5.8% GDP Q3 2023 Projection Revision from Atlanta Federal Reserve

This is an interesting state of affairs as economic revisions are revised upward significantly. The Federal Reserve of Atlanta believes GDD will rise 5.8% up from the .3% originally projected by most economists in January and 1.8% in June of this year.

Its a possible influence of digital GDP, investments and realignment of the supply chain. However, further analysis will help to determine the key components. There are likely confounding factors not originally measured by current economic statistics.

It very well could be an opportunity, maybe single opportunity, to push the system to master the new electric business environment and a shift to more manufacturing. GDP Now Atlanta Federal Reserve

Innovation and human capital will likely be the name of the game. 

Questions might be...

1. Why?

2. What is going to happen to inflation?

3. What would a new Post Covid homeostasis look like?

4. What is going on currently in the world economy (environmental scan)?

Source GDP Now

Labor Day: Human Capital Powers Our Economic Engines!

Labor Day is a celebration of labor and the rights of workers. The Department of Labor offers some information on the  'History of Labor Day'. Yet it is more than a day off of work. It is an acknowledgement that labor is an important factor to national development. For far too long we invested in cheaper labor overseas in foreign markets versus enhancing our own human capital at home

(Its not about investing or not investing overseas as we are in a global interconnected world and some investments for materials, emerging technologies, international partnerships, supply chain, etc. are a must and cannot be avoided. Being strategic to ensure it enhances our national position means we get the most out of our efforts.)

We cannot neglect American labor in our American Digital Era Oriented Renaissance and should find ways to enhance it. A few economic snap shots from classical economic theory as it relates to labor.

"The real price of everything, what everything really costs to the man who wants to acquire it, is the toil and trouble of acquiring it. (Smith 1776, ch. 5, §2; )"

Principle: Product value is based in effort of obtainment (i.e. scarcity). By extension we might further make the connection to increased productivity, i.e. technology/innovation, can lead to cheaper, high demand products.

"The value of a commodity [. . .] depends on the relative quantity of labour which is necessary for its production, and not on the greater or less compensation which is paid for that labour. (Ricardo 1817, ch. 1, §1;)"

Principle: We can enhance labor to build better products and that paying workers more for learning and applying new skills and abilities may help in fostering human capital. If their creative and productive value rises so should their wages. (One of the potential advantages to a cluster is that it not only raises skill through advanced innovation but also wages from industry labor enhancements.)

A man grows rich by employing a multitude of manufacturers: he grows poor by maintaining a multitude of menial servants. (Smith 1776, book II, ch. III;)

Principle: The innovative complexity of a product (i.e. its uniqueness) can created unique real value (Based on my transactional innovative cluster theory, one might say a unique cluster and its innovative product outputs, i.e. unique ships or outdoor gear will likely have higher value that countries can't easily copy. That could lead to market leading products and/or multiple leading industries in a nation.)

Smith, A. 1776. An Inquiry into the Nature and Causes of the Wealth of Nations. https://oll.libertyfund.org/title/smith-an-inquiry-into-the-nature-and-causes-of-the-wealth-of-nations-cannan-ed-vol-1

Ricardo, D. 1817. The Principles of Political Economy and Taxation https://www.econlib.org/library/Ricardo/ricP.html

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Research Supports "The Power of the Flower" in Our Lives and in Our Work (The Financial and Economic Benefits of Greenery)

The Power of Flower Picture
The Wooded Pathway Gallery

What is the power of the flower? Researchers have known for a long time that nature has benefits to our health and psychological perspective. Yet we are unsure of how flowers can improve corporate performance. One might wonder if we put flowers within our workspaces and homes whether we would obtain some of their advantages. Applied psychology often delves into such topics to find connections between things that may not be at first apparent (i.e. this is where stats often come into play). 

Business executives should persistently look for ways to improve their financial bottom line. As bizarre as it sounds, sometimes new ideas are as easy as smelling the roses. Whether one is a flower lover or a weed warrior we might consider whether there could be financial advantages of flowers. Thinking out of the box, especially a planters box, with a systems mindset can help see the contribution of different factors throughout an organization (I'm not advocating for or against flowers but advocate for trying to see things in new perspectives and diverse vantage points.)

For example, if $50 of desk plants (i.e. planting more flowers in the workplace, green pictures, etc.) for employees every quarter led to $5,000 in improved performance then one might consider implementing a reimbursement program for plants companywide. If there is not enough available information to make a decision, an executive might design/commission a study to determine the potential advantages and impact of flowers/plants. If statistically significant (promising), consider replicating and/or retesting the study to a broader organizational pool. 

