Quote:
Originally Posted by tgrundke
Inflation was kept at bay largely (though not exclusively) through the offshoring of most American manufacturing to China and Mexico over the last 40 years. It's the primary reason we can buy 65" TVs for $500.
The cost of labor, shipping, and doing business in general in Asia has increased in recent years. Same goes for labor costs in Mexico. As a result, the benefits of this offshoring have been decreasing for some time, but they're still there.
However, since COVID, industry realized that long supply chain/just in time operations have some major achilles' heels and started to re-shore that manufacturing to the US and Mexico. Intel's big investment in Ohio being a great example of this.
It's inflationary because it will be more expensive to manufacture in the US than Asia, it's creating demand for construction jobs, manufacturing jobs, mainland transportation jobs, land, materials, etc.
Boomers retiring are taking a huge chunk of mature workers out of the economy. The current 22-40 year bracket of workers have very different views on work and skew heavily toward white collar and not blue collar jobs. Hence shortages of skilled laborers, especially in the woodworking, plumbing, electric trades. Want to know why your home renovation is a solid 50% more expensive now than in 2018-2019? Because they can charge it, especially if they're quality, reliable, and get the job done in a timely manner.
Deficit spending: we haven't even talked about the big enchilada which is government spending:
On top of all this, there are some estimates of between $3.5 - $5 trillion in private equity and family office money sitting on the sidelines, available to be deployed.
There's still a lot of money floating around out there, and a lot of factors that are going to conspire to keep rates higher for longer. |
Retirements - doesn’t this create opportunities for younger workers therefore reduce the risk of higher unemployment?
Are you a boomer?
Reshoring - same as above, doesn’t this bolster employment demand and increase wages so people can pay for living expenses? Yes it has a relationship to inflation but wouldn’t you rather have high labor demand vs low labor demand?
Do you agree the Federal debt is a red herring and is meaningless?
Money on the sidelines is another red herring, do you agree?