The Sunday Drive - 02/04/2024 Edition [#96]
Musings and Meanderings of a Financial Provocateur
👋🏼 Hello friends,
Let's enjoy a leisurely Sunday Drive around the internet.
🎶 Vibin'
This week I’m vibin’ to Don Henley’s Not Enough Love in the World from his 1984 album, Building the Perfect Beast. Given the turmoil and sense of unease both here in America and around the globe, I find it quite hard to disagree with the words in the song’s title.
💭 Quote of the Week
“I have always felt, since the beginning, that there was a possibility, because of the unusual situation, that the economy could cool off in a way that enabled inflation to come down without the kind of large job losses that have often been associated with high inflation and tightening cycles. So far, that’s what we’re seeing”
– Jerome Powell, Chair of the Federal Reserve
Bonus Quote of the Week
”Don’t get cocky, JPow.” - Me
📈 Chart of the Week
The Chart of the Week helps put historical equity market volatility in perspective.
I found it quite interesting and a little surprising to see that the S&P 500 spends about 60% of the time within 10% of its all time high.
🚙 Interesting Drive-By's
This week we have articles on productivity, GDP measurement, spending, and the well-lived life:
📈 Has the Great Upshift Arrived? - from James Pethokoukis
Let’s begin with a caveat: Yes, labor productivity data are notoriously bouncy. They’re a derivative of other economic numbers, themselves subject to revision, and especially jumpy during times of economic turbulence. Caution is warranted.
But, but, but … the US Bureau of Labor Statistics today released the 2023 fourth-quarter result for nonfarm business sector productivity, and it was pretty good — again. Productivity rose by a better-than-expected 3.2 percent during the final quarter of last year and was up by 2.7 percent on a year-ago basis. Even better, productivity growth has now increased at a rapid pace for three straight quarters, including 4.9 percent in Q3 and 3.6 percent in Q2.
Given both the advances in artificial intelligence/machine learning, which emerged before ChatGPT in 2022, and similarly strong productivity numbers in 2019, the last pre-pandemic year, it’s certainly worth contemplating whether we’re seeing the start of a (hopefully sustained) period of elevated productivity growth. Which would be totally awesome for several reasons.
For starters — and this is the thing that’s top of mind for most people, including Wall Street — strong productivity growth has contributed to a “Goldilocks” scenario where inflation has declined even as the economy has continued to grow. [link]
💡 The GDP Indicator - from Arnold Kling
What is GDP supposed to measure? I think of it as a measure of economic activity, meaning goods and services bought in the market.
If I pay you to mow my lawn, your labor counts in GDP. If I mow my own lawn, my labor does not count in GDP. That might seem wrong, but I believe it is exactly right. I think of economic activity as specialization and trade. We exploit comparative advantage and the division of labor. The more we outsource, the better off we are.
You can say that when I mow my own lawn that should count as production. But I don’t want GDP to measure production. I want it to measure economic activity, which is the exchange of goods and services in the market.
People who think in terms of production complain that housework belongs in GDP. But I say that if a woman (or a man) engages in housework, that is economic malfunctioning. She should be able to outsource housework to machinery and/or someone she employs.
From a long-term perspective, looking at the economy as a whole, production and outsourcing are the same thing. The only way you can have a modern economy is with a lot of specialization and trade. If you had to limit yourself to consuming only what you produce for yourself, you would be in a primitive state.
Another way we use GDP is as an indicator of consumer well-being. Again, that might be true from a long-term perspective. But a lot of stuff counts as GDP that does not contribute to well-being, and there is a lot of stuff that contributes to well-being that does not count as GDP. I repeat: GDP is just a measure of economic activity. [link]
💰 A Few Thoughts on Spending Money - from Morgan Housel
There are two ways to use money. One is as a tool to live a better life. The other is as a yardstick of status to measure yourself against others. Many people aspire for the former but get caught up chasing the latter.
Money is a tool you can use. But if you’re not careful, it will use you. Sometimes the stuff you spend money on has so much influence over your autonomy and sanity that it’s not clear whether you own things or the things own you.
Everyone can spend money in a way that will make them happier, but there is no universal formula on how to do it. The nice stuff that makes me happy might seem crazy to you, and vice versa. Like many things in finance, debates over what kind of lifestyle you should live are often just people with different personalities talking over each other.
How you spend money can be a reflection of what you’ve experienced in life. To someone who grew up snubbed by poverty, owning a fancy car might be the ultimate symbol of what you’ve overcome. To an old-money family, it might be the ultimate symbol of ego and insecurity. People don’t just spend money on things they find fun or useful. Their decisions often reflect the psychological wounds of their life experiences.
Spending money can buy happiness, but it’s often an indirect path. The big, nice house might make you happier, but mostly because it makes it easier to spend time with friends and family, and the friends and family are actually what are making you happy.
Unspent money buys something intangible but valuable: freedom, independence, autonomy, and control over your time. Every dollar of savings buys a claim check on the future.
[link]
🤔 Tasting Joie de Vivre - from Tania Carriere
Life is good, yet a powerful yearning for days that feel a little lighter, a little more at ease has brought me on retreat in Provence. I’m tired of days measured by the relentless pursuit of productivity and achievements. What if the metric for a "well-lived life" was defined by something other than my salary, my full agenda, my sense of accomplishment? Could it include unhurried moments of connection, unforeseen delights, and living in tune with the natural rhythms around me? I’m here to find out.
And so do 12 of my newest friends.
It takes until the fourth morning for me to break free from my ingrained productivity script. Croissant crumbs are scattered everywhere as I sit captivated by the unhurried banter weaving through our petit dejeuner group. When a serene pause settles, like a languid stretch of a cat in the sun, we sit in a collective quietude until someone nudges the conversation forward. No rush.
This moment starkly contrasts my usual routine, where the to-do list holds dominion and coffee is a hurried companion. The extent of my depletion and my need for this retreat becomes evident—the ceaseless whirlwind of thoughts, the unrelenting pace, the endless plate spinning have taken their toll. [link]
👋🏼 Parting Thought
If you have any cool articles or ideas that might be interesting for future Sunday Drive-by's, please send them along or tweet 'em (X ‘em?) at me.
Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed.
I hope you have a relaxing weekend and a great week ahead. See you next Sunday...
Your faithful financial provocateur,
-Mike
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