To investor not invest in plants is not the central point (Maybe flowers are or are not better than a free lunch once a quarter or swag). It is that applied psychology can have an impact on what we understand, how we make decisions and that such research is often tied to longer term trends in multiple environmental contexts. Much of those decisions will likely come down to dollars and cents for businesses but there are social considerations as well that may not be easily calculated today but could have financial consequences later. Each company must decide what is important for them, their employees and communities at the time they are making a decision. This delves into something called Behavioral Economics which is a topic we can discuss at a later date and time.  

A Business and Virtual Worker Benefits of Plants and Flowers

Flowers and plants not only may reduce stress but also can improve productivity. 'Research shows flowers can boost productivity when working from home'

Indicates plants improve performance productivity 15% and reduces stress (This is where we can go down a line of thinking such as asking questions relate to how much do plants reduced stress impact medical benefits, retention, etc. in addition to productivity to uncover possible hidden long-tail value.). 'Exclusive research shows the impact of plants on work productivity'

The Community Benefit of Plants

The Municipal Research and Services Center (MRSC) indicates that things like trees can impact our communities, investments, business and much more. It indicates that plants could potentially determine opportunity (You can see the difference in greenery between rich and poor.). 'For More Equitable and Livable Cities, Consider Trees'

The National Benefits of Plants

We discuss plants and work, plants and community and we can discuss the potential economic benefits of plants to the macro economy (This is not an endorsement of lack thereof of any policy). Business leaders should be aware of government policy as a legal/regulatory issue but also help them understand some of the science used to make such macro decisions and in turn how those decisions impact general trends. Investing in Nature to Solve Today’s Challenges'

A Few Thoughts on Studies and Publications

Within this article we looked at a few studies and a few publications. In any article we may need to further look at the limitations of the studies. That will require moving beyond the general publication and into reading the scientific study itself. If you trace these articles back far enough you will eventually run into a scientist and/or a scientific publication. Sometimes you can request the data and other times you cannot (i.e. proprietary) The stronger the studies, and the more studies saying/find similar things, then the greater the credibility of the arguments. Always be aware of alternative arguments of explanation. At this point it looks like greenery will be a globally hot topic of discussion (maybe just a globally warm topic😳🙊💨).

US GDP Q2 2023: 2.1% GDP Increase Could Avoid Fed Rate Hike

Economy and Consumer Spending

The Bureau of Economic Analysis (BEA) provided an important update as to propensity for economic growth in Gross Domestic Product, Second Quarter 2023 (Second Estimate) and Corporate Profits (Preliminary) The BEA runs our official economic stats including the imperfect GDP benchmark. You can learn more about the BEA and what they do HERE. The numbers indicate that the speed of GDP growth has declined to a point that it might be enough to avoid an interest rate hike (They are looking for trajectory trends but its complex so different factors can be confusing.)

"The increase in real GDP reflected increases in consumer spending, nonresidential fixed investment, state and local government spending, and federal government spending that were partly offset by decreases in exports, residential fixed investment, and private inventory investment. Imports, which are a subtraction in the calculation of GDP, decreased (table 2). (BEA, 2023, para 3.)

The Sweet Spot of Economic Growth:

The U.S. economy has been running fairly warm in recent times and inflation has been consuming the thoughts of a large percentage economists and bankers that alike that rely on these numbers to determine profitability potential.  Raising or lowering interest rates influences the money supply and is one of the primary tools the Fed used to influence macro economic behaviors that have a significant impact on the businesses environment. 

In general, economists crave the sweet spot in economic management where the system maintains a healthy growth rate while also maintaining the contributory functioning of the other economic pieces (New economic platforms likely create new ideal growth rates because the fundamentals the economy have changed. i.e. virtual GDP influence and the long tail creative capital of that.). The further one must manipulate the environment beyond homeostasis the more likely they will run risks (The key actions of the Fed are often more stabilization oriented.)

Federal Rate Hike:

At this point, the mild economic slowdown decreases the chances of another federal rate hike that would normally be forthcoming in situations of continuous growth. As interest rate hikes increase, borrowing costs that are passed onto the average company and consumer leading to slowing the circulation/availability of money. The cost of borrowing money is an important consideration in investment decisions as well impact the price you pay for interest on your credit cards or car loans. (We will have to wait to see what actually happens. 'How the Fed affects credit cards')

Standing back from the immediacy of the problem you can gain a wider perspective, we may realize there could be an ideal place where government spending increases economic activity that in turn generates net positives (knowing the difference between cost and investment. I typically advocate investment versus cost.), business investment rises to increase tax revenue beyond what is spent to create a spark (i.e. semi conductors will be an industry to watch as it impacts many other industries from a root level making long-tail benefits that are more difficult to calculate), increases in exports funnel more investments, labor productivity increased with technology, so on and so forth that raises the overall economy and the value of American worker and competitive value of the outputs of such production. (I call this a perpetual society that invests in itself to create verified net positives that allow for future investments.)

