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The black line shows the annual average of the industrial mining production index (left scale). Note that it recently set a new record.

The blue line shows the annual average gold price adjusted by the consumer price index (right scale, December 2013 dollars). It grew exponentially starting in 2000 and very nearly set a new record. It has recently backed off though.

Let's zoom in a bit.


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September 23, 2007
Productivity Miracle


May 22, 2013
20 Insane Bitcoin Mining Rigs


Mining rocks to hoard? Mining bitcoins to hoard? It's all good if it adds to GDP! Right?

This is not investment advice. As always, just opinions.

And on that note, here are a few bonus opinions. I find it insane that we needlessly waste any of the world's resources to mine bitcoins. Is the world really going to be a better place because of it? Is this the kind of productivity miracle that will lead to future prosperity? It's shameful that bitcoins require any energy at all to create. Good grief. At the very least, they could have made a computer game out of it that's fun to play. But no, it's just automated computers (in ever greater numbers) mining virtual bitcoins (in dwindling numbers). Put another way, it requires ever increasing streams of energy to generate fewer and fewer bitcoins. What a frickin' long-term plan of wasted effort that is (not necessarily from a miner's perspective, but for society in general).

At least gold gives you something shiny to fondle once the mining's complete. I say this as one who owned gold from 2004 to 2006. It treated me very well over that period. No complaints. No desire to buy it again though (at these prices anyway). Your opinions may vary of course.

Source Data:
St. Louis Fed: Custom Chart (Long-Term)
St. Louis Fed: Custom Chart (Short-Term)

Now that the consumer price index for 2013 is complete, let's look at the long-term trend of the annual percent change in the average annual CPI.


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Ten Questions for 2014

1. How many decades will we be stuck in ZIRP?
2. Will it be as many decades as Japan?
3. Why is the Fed tapering?
4. When will the Fed ramp up QE again?
5. How much more poning can the hyperinflationists take?
6. Why am I so willing to hold long-term TIPS to maturity?
7. Where have all the "bond vigilantes" gone?
8. What are they doing with all their profits?
9. Sears? (It's a rhetorical question.)
10. Why must I use the sarcasm label in nearly every post?

Source Data:
St. Louis Fed: Custom Chart

The following chart compares the growth of nonstore retailer sales vs. overall retail sales (in black and red) to the growth of nonstore retailer employment vs. overall retail employment (in blue and orange).


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Nonstore retailers are growing their sales exponentially relative to overall retail sales but nonstore employment is decaying exponentially relative to overall retail employment. It doesn't take a rocket scientist to understand the stress that's placing on brick and mortars over the long-term (and the jobs that go with them).

I believe with every fiber of my being that retail employment of the future is going the way of farming employment and manufacturing employment. It won't stop there though. Coming soon to a profession near you!

September 13, 2013
Half of all U.S. jobs will be automated, but what opportunities will be created?


I'm thinking that the answer isn't extreme student loan debt. That's just a hunch though.

Terminator 3: Rise of the Machines (2003)


Was Kate Brewster a Sears employee? Sigh.

This is not investment advice.

Source Data:
St. Louis Fed: Custom Chart

The following chart shows the annual job growth using the quarterly average of the equally weighted government establishment and household employment surveys. I'm using the quarterly average to filter the noise out a bit.


Click to enlarge.

Perhaps an optimist can find something good in that chart, but I certainly can't (at least over the long-term and/or full business cycle anyway).

May 18, 2012
Recession Prediction



For what it is worth, the odds of me turning optimistic any time soon are somewhere between slim and none. Just so you know, slim left town. Put another way, I see little reason to change my long-standing prediction.

This is not investment advice. Predicting the future is a fool's game. That said, it might be even more foolish to ignore the risks entirely. It's certainly easy and popular these days though. I'll give you that.

January 6, 2014
Hussman Funds: Confidence Abounds

Hey, what do you know? No sarcasm this time, unless sheer unadulterated long-term employment chart terror counts. I don't think it does but it is certainly open for debate.

