When I look at today's Producer Price Index, a few things strike me. There is a shift around November. Services demand is up & goods demand is down. This leads me back to the demographic message I've been pontificating about for ages.

As people age, their demand for goods declines. Why do I need a new car when I go less places? Why do I need a new washer and dryer when this works just fine? They shift their attention to services heavily because they've worked hard to get where they are and its about time they enjoy life.

This also fits with the Black Friday narrative that people spent more money on less goods, powered by Buy Now Pay Later Services. Demand would surely plummet as their aims turn to repayment of their debts instead of purchasing more. Furthermore, older people use BNPL services at a far lower rate than young people, who'd be focused on goods far more than services. This further exacerbates the drop off in goods demand because it demographically powered by those most mired in debts and beaten by inflation.

I've long wondered when the skewed economy might shift back toward young people & away from the elderly and it has to come back to their largest asset in the form of housing. Recently, the president has said he aims to improve housing affordability without damaging the costs of houses. This means he'll likely do nothing because any significant changes to new housing stock would result in the devaluation of homes.

As long as those assets remain the backbones of their finances, they'll remain in the source of economic power.

I say this to say, the economy is in much worse shape than I previously thought. There are many who'll laugh at me and say I am an idiot but I personally like to read the data. The demographic factor in the US Economy has been, for the past few years and underlying factor, but I believe that it has now become a driving factor. This is seen in the directional bifurcation of Service PPI & Goods PPI.

If the rising disposable incomes of the 55+ group drives inflation this'll become the driving force of the economic uncertainty at large. When you couple this with the debts and costs of living for young people, you begin to see the demographic deflation I wrote of years ago, however the extreme levels of it I cannot know until I see it.

The one factor I wrote of deeply which I can attest to today is Artificial Intelligence. The US Economy is growing aggressively however it is not leading to more jobs - this is known as jobless growth. The value of the economy is in capital growth not human productivity. Block just fired 40% of its staff for AI. Many other companies have followed this path and this will accelerate as AI becomes more capable of menial tasks. Furthermore, college graduates are no longer finding jobs fresh out of college.

Everyone has one question.
What does this mean for markets?

This means markets will perform terribly well as productivity per employee rises both because employee numbers are falling and productivity is remaining stable or rising. For less costs, shareholders can receive more return. This will fatten the shareholders and squeeze the laborers.

As uncertainty rises, so to shall the temptation to print money and devalue currency for whatever might arise - albeit war or corruption. This also forces shareholders to squeeze the market more to beat out the returns from sound assets like gold and to hedge the risks of an economic downturn as a result of declining consumption.

I expect to see automation rise with speed to attract demand for goods (better known as goods deflation) from those who can afford it. I expect to see services inflation continue because wage inflation continues above consumer inflation - this ought to be a perpetual phenomena for the foreseeable future. I do not expect wages to outpace net inflation since December 2019, but this loss of real wages will only force wage inflation demand over the next decade or so as a new equilibrium is established.

When I look at today's Producer Price Index, a few things strike me. There is a shift around November. Services demand is up & goods demand is down. This leads me back to the demographic message I've been pontificating about for ages.

As people age, their demand for goods declines. Why do I need a new car when I go less places? Why do I need a new washer and dryer when this works just fine? They shift their attention to services heavily because they've worked hard to get where they are and its about time they enjoy life.

This also fits with the Black Friday narrative that people spent more money on less goods, powered by Buy Now Pay Later Services. Demand would surely plummet as their aims turn to repayment of their debts instead of purchasing more. Furthermore, older people use BNPL services at a far lower rate than young people, who'd be focused on goods far more than services. This further exacerbates the drop off in goods demand because it demographically powered by those most mired in debts and beaten by inflation.

I've long wondered when the skewed economy might shift back toward young people & away from the elderly and it has to come back to their largest asset in the form of housing. Recently, the president has said he aims to improve housing affordability without damaging the costs of houses. This means he'll likely do nothing because any significant changes to new housing stock would result in the devaluation of homes.

As long as those assets remain the backbones of their finances, they'll remain in the source of economic power.

I say this to say, the economy is in much worse shape than I previously thought. There are many who'll laugh at me and say I am an idiot but I personally like to read the data. The demographic factor in the US Economy has been, for the past few years and underlying factor, but I believe that it has now become a driving factor. This is seen in the directional bifurcation of Service PPI & Goods PPI.

If the rising disposable incomes of the 55+ group drives inflation this'll become the driving force of the economic uncertainty at large. When you couple this with the debts and costs of living for young people, you begin to see the demographic deflation I wrote of years ago, however the extreme levels of it I cannot know until I see it.

The one factor I wrote of deeply which I can attest to today is Artificial Intelligence. The US Economy is growing aggressively however it is not leading to more jobs - this is known as jobless growth. The value of the economy is in capital growth not human productivity. Block just fired 40% of its staff for AI. Many other companies have followed this path and this will accelerate as AI becomes more capable of menial tasks. Furthermore, college graduates are no longer finding jobs fresh out of college.

Everyone has one question.
What does this mean for markets?

This means markets will perform terribly well as productivity per employee rises both because employee numbers are falling and productivity is remaining stable or rising. For less costs, shareholders can receive more return. This will fatten the shareholders and squeeze the laborers.

As uncertainty rises, so to shall the temptation to print money and devalue currency for whatever might arise - albeit war or corruption. This also forces shareholders to squeeze the market more to beat out the returns from sound assets like gold and to hedge the risks of an economic downturn as a result of declining consumption.

I expect to see automation rise with speed to attract demand for goods (better known as goods deflation) from those who can afford it. I expect to see services inflation continue because wage inflation continues above consumer inflation - this ought to be a perpetual phenomena for the foreseeable future. I do not expect wages to outpace net inflation since December 2019, but this loss of real wages will only force wage inflation demand over the next decade or so as a new equilibrium is established.