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The following chart shows the consumer price index for services divided by the consumer price index for nondurables.


Click to enlarge.

Goodbye service economy tailwinds.
Hello service economy headwinds.

Perhaps Bernanke can give our service economy some inflation but he sure can't seem to target where it goes. As seen in the chart, we eventually managed to get back to the trend line in the aftermath of the 1970s. We're sure making feeble progress these days though. Fantastic. Get out the party hats.

In fact, I am not confident that we will ever return to the trend line. This is yet another epic exponential growth failure. Using the power of future hindsight, we might even consider ourselves fortunate if we can maintain present levels. Sigh.

Why is this bad? When nondurables rise in price faster than services then this service economy's many, many service employees get the short end of the stick (even less stick than they currently think they are getting).

Durable good

Examples of nondurable goods include fast moving consumer goods such as cosmetics and cleaning products, food, fuel, beer, cigarettes, medication, office supplies, packaging and containers, paper and paper products, personal products, rubber, plastics, textiles, clothing and footwear.

While durable goods can usually be rented as well as bought, nondurable goods generally are not rented.

Nondurables are generally not rented yet? Say what? I sense a business opportunity!

May 4, 2012
Renting Prosperity


Rent the good life! Premium Gasoline! Beluga Caviar! Gurkha Black Dragons! Samuel Adams' Utopias! Lucentis! The Nondurable Rental Corporation of America will fulfill all your nondurable rental dreams and then some with low, low payments amortized over your remaining expected lifespan (with only modest surcharges of course)!

Have I mentioned lately that I'm a permabear? This is not investment advice. It's a business opportunity! Tap those severely tapped consumers before they are entirely tapped-out again! What could possibly go wrong? Genius!

In the epic battle between health care services, college education services, and nondurable fuel prices, which pain will ultimately reign supreme? Stay tuned! It's sure to be a hoot!

Source Data:
St. Louis Fed: Custom Chart

Click to enlarge.

1. Although we cannot see it in all its grandeur, we can infer that there was a failure during the dotcom bust. Note the decline heading into 2002.

2. We can clearly see the failure during the housing bust. The data stopped following the blue line.

3. We now have something new. The data no longer follows the red line and it seems extremely unlikely that it will return to it. Those expecting a surge in growth from here may soon be very disappointed.

I'm repeatedly told that there will be no unhappy ending this time though. So we've got that going for us, which is nice.

Quits and openings are only part of the picture of course. I'm not looking at hires or other separations. I think quits offer a fairly interesting take on how optimistic workers can be. I'd say they are way too optimistic right now. That's especially true of recent retirees who became convinced that recent stock market performance can be extrapolated well into the distant future. Good luck on that theory!

This is not investment advice.

Source Data:
St. Louis Fed: Custom Chart

The following chart shows the producer price index for intermediate foods and feeds divided by the index of the average hourly earnings of private production and nonsupervisory employees. The low point was achieved in May of 2002 (represented as 1.0 on the chart).


Click to enlarge.

Stick a fork in it. The old trend's over. Welcome to the new trend. Who doesn't like higher asset prices?

Not all of these price increases are making it down to the consumer of course. Value is "added" by heavily processing the food, placing it in cheap boxes and cans, slapping a well known brand name in colorful print on the outside, and then marking up the price. We may not have infinite global food supplies well into the distant future, but at least we have an ample supply of presentation!

September 20, 2013
Our Chat With Jeremy Grantham


November 13, 2013
Experts: world's soil is at risk


What would Carl Spackler say though?
And I say, "Hey, Lama, hey, how about a little something, you know, for the effort, you know." And he says, "Oh, uh, there won't be any money, but when you die, on your deathbed, you will receive total consciousness." So I got that goin' for me, which is nice.

Not everything is inflating of course. Take Redux for example. Some miracle drugs are not all they are cracked up to be apparently.