See Also:
The Overleveraged Cone of Shame

Source Data:
St. Louis Fed: Custom Chart

Click to enlarge.

As of November of 2013, 3.28% of our population works in the food services and drinking places industry. That's a new record. Can't ever have too many highly compensated restaurant workers in this brave new world!

As clearly seen in the chart (red trend line), it will only grow exponentially higher from here. Just look at that 0.990 correlation!

What's that blue line you say? Oh, that's an old trend that you need not concern yourself with all that much. With a lower correlation of just 0.988 it was surely doomed to fail at some point. And what a pathetic growth rate it had. That 1.78% annual growth rate pales in comparison to the new and improved 2.42%.

And to think, all we needed to get here was a Great Recession to speed things along. It's only a matter of time before every man, woman, and child in America will be flipping burgers for a living! Hurray! What could possibly go wrong?

Motherboard: Meet the Robot That Makes 360 Gourmet Burgers Per Hour


Source Data:
St. Louis Fed: Custom Chart

The following chart shows construction and manufacturing payrolls as a fraction of nonfarm payrolls.


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That sure looks like a fish ladder to me. The only difference is that the fish aren't supposed to be heading downstream. Down 19% and temporarily holding!

Fish Ladder


Oh oh. Sounds like a faulty dam. What went wrong?


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Craziest monetary god dam design ever! That's what! Who in their right mind would put the monetary floodgate below the fish ladder?



I said in the past that some posts are mostly for the puns. How could I pass up this post's title once it got stuck in my head? Hahaha! Sigh. I sigh because the data is ugly, especially over the long-term. Gallows humor can't fix that.

See Also:
The "Recovery"

Source Data:
St. Louis Fed: Custom Chart
St. Louis Fed: Monetary Base

The following chart shows goods-producing employment divided by service-providing employment.


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Poof.

Let's look at the bigger picture and see where we are.


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If transitioning from a goods-producing economy to a service-providing economy is such a good thing, then why does the bulk of the transitioning happen during recessions?

Source Data:
St. Louis Fed: Custom Chart #1
St. Louis Fed: Custom Chart #2

The following chart shows the natural log of real disposable personal income per capita. Once again, constant exponential growth shows up as a straight line when using natural logs.


Click to enlarge.

There are at least a few things worth considering.

1. Due to rising income inequality, the typical person isn't doing nearly as well as this chart would suggest.

2. As automation takes on more and more human work, how will billions of people find employment? How much of this is seen in the chart?

3. The trend is definitely not a straight line. It is curving downwards with a very high correlation of 0.993. If the current trend continues, then we'll peak in 2058 (45 years from now). That's a big if. If I'm alive to see it, I'll be 94 years old. That's another big if.

4. It is mathematically impossible for this upside down parabolic trend to continue forever. There must be a failure at some point. If nothing else, I don't think any rational person would expect real disposable personal income per capita to ever fall below zero. That would happen in 2164. This would certainly not be the first failure we've seen in recent years. We live in the era of long-term trend failures.

5. Any failure would probably be to the downside, since that is the direction the data is being pulled (much like a camel's back when more and more weight is placed upon it).

6. Contrary to some, I therefore definitely believe that the long-term future is not so bright that I gotta wear shades.

“I believe in making the world safe for our children, but not our children's children, because I don't think children should be having sex.” - Jack Handey

Japan (our partner in ZIRP crime) must love Jack Handey quotes.

December 23, 2013
Japan’s Diaper Shift and Global Population Trends


For what it is worth, I'm very much a believer in the theory. In some ways, we're like locusts and the lowest hanging fruit has already been eaten (USA prosperity analogy). I know it sounds grim, but that's what I believe. The good news is that I'm thankful every day that I was born where and when I was.

As seen in the chart, I'm not at all convinced that our children's children will be quite as thankful. It isn't that I think they will be unhappy being born in America. Far from it. I simply question the timing. It's not like I would tell them to move to China. Let's just put it that way.

Source Data:
St. Louis Fed: Custom Chart