We are on the cusp (What is a cusp, by the way? Who cares? We are on it.). The point is that economic force is at work and that means momentum. Much like what is happening in Egypt, the same rules apply to economic momentum. Once the force reaches a certain point, it is unstoppable. Momentum takes over and that is that …
MANUFACTURERS GROWING: Factories reported a sharp increase in orders from the United States and overseas last month, pushing a private group’s index of manufacturing activity to its highest level since May 2004. It was the 18th straight month of growth for the sector.
When I said cusp, I was partially referring to the fact that the above is happening, but the force of the manufacturing increase has yet to reach into the depths of the unemployed. Two key reasons exist for this at this moment. The first is the excerpt below.
CONSTRUCTION NOT: Separately, construction spending fell 2.5 percent in December, according to a government report. It dropped 10.1 percent in 2010 to its lowest level in a decade.
No one really talks much about this anymore, but construction spending has long been an integral part of our employment base here in America. In the “old” days, if you wanted to know what the economy was doing, you looked to housing starts along with manufacturing data. Things have not changed all that much. We still rely on construction spending for a chunk of our employment base. Construction spending is directly tied to the housing market (and state government spending), which is directly tied to consumer spending (and tax revenues).
The second key reason for our employment problem is that we have lost millions of traditional manufacturing jobs in the last ten years (steel, appliances, cars, etc.), and tens of millions in the last thirty. Those jobs are gone and the “new” and developing employment base is in technology, and as we all know, the tech sector has yet to turn dollars into people. In this recovery so far, the money tech has been putting into the economy comes from rebuilding technological infrastructure. Yes, that helps create jobs, but only to a small degree. When companies decide they are too lean, they will begin hiring, and the jobs will be high paying, high-skilled jobs. This is the cusp, and on the other side is the unstoppable force that is coming.
NEW YORK (Reuters) – U.S. private employers added more jobs than expected in January, the 12th consecutive month that companies took on staff, adding to hopes that the weak American labor market is slowly improving.
As investors and traders, we need to understand this reality. We need to understand this so we can be in the right investment/trade, at the right time. We need to understand this so we can see through the smoke of uncertainty and negativity. Clarity is what we need to make the most of what opportunities come our way.
Trade in the day – Invest in your life
