“Where should a poor peasant go …”

September 28 – October 4, 2024

Big news. This is the end of the huge strike of longshore workers on the US East Coast and political recognition of the scale of inflation in the US. In the last days before the strike (it began on October 1), news about it overshadowed the pre-election news. According to experts, the losses would have been about 5 billion dollars a day. If it had continued for a month, the consequences would have taken two years to clear up, if two months – three years.

The main demand was to raise wages, since they had not been raised for 6 years. And the scale of the increase was 75%. At the same time, it was understood that there would be no increase for the next 6 years either. Thus, it was assumed that over 12 years, inflation would be about 75% or slightly more than 6% per year.

The bottom line is this: The strike at the ports is suspended, the ILA has agreed to a 62% wage increase. The final deal will be concluded within 90 days, and the contract will be for the next 6 years.

The ILA leadership played the election period very well to get the maximum benefit for themselves, but with this agreement, Big Business officially confirmed that real inflation in recent years has been and will be (on average) more than 5% per year. The other unions will draw their own conclusions: https://www.youtube.com/watch?v=5NE–SExITI .

5% per year is twice as much as the Fed plans. Okay, given the high official inflation of 2021-22, something can be taken into account there, but then the compensation for 2020 will also need to be taken into account. So we can say with confidence that it is recognized at the public political level that real inflation will be much higher than the Fed’s wishes. Although, of course, much lower than reality, even in the interpretation of Larry Summers ( https://fondmx.pro/en/weekly-wrap/no-signs-of-improvement-found/ ).

Macroeconomics. China’s composite official PMI (an expert index of the state of the industry; its value below 50 means stagnation and decline) remains in the stagnation zone (50.4):

Which is also confirmed by independent researchers (50.3):

Australia manufacturing PMI at record low (46.7), Covid-neutral:

Turkey has a 6-year low (44.3):

In Singapore – 12-year-old (48.3):

Perennial lows in Mexico (47.3):

In Germany, the annual bottom and the level of depression (40.6):

The US is in recession according to both survey versions (47.3 and 47.2):

 

The Texas Fed’s regional manufacturing index has been in the red for a record 29 straight months:

The service sector in the same region also has a record 28 months:

France’s construction PMI is at a nearly 10-year low and in severe depression territory (37.9):

My favorite and not very adjustable indicator, the average length of the workweek in the US, has fallen to 34.2 hours. If we exclude the Covid dip, the last time it was lower was in June 2010:

Although, it has already fallen to the same level twice this year.

Main conclusions. Negative economic indicators cause various nervous reactions in entrepreneurs. Which manifest themselves in the most unexpected places. For example, in the state of the Shanghai Stock Exchange. Although it was a holiday week in China, a single trading day was enough for it to soar by another 8.1%; as a result, in a couple of weeks, this indicator jumped from multi-year lows to a one-and-a-half-year high:

If anyone thinks this is good, they are mistaken, especially given the performance of the Chinese economy noted in the last two reviews. Yes, of course, the easing of monetary policy is pleasant for stock speculators, but it would be good to think about it. Why such happiness all of a sudden.

Let’s also note two more circumstances. The first is the rise in gold prices:

When it grows so thoroughly, it is a sure sign of an extremely difficult economic situation.

And the second, and here we will not overload the review with graphs, although they are there — is the refinancing of the American debt. There is no more free money in the world economy. And how to plug the holes is a big question. It is necessary either to sharply reduce the budget deficit, that is, to reduce the standard of living of the population. It is impossible, including for the reasons mentioned in the first section of the Review. Or — to start printing money. That is, to launch dollar inflation …

“Where should a poor peasant go …”

But still, this is not a reason to be upset about the weekend, but only an incentive to get ready for a new work week! Which is what we wish for you, our readers!