2019: Recessionary Forces Cannot Be Halted

Economic Forces Affect Political Outcomes

If you look inside the economy, you need to find more than an empty box.

The US economy and how it functions is truly a mystery to most people. For the most part it operates on faith. For politicians, it is generally taken as a granted. When a recession strikes, no one knows what to do.

The outcome of the 2020 Presidential Election hangs in the balance, and Trump has less than 6 quarters to turn things around in a major way, or Trump will become the first one-term President since G.W. Bush.

The data is very clear. It extends all the way back to the mid 70’s, and it is a nearly perfect indicator for POTUS election results. I have written about it in the past. It has not changed. The rules are rather simple.

Corporate Profits Are Mediocre

If corporate profits as reported by the Bureau of Economic Analysis is growing by more than 6%(more or less) year over year, then the party in the White House will maintain control of the White House. The ONLY exception to this rule since 1972 is Gerald Ford, who was tossed out of office because of the overwhelming desire for any new direction after Nixon’s resignation.

With that in mind, those that hold the office of POTUS really need focus on a few major things, and one of the most major things is the real health of the underlying economy.

Why corporate profits? It’s simple. Businesses are in business to grow profit. No one should run a business just to maintain the status quo. But watching the major financial networks, it becomes clear most are clueless to this rather simple truth.

But the networks seem to focus on two numbers that mask the real performance. The first is the top line, or sales. The second is the earnings per share. Both of these numbers are not worth 1/2 of what weighting analysts have placed upon them. Why?

Sales can rise 30% per year. But if you are not bringing any more profit per sale to the bottom line you are just working hard for the same result.

Earnings Per Share are Misleading

Earnings per share can make a company with less profit look like they are doing better than they really are. If a company’s earnings fall 3% but they buy back 4% of their shares, then EPS will rise. And this false signal seems to be embraced by analysts at every turn.

So why are we headed into a recession? The costs of doing business are rising, and rising fast, and there is nothing that will put the brakes on those pressures.

Back in 2008, the same two factors that accelerated the market collapse are happening once again. What are those two factors? Interest rates rising and minimum wages rising.

There has never been more debt being held by Americans in our history. And the increases in rates, while they appear small, relatively speaking, are really huge in their outcomes. Rates rising from 2 to 2.5% for instance, results in a whopping 25% increase in your interest costs. That is not insignificant.

Minimum Wages are Rising

Minimum wages increases, however, are going to push the economy over the edge. These increases are not happening because businesses have chosen to pay employees more because A) they are more productive and B) it is what is needed to get employees on the job. Rather it is the worst of reasons: despite the economic realities, government mandates it.

Minimum wage is increasing in 21 states in 2019. And by much more than what the rate of increase was back in 2008.

https://www.businessinsider.com/minimum-wage-2019-state-map-2018-12

Politicians never seem to grasp the affect of these mandatory wage increases on businesses. And the businesses they most affect are the ones with some of the lowest profit margins in our economy: Restaurants and retail sales are going to have to raise their prices to maintain their profit margins, despite the workers only producing as much as they did last year.

That of course, will inject just a bit more inflationary pressure into our economic system, which will put even more pressure on the Federal Reserve Bank to raise rates even higher.

We know that the the odds of states and cities reversing course and lowering the minimum wage is near zero. As for the Federal Reserve, who knows what they will do? They do not even know what they are doing today.

If Trump (and most of the Republicans) want to maintain the White House in 2020, they better start acting now to lower the costs of doing business in the United States. They will need to see this recession end quickly, which means it needs to be officially acknowledged sooner rather than later.

The summer of 2019 needs to be the low part for the economy. The rate of Federal Debt growth must be slowed dramatically. Home grown energy needs to be deregulated. The constant increase in local sales taxes fuel taxes and property taxes need to be reversed just to have a shot at this objective.

Otherwise, this recession is going to be far worse than 2008. And no business is actually prepared for that.

And I’d wager good money that no state or local governments are either.

Johns Creek: At a Crossroads (Or Being Pushed Towards A Different Outcome)

The semantics are similar, and people can argue which is which.  But make no mistake about it, Johns Creek has been pushed for the last ten years towards change.

The affects of this change are readily apparent in our annual CAFR reports.  Our per capita income is declining.  Our density(number of people) per square acre is rising.

It seems that there are those among us that believe we just need more population to make all of the things we have in Johns Creek work.  More residents justify the need for more services.  More residents justify the need for Bus Rapid Transit.  And you need to have a place for all of these residents to live, and while mostly built out, the only wan to do this is to increase the density of our housing.

The recent “first draft” of the Comprehensive Land Use Plan was revealing.  While the CAC and the City have more or less dismissed this draft, it was they that brought it to us. Continue reading

Operation: Silence The Opposition

What happens when you challenge the leadership in your community?  What happens if you do not accept the notion that the best choices were made, that the best outcomes were achieved?  What if you challenge the ideas that the future of your community needs to be drastically different from the community that you have chosen to call home?

In Johns Creek, you are given labels.  You are called a hater.  You are labeled as the wrong type of person to hang around.  Your elected officials tell people that you are the wrong types of people to associate with.  Those crying in the public arena about bullies are actually the bullies of Johns Creek, using their efforts in an attempt to silence the opposition. Continue reading

Fats Domino: New Orleans Legend

Fats Domino passed away this week.  Being born in New Orleans meant you were aware of music and musicians at an early age.  I was no exception.

