toward the lowest since February, while U.S. Treasuries fluctuated before ending mostly unchanged as 10-year yields briefly fell below 1.47% after the jobs data hit. For the week, the Dow Jones and S&P 500 indexes closed at record highs, rising 2.7% and 1.2% respectively, but the Nasdaq ended lower for the third straight week, down 1.5%. Value stocks outpaced growth stocks for the week.

Nearly 60% of small business owners reported that they were trying to hire while 44% said they were struggling to fill job openings, according to the National Federation of Independent Business’ (NFIB) April jobs report released Thursday. Ninety-two percent of those looking for workers said there were few of no qualified applicants.

“The tight labor market is the biggest concern for small businesses who are competing with various factors such as supplemental unemployment benefits, childcare and in-person school restrictions, and the virus,” NFIB Chief Economist Bill Dunkelberg said in a statement. “Many small business owners who are trying to hire are finding themselves unsuccessful and are having to delay the hiring or offer higher wages.

Twenty-two percent of small owners generally report that they are struggling to find workers, according to the NFIB’s 48-year historical average.

“The huge miss in expectations is because the unnecessary additional unemployment benefits are incentivizing people to stay home,” Alfredo Ortiz, president of the Job Creators Network, and Steve Moore, co-founder of the Committee to Unleash Prosperity, said in a joint statement on Friday. “As we’ve been saying all along, the extension of unemployment benefits would hurt our recovery, and now we are seeing that in real time.”

“Additionally, President Biden’s relinquishing leadership to the teachers union on reopening schools has prevented people from getting back to work,” the statement continued.

Supply chain vulnerabilities

Risks of rising prices are intensifying across the economy as a growing number of companies warn that supply shortages and logjams will compel them to raise prices. In fact, tight inventories have seen prices surge for raw materials, ranging from semiconductors and steel to lumber (LB1:COM) and cotton (CT1:COM). Manufacturers are scrambling to replenish stockpiles to keep up with accelerating demand as eager shoppers take out their stimulus-filled wallets following a broad vaccine rollout.

Thought bubble: As commodities and materials become more expensive, the bigger question at the table is whether faster inflation sticks around. Putting it in perspective, a sheet of 3/4" plywood at Home Depot (HD) is now selling for around $60 (depends on location), up from about $30 before the pandemic - that's a 100% increase. Investors and policymakers alike are hoping that the price hikes prove transitory, though it's still too early to predict the future, and Treasury Secretary Janet Yellen even made waves this week by suggesting tools that could combat an overheating economy.

"Straight price increases will continue to be an important element as we look at the back half of the year," Colgate-Palmolive (CL) CEO Noel Wallace told investors after the company's Q1 results. "I anticipate that you'll see more price increases across the sector, given the headwinds that everyone has faced in this space." Many other companies have also warned of price increases and supply chain disruptions on their earnings calls, including Apple (AAPL), Coca-Cola (KO), Proctor & Gamble (PG) and Kimberly-Clark (KMB).

The economic angle: Longer lead times and orders booked far in advance could result in a robust demand floor that could encourage companies to invest in ramping up production and capacity. That would be great for economies coming out of the pandemic, but the opposite could also happen, in which volatility and uncertainty destroy demand as prices become too high for consumers. The phenomenon, called the "bullwhip effect," could end up damaging the economy in the short-term, with violent swings in a range of goods.

Tuesday, May 4, 2021

PRO Act does nothing for American workers, everything for Union fat-cats

I currently am working for a small company in North Texas on a short-term contract. If the PRO Act were to pass, I probably would not have been able to get this contract, as this small company would not have been able to hire me as an employee. Or the rate I which I get paid would be much lower.

This is another step toward the government's full control over its populace. Biden was so wrong when he said "We the the government." Sorry, We The People...Are the PEOPLE.   

During his remarks to Congress, Biden asked the lawmakers “to pass the Protect the Right to Organize Act—the PRO Act—and send it to my desk so we can support the right to unionize.”

The legislation dubbed the PRO Act essentially would take a California law known as AB 5 national. However, the California measure wasn’t very popular after the Legislature passed it and the governor signed it into law.

Previously, drivers for ride-hailing services such as Uber and Lyft; freelance writers, musicians, and others, and various independent contractors could work for companies without being considered full-time or part-time employees.

The new law required workers in California to be considered employees, narrowing opportunities for workers that wanted to set their own hours.

In November, voters opted to significantly weaken the law, though not discard it entirely, by passing a ballot question called Prop 22 after the law was seen as harming opportunities for freelancers and independent contractors.

The ballot initiative carved out Uber and Lyft drivers, but the law still affects most other part-time or freelance workers in California.

“If a policy is too liberal for California voters, you would think it’s definitely not something for the rest of the country,” Alfredo Ortiz, president of the Job Creators Network, a small business advocacy group, told The Daily Signal.

“That law has had a horrible impact on freelancers and independent contractors,” Ortiz said. “Even people in the movie industry that used to get contract jobs are losing opportunities. If you are a sole proprietor, you are a small business.”

The PRO Act touted by Biden would prohibit contract or freelance work. Organized labor strongly backs the legislation as a means of increasing union membership.

The Freelancers Union estimates that 1 in 3 workers in the United States participates in independent work such as contracting, freelancing, and consulting. About 10% of workers perform independent work as their primary job.

Fewer than 1 in 10 independent contractors would prefer a traditional work arrangement, according to the Bureau of Labor Statistics.

Specifically, the federal legislation would broaden the definition of “employee” under the National Labor Relations Act. Under the new definition, an individual who performs any service—with some exceptions—would be an employee rather than an independent contractor.

The proposal also raises concerns about invading workers’ privacy, doing away with the right to secret ballots in union elections, and invalidating 27 state right-to-work laws against compulsory union membership.

“California has been a policy disaster, yet President Biden seems to view it as a success,” Ortiz said.

Up to the plate: Bad jobs report, inflation and supply chain fears

In an amazing display of deception, Biden declared after the Labor Department had its worst report in decades, “This month’s job numbers sho...