PPI, CPI, Empire State Survey, the K Economy, A New Chair and a new American Idol
Last Week, Economically
Let’s start with the good stuff – inflation.
By ‘good’, I mean the interesting, not necessarily ‘good’ news. That said…
PPI and CPI – Producer Price Index and Consumer Price Index – continue to rise. One is essentially a measure of business costs; the other, of consumer costs.
The PPI came in at 6.0% over the last 12 months. Yikes.
The CPI came in at 3.8%.
What happens when you take food and fuel out of it?
PPI comes in at 4.4% and the CPI at 2.8%.
Fuel is a huge driver, so let’s break down what's up with that:
Jet fuel up 104% and diesel up 74%.
Gas up at 39% and nitrogen fertilizer at 38%; that’ll drive up some farming costs.
Truck transport up 15%, and airmail and delivery up 18%.
Ugh.
Let’s wrap with the Empire State Manufacturing survey. A core above 0 means expansion, and below means contraction.
Last month, it was at 11, and expectations were for 7.3.
It came in at 19.6. Nice, except…
Prices paid by businesses were up.
Prices received are rising.
Key challenges for businesses were supply constraints and a worsening of delivery delays.
Didn’t I mention inventory last week?
The K Economy
So, what is this ‘K’ economy? And will it be the precursor to the ‘L’ economy? Is it like the K Car?
I hope not – the curve of an L has no appeal to me. I much prefer a hockey stick economy.
Boomer alert: the Chrysler K Car did save Chrysler in the 1980s. I digress…
When you research it, you find there are a bunch of other letters for economic theories, and here they are:
V‑shaped (quick rebound).
U‑shaped (slow recovery).
L‑shaped (prolonged stagnation); go figure, it really is a thing.
W‑shaped (double‑dip recession).
Back to the K. Some sectors or groups improve sharply (the upward arm of the “K”) while others continue to decline or lag (the downward arm).
A stat or two:
In 1995, the highest earning 20% of households accounted for half of consumer spending.
Now, it’s about 60%. Kiplinger states that 10% of households are driving 50% of spending.
So what are the other 80% doing? Being a little more frugal.
The discount retailers will stand to do well as folks move from the main supermarkets to Aldi or Walmart.
Everyone is looking to save a buck.
Whereas the luxury goods, vacations, and home renovations will continue with the 20% that spend 60% of the money.
Who is Kevin Warsh?
For starters, he is (almost) the new Chairman of the Federal Reserve Board of Governors.
He has been confirmed, but has not been sworn in.
Jerome Powell will be staying on, but he won’t be Chair, so you won’t hear so much about him anymore.
So, where did he come from?
He is a Stanford man, with a Harvard law degree, don’t you know.
Mr. Warsh served on the Board of Governors starting in 2006 and was in the thick of it during the Great Recession’s 2008-2009 financial crisis under Ben Bernanke.
At the age of 35, he was the youngest member ever when he was appointed.
He resigned his post in 2011.
In 2018, Janet Yellen departed as Fed Chair and Warsh was one of the two finalists for the Chair position. The other?
Jerome Powell, the current Fed Chair.
Summed up, his name was not picked out of the blue. Powell was chosen over Warsh because he had more experience.
Now Warsh gets his turn.
All it takes is an Audition
Same week, different year for American Idol.
Last year, I talked about Jamal Roberts from Meridian, Mississippi.
Since then, he has earned a Grammy nomination for Best Gospel Performance/Song.
This year, the winner is Hannah Harper, a 25-year-old mother of 3 boys from Willow Springs, Missouri.
Population 2,219.
Many of the 100+ contestants who qualify to compete come from small towns throughout the United States and sometimes even outside the USA.
Almost without exception, all display a strong sense of humility, and most have a strong commitment to their faith.
That was certainly on display this year.
It is moving to hear some of the backstories behind their journey to the audition. It gives you a very real sense of what most of the country is like, once you get away from the big coastal cities.
All of them have a dream of being the next American Idol.
But to do that, you have to take the first step.
All it takes is an audition.
It’s Memorial Day – Monday, May 26
Next Monday is Memorial Day, traditionally the start of summer in the USA.
It also marks the time of year when prospects put off all future sales appointments until September.
This is a federal holiday observed(not celebrated) on the last Monday of May. This date has been set since 1971.
I say “observed” because the whole point is to remember our military service men and women who have died during military service for the United States of America.
It is Veterans Day in November that we celebrate living service members, past and present, in case you are keeping track.
Many states and cities lay claim to starting it, but generally speaking, it started as Decoration Day in the 1860s during the Civil War.
In 2000, Congress passed the National Moment of Remembrance Act. This asks all citizens to stop and remember these service members at 3:00 p.m. Or, more appropriately, 1500 hours.
My ask this week is as follows:
Survey your employees and learn if any of their family members died in service to their country.
Then, thank them for their family’s sacrifice.
Whether you are grilling, swimming, driving, or picnicking, please make a point of setting your phone to ping at 1500 hours on Monday. You can even ask Alexa, Siri, or Google; they will be happy to track your activity. They kind of do it already, anyway.
Enjoy the weekend while remembering why we have it.
One more thing… my point in the American Idol piece is that you have to take the first step to what it is you want to do, versus what you have to do. Many folks do not take that first step; it’s just more comfortable that way. Some folks are forced to take the first step, myself included (that story is for another day), some just take small steps, but many never take THE step. We become very comfortable in what we have, most likely a salaried job that supports a family, and that’s not a bad thing; most of us do that, also myself included.
It just takes faith in yourself.
