Inflation, Wages, Florida’s Stickiness & More Freedom – Top 3 Takeaways – September 14th, 2023
- But wait there’s more...as in inflation. You know what inflation was like in August. You lived it. You paid daily for it. You’ve been there and done that. That’s why it’s likely no surprise to hear that inflation rose during the month from an annualized rate of 3.2% to an annualized rate of 3.7%. But the people who were surprised were the ones who forecast this stuff for a living. Go figure. Wall Street estimates across the board called for lower inflation than what the monthly Consumer Price Index Report showed. The increase in monthly inflation marks the second consecutive month we’ve seen a reacceleration in inflation, and the monthly increase in inflation was the highest we’ve seen over the past year as well. Here we sit over two years into 40-year+ high inflation rates which have triggered the highest interest rates in 23 years and what’s likely is that they’re headed higher from here (though the wiz-bang economists are betting that the Fed will skip raising interest rates next week but that they may raise again in November). But while inflation has reaccelerated, what’s in our paychecks hasn’t. In the ultimate one-two punch in the wallet last month the Bureau of Labor Statistics also released their Real Earnings Summary yesterday. Now the same principles apply. You know what you earned in August. You’ve been there, you’ve worked for that, and you’ve been paid for it. And if you’re the average person you had less to show for your work last month. The lead line from the BLS’ report says this: Real average hourly earnings for all employees decreased 0.5 percent from July to August. Yikes. What that means is that in inflation adjusted dollars the average American fell behind by the equivalent of 6% annualized last month. So not only has inflation been accelerating, but it’s also been happening while wages have been decelerating. It was just in Monday’s Q&A that I highlighted this: President Biden’s net inflation rate is 18% through the first two and a half years of his presidency. Meaning you must spend $1.18 to buy today what a dollar bought on January 20th of 2021. That would mean the average American who is working would need to be making 18% more than they were the day he took office just to have broken even in his economy. Well, that was as of Monday. It’s somewhat considerably worse now – especially if what happened last month were to become a trend. Higher inflation, lower earnings= Bidenomics. Any questions? Elections have consequences. We literally pay for them daily.
- Born and raised. Times have changed in Florida in so many ways. It was not all that long ago that just about the one thing we all had in common is that none of us were from around here originally. That was due to the combination of Florida’s appeal to people of a certain age, in addition to the inability for most born Floridians to remain in the state if they wanted a decent career after having been raised here. That’s no longer the case. Over the past decade Florida’s economy not only boomed, but it matured. Florida’s maturation from an economy wholly reliant on tourism, agriculture and housing two decades ago into the 13th largest economy in the world most recently, has been remarkable. Florida’s rapid success and development into one of the world’s top economies wouldn’t have been possible without good policies setting the stage for business success in our state, and it wouldn’t have happened without entrepreneurs taking advantage of the opportunities within our state. Florida’s economy now generates $1.23 trillion in economic activity annually. And with a greater than $1 trillion economy, comes lots of career opportunity. Over the past decade Florida increased manufacturing output by more than any other state growing by 65%. As the Florida Chamber of Commerce noted, there are now over 360,000 Floridians working in manufacturing. Florida added 120,000 jobs within the technology space over the past decade, for a growth rate of 26%. Currently 8% of Florida’s economy is within the technology sector. Quoting analytics firm CompTIA: Technology powered job growth and economic gains in the past decade in Florida and across the county while delivering countless benefits in how we work, communicate, create and share. The average full-time income in Florida for the approximately 450,000 Floridians working in technology is over $75,000. Those are just a couple of examples of how Florida has matured and also how we’ve become so sticky...in a good way. New Census data shows that Florida’s gone from being one of the least “sticky” states a few decades ago to one of the “stickiest” in the country today. The term sticky is used to define the percentage of residents in a state who were born in the state. Florida is currently the 6th stickiest state in the country with nearly 73% of all born Floridians still living in the state today. Only Texas (at 82%), North Carolina, Georgia, California and Utah are stickier. What you’ll notice with the top five states ahead of Florida, is that they’re all states with diverse economies which provide numerous career opportunities. A couple of decades ago when I moved to South Florida one of the saddest things, I would commonly see...families raising their children here, sending their children to college here, but then have their college educated kids leave here to pursue a career that wasn’t available for them in Florida. That’s no longer the case and it shows in just how sticky Florida has become.
- Less is more. I can make this complicated or I can keep it simple. Less government equals more freedom. This is true in the sense of overall governance, but it’s also true in the context of economic freedom. The less government that we have to pay for, the more of our money that we retain to use as we see fit as opposed to bureaucracies. These are not complicated concepts. And of course having less government, and thus more freedom economically and otherwise, means fewer people working within it. How does a reduction in employment in the U.S. Department of Education, the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Internal Revenue Service and the Commerce Department sound to you? If it pleases you, there’s a presidential plan for this. Yesterday Vivek Ramaswamy unveiled his plan for this. His plan includes the elimination of 1 million federal employees across those agencies (and others) within his first year as president with the elimination of nearly a million more by the end of four. All-in-all the plan is for a 75% reduction in the federal bureaucracy and administrative state. You can take him or leave him as a candidate for president. But something you can take to the bank, in addition to more of your money if that plan ever happened, is that less of the federal bureaucracy means more freedom for us. And that’s a great thing that’s been under threat for far too long with an ever-growing federal administrative state.