Redux: The Miracle Weight-Loss Drug

I'm not trying to imply that the Fed's miracle drug won't work over the long run. No, sir. ZIRP is all but guaranteed to restore all lost prosperity and then some! Common knowledge! Everyone knows it! Trapped in ZIRP like the Japanese isn't a long-term curse, it's a long-term blessing! Genius!

See Also:
The Fed's Wealth Effect (Musical Tributes)

Source Data:
St. Louis Fed: Custom Chart

Click to enlarge.

The low points are following a linear trend, implying that growth is slowing over time. If it took 30 years for real net worth per capita to roughly double from 1982 to 2012, then it will take 60 years for it to roughly double again. That's assuming we even should extrapolate past history into the distant future of course. I for one am skeptical, especially now that we've entered a "QE Trap".


The high points are following an exponential trend, implying that the bubbles are growing exponentially over time (relative to the linear base line). I expect an epic failure that even mainstream economists can see coming if we get anywhere near that blue trend line again. Note that the data only goes through June of 2013. The stock market's up another 7% since then. To the moon, Alice!

This chart is more disturbing if one factors in that the federal, state, and local debts are not included in the household net worth as calculated by our government. That's not quite true. We get credit for owning them as households, just not as owing them. Win win. Perhaps we'll someday find an alien species that we can bill instead of American households. That must be the thinking.

If my net worth is $10,000 and I loan it all to the government then the government would claim my net worth is still $10,000. If the government then spends the $10,000 to keep the government running then my net worth is still $10,000. I'd only be in big trouble if the government actually taxed me $10,000 to pay me off. But why do that? Stick with what works! Deficit spending for the win!

The chart is even more disturbing if one factors in rising wealth inequality. I doubt that real median net worth would make such an optimistic looking chart. That's just my way of saying that there are parts of this economy that were financially subprime heading into the Great Recession and they remain financially subprime. In fact, there were 34% more households on SNAP in July 2013 than were on SNAP in October 2009. How's that for a recovery!

And lastly, who would have thought that the Fed could make the average household so much richer simply by helping us earn even less interest on our savings. Genius! And sustainable? Well, who can really say for sure?

Sarcasm abounds. To the moon! Alien species! Government running! Optimistic! Sustainable! Beware, it's a bungle out there. Seriously.

Source Data:
St. Louis Fed: Custom Chart

Click to enlarge.



Source Data:
St. Louis Fed: Custom Chart

The following chart shows the 12-month moving average of annualized production and nonsupervisory collection agency employee minutes worked per capita.


Click to enlarge.

Optimists might point to this chart as proof that a new age of prosperity is upon us. Collection agencies are no longer needed! Hurray!

Pessimists might point to this chart as yet another "sure thing" employment growth story that ended with an exponential trend failure.

See Also:
Idiom: Squeeze blood out of a turnip

Source Data:
BLS: Employment
St. Louis Fed: Population

The following chart shows the 12-month moving average of annualized production and nonsupervisory coal mining employee minutes worked per capita.


Click to enlarge.

We seem determined to restore the prosperity of the Roman Empire one year at a time. Coal mining jobs for the win!

Don't let the naysayers get you down with all their talk of newfangled automated processes and the rolling over of the 2nd order polynomial trend line in blue. Coal is where the jobs of the future will be. We'll mine it all by hand if need be, just to keep the employment reports looking good.

History of coal mining


The Fed would never allow this modern and financially innovative economy to fizzle yet again. You can take that to the bank. No, sir. Recessions are a thing of the distant past, much like the explosive growth in coal mining employment. Just gotta keep the faith!

Despair.com: Potential


See Also:
Sarcasm Disclaimer
Trend Line Disclaimer

Source Data:
BLS: Employment
St. Louis Fed: Population

The following chart shows production and nonsupervisory employee hours worked in long-distance general  freight trucking by hours worked in air transportation.


Click to enlarge.

Expectation:

Bald Eagle with Fish (Yathin S Krishnappa)


Realization:

Pygoscelis papua (Stan Shebs)


Source Data:
BLS: Employment