Wednesday, January 11, 2017

Relocation of Jobs Follows Invisible Hand Not Presidential Tweets

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The relocation of jobs to Mexico or overseas, a trend slowly reducing the contribution of goods-producing and manufacturing jobs to total nonfarm payroll employment, is a well-establish trend that dates back to the end of World War II (chart). Goods producing jobs that represented 43% that represent of total non-farm payroll jobs in 1945 has fallen to 13.5% in 2016. Manufacturing jobs have fallen from 37% to 8%. Smart money, a group that looks beyond headline grabbing numbers such as the unemployment rate or wage growth, recognizes that these trend worsen with each employment report.

The sharp decline in the production of goods reflects a mixture of political and nonpolitical trends such as the rise in socialism (increased regulations and taxation), increasing workforce productivity, shifting trends in higher education, and significant technological advances slowly displacing the need for human labor.

The slow transition of the labor force from higher paying skilled jobs - the design and construction of building commercial and residential equipment to lower paying unskilled jobs - flipping burgers and greeting customers at big box stores will continue until capital flows (investment trends) change. These trends that do not follow Presidential tweets are driven by the invisible hand.

Seasoned traders either learn this lesson early, or they pay the price later when beliefs are smashed by the invisible hand.

Chart


Headline: Donald Trump can bully auto makers all he wants, but he can’t repeal the laws of economics

Donald Trump meant what he said during the campaign about trying to keeping American jobs in America.

As the opening salvo in his “Make America Great Again” playbook, the tweeter-in-chief has been shaming American companies that offshore high-paying American jobs to factories in other countries, with some apparent minor successes that will do more to burnish Trump’s reputation as a dealmaker than they will to help working Americans struggling to make ends meet.


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Market-driven money flow, trend, and intermarket analysis is provided by an Insights key.