👋🏻 Hello friends,
Greetings from Saratoga Springs! Take it easy and enjoy this week's leisurely Sunday Drive around the internet.
It's the zenith of summer vacation season so I just couldn't resist. The Vibe of the Week is Ice Cream Man, the final song on Van Halen's debut album. Please forgive the somewhat risqué lyrics, but after all, it was recorded in 1978.
Quote of the Week
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest of them have to pee on the electric fence for themselves."
- Will Rogers
Chart of the Week
💭 Thought Bubble
This section of the Sunday Drive is intended to serve up seedling ideas which may ultimately grow into more fully developed pieces to be published on NewLanternAdvisors.com. I'd be most grateful if you'd share any thoughts, suggestions or feedback.
I think that more and more investors, economists, and policy makers are beginning to understand and accept that we have another supply shock to work through - and it's a big one.
The 1970's stagflation, caused largely by the OPEC created oil supply shock, was effectively artificial in terms of its creation. A combination of aggressive monetary policy courtesy of the Paul Volker-led Federal Reserve, and an increase in the oil supply resulting from more domestic drilling led the US economy to get back on a growth trajectory with a disinflationary backdrop after just a few years.
I contend that this will not be the case with today's stagflationary environment. The current labor supply shock is largely demographically driven and has been a long time in the making. Covid wasn't the cause, but certainly served as an accelerant.
Retirement related declines in the labor force became noteworthy beginning around 2012 when the first of the baby boomers started turning 65 at a rate of approximately 10,000 per day in the US. The pace of boomers turning 65 has picked up over the last decade, now pacing at roughly 12,000 per day.
As you can see from the Chart of the Week, we are currently at the peak of boomers turning 65 and that level will persist for a number of years before starting to decline around the end of decade.
That's a lot of folks leaving the workforce. In my opinion, we as a society must deal with this dynamic head on, by aggressively investing in productivity enhancing technology as well as policies that will encourage aging workers to remain in the labor force longer.
Until then, I expect to see continued upward pressure on labor costs as the workforce continues to age and to age-out.
🤔 5 reasons Americans are retiring later in life - Americans are now retiring three or four years later in life than they did three decades ago, puzzling researchers and reversing a trend that had lasted more than a century.
😡 Age Discrimination in Workplace at Decade High - Older job seekers hoping for a welcome mat in this record-high jobs market are encountering more age barriers instead, according to an AARP Foundation survey.
🤓 The State of Matching Efficiency - If you'd like to engage your inner micro-economics nerd, this article if for you. Firms are stuck with a pre-COVID capital to labor ratio, but they have a post-COVID labor force to man the machines available. Firms are desperately trying to right-size their labor force, but they cannot all do so because there simply is not the labor supply.
🏀 Bill Russell's No. 6 to be retired across NBA - Before there was Tom Brady, there was Bill Russell. The NBA will honor the legacy of the Boston Celtics legend by retiring his No. 6 jersey for all 30 teams, the league and the National Basketball Players Association announced. Russell becomes the first player in NBA history to have his jersey retired league-wide.
I hope you have a relaxing weekend and a great week ahead. See you next Sunday...
If you enjoy the Sunday Drive, I'd be honored if you'd share it with others.
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