Domino was a fixture in New Orleans, where he had soaked up the influences of the musical melting pot and, even after gaining fame, stayed in his old neighborhood where he would sometimes sleep outside in a hammock.

I can still remember the day in the 1960’s, when my parents, who loved to take long rides, drove us past the home of Fats Domino.  It was not the first time, but it was the time that I remember that Fats Domino was sitting outside on the porch.

“Wave to him” one of my parents said.  And I did.

Fats Domino waved back, creating a memory I can see to this day.as if it were yesterday.

Rest in Peace, Fats.  We are gonna miss your presence.

http://www.breitbart.com/big-hollywood/2017/10/25/rock-n-roll-pioneer-fats-domino-dead-89/

Why We Are Frustrated With Traffic (In 90 Seconds)

In less than 90 seconds,  anyone should be able to clearly understand why we are frustrated with traffic and why we think that there are improvements that can be made without paving six lanes the entire length of 141.

While I took this video in Peachtree Corners, it was only because I saw it as an example of what ails us in Johns Creek.  We all experience the same thing on a frequent basis in Johns Creek.  It just happened to be convenient for me to film at this location.  Frustrated with the additional 10 minutes it took to get to Earth Faire at 12:30 p.m., I made it a point to stop and record it.

The questions I keep asking is why.  What does it take to resolve these sorts of issues with our traffic lights?

The video was taken Friday, March 10th 2017, just before 1:00 pm.  I am facing north on 141 on the eastern side of the intersection.

Be sure to watch to the very end where you will see as I zoom just how far the backup extends.

US Economic Engine Continues Its Steady Decline

It’s been a long time since we had robust economic growth.  Most of those alive today cannot really recall a boom time.

Compounded Annual rate of job growth since:

1960:  1.75%

1970:  1.53%

1980:  1.28%

1990:  1.05%

2000:  0.56%

Anyone see a “long term” trend here besides me?

Slowly but surely this economy creates lower and lower job growth.  There are those, like me, who have relentlessly stated that taxes, regulations, and other restrictions are having a negative effect on the US economy.

And I have on more than one occasion demonstrated that profit growth in the US has also been on a steady decline.

With less profits and lower job growth, should we really be surprised that the overall health of the US consumer has been on a steady decline?

Were it not for liberal monetary lending, where American consumers are borrowing to sustain their standard of living, the evidence would be quite clear.

So, how long can this last and how much more debt can the American consumer get their hands on before we see some serious repercussions?

In The End, It Was About The Economy Again

Once again, we faced a National Election for President of The United States, and once again the outcome was never really in question, was it?

What if you could find one indicator that pointed the way to what would happen in the election for POTUS that could very well sum up how the United States was doing, and therefore indicate what the outcome would be during election years? Continue reading

Dismal Jobs Report Yet Again

 

 

Once again we have gotten the Non-Farm Payroll number and once again we have evidence that the economy continues to weaken.  Below you will see a chart of the rate of growth of jobs over the last twelve months.

With the September 2016 number, we can see that growth for the 12 months ending September 2016 is the lowest of the last four years, and the trend for the year overall has been decidedly downward.

Meanwhile the Federal Reserve Bank continues to pepper us with upbeat reports of the strength of the Jobs Market in the United States.

When you look at where we are and where we have been the last four years, what conclusion do you draw?

Exactly.

And the October 2016 is gonna have to be a doozy to even keep us at our current level of YOY growth.  What will that number need to be at a minimum?

295 thousand jobs added will need to be the number.  Unless some serious magic occurs, do not expect that to be a possibility.

The economy continues to weaken.  Job growth supports that conclusion. So does Corporate Profits.

At some point the Stock Market Indexes will also have to come to terms with the realization that we are not in the economic reality they continue to believe we are in.

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Is Johns Creek Wandering in the Desert?

Recently it was stated that the City Council of Johns Creek was “wandering in desert”. Since the City Council is supposed to be representative of its residents, the implication is imperfect but clear.

The residents however, are not wandering.  They have been clear and steadfast for years. Traffic. Traffic . Traffic.  That is our # 1 issue.

Neither are the majority of the Council Members that are suggested to be the problem here.  At last,  we have some principles of leadership and governance that are finally seeing the light of day.  They are only seeing that light of day because those Council Members realize they are not there to reach a consensus, but to actually have a dialogue on what principles we are going to follow as a City.

Unfortunately, we still have a few Council Members that are unsure of what their actual principles are, and so we must wait and see how they cast a vote to see where they stand on an issue.

Let’s face it, we cannot wander around Johns Creek.  We cannot get out of town in a reasonable manner.  We cannot get home either.  Our main travel routes take 3-4 times longer during our rush hours than our non-rush hours. It’s been that way for more than 10 years.

Believe me, we know exactly where we are.

Johns Creek was created so that we could take care of our needs which were being ignored by Fulton County. Continue reading

Play or Pay: How We Are Subject to TSPLOST Extortion

Cities in Fulton County are being held up at legislative gunpoint in Fulton County, Georgia, and if they do not play along with how the rules have been written by the State Legislature, their constituents will pay the price.

Cities within Fulton County (I live in Johns Creek) are required to either get on board with a Transportation Local Option Sales Tax (TSPLOST) or run the risk of having the TSPLOST passed in the fall of 2016, and their jurisdictions be subject to the tax and receive nothing. Continue reading