(You can read for more information 'How does the Federal Reserve affect inflation and employment?)

GDP and GDI:

You will also notice real gross domestic income (GDI) increased 0.5 percent in the second quarter, which was in contrast to a decrease of 1.8 percent in the first quarter. The difference between Real GDP and Real GDI is noted in a few places. (You can read about why they are sometimes different, 'The Discrepancy Between Expenditure- and Income-Side Estimates of US Output' or 'Better Measure of Output: GDP or GDI?')

Related Reading:

-Yahoo Finance has a solid article with a discussion on the S&P500 bump which could be an indication of willingness to invest as well as a discussion on employment hiring slowing. US economic growth revised down for Q2, a 'welcomed' sign for Fed

-“Weaker growth in real GDI, relative to GDP, may be an indication that tighter monetary policy is weighing on the U.S. economy,” said chief economist Gus Faucher of PNC Financial Services. U.S. economy grew at slower 2.1% pace in second quarter, new GDP figures show

-A strong analysis that included the idea that GDP and GDI are considered gross domestic output and that it is a stronger measure than each alone. Thus, economic activity increased 1.3% April-June which is up from the 0.1% from the first quarter. 

-The article also mentions projections for the 3rd quarter 2% rate to a 5.9% based on export projections.

US economic growth trimmed on inventories; retains underlying momentum

-The economy added 187,000 jobs. 'U.S. Hiring Settles Into a Lower Gear'

Escanaba City Council Meeting (August 17th, 2023): Street Sweepers, Pot Hole Bleepers and Nomad Peepers!

The Crossing Sweeper
1860's
Seymour Joseph Guy

We keep our roads smooth and clean in this town! Much of the meeting's deliberation revolved around cleaning up, improving recreational access and fixing the pot holes (Pot holes are a natural part of life in the Upper Peninsula of Michigan.). At the Escanaba City Council meeting, you can hear the conversational tantalizing tid bits such as new pickle ball courts, repaving Stephensen Avenue, cleaning contracts, street sweepers and the like as positive steps of improving a town. If anything, the local leadership are ensuring the city's appeal to locals and visitors is positive and inviting.

According to American Express's 2023 Global Travel Trends Report, 68% of respondents pride themselves on finding lesser known places before they become popular. Thus, it could be possible Escanaba emerges as a vacation and digital nomad hot spot that maintains broad appeal as a recreational get-away destination. See Adventure-Venture Tourism.

(Some of success is based on where the message of this town are shared and in what venues. This is where understand site stats and demographics help. Digital nomads have their favorite sites, the wealthy of California beach combers have their own sites and NY socialites have their own sites. Grabbing and maintaining their attention is a balance creating and maintaining interest.)

Perhaps with a little luck the town could attract some of the wealthier, younger, and virtual crowd that ponder a world outside of NY and California (Study 2023 Wealthy Young Adults Moving From Big Cities). Covid has changed some of the trends and people now enjoy extended stays in places much like Escanaba (Marina, recreation, restaurants, bands, etc.)

As you watch this meeting think about some of the possibilities for such a rural coastal type town with a hint of a recreational hipster vibe. Escanaba has multiple underdeveloped attributes that are unique and beneficial to reconnecting the town to the global economy. A few signs of that reemergence are the attraction of a billion dollars in investments, hundreds of millions in infrastructure improvements, increased tourism/marina traffic, and many more fun events that are drawing a crowd. 

As you watch the meeting there are few questions to keep in mind,

1. Does an initial spark investment by international industry and government lead to additional investments from other stakeholders?

2. There has been an increase in the frequency of events, bands, recreation, vacationers and investments in hotels. From an economic perspective, how might such events/activities lead to attraction and retention of human capital?

3. What are some of the best ways the town and county can hedge their uniqueness of location and industry to create competitive advantages (i.e. a custom transactional cluster)?

August 17th Agenda.

The Global Tuna Industry Rises: No Tuna in the Great Lakes?

Tuna is not only a vital source of protein but is also in high demand at restaurants. The global tuna industry is projected to grow from $42.08 billion in 2023 to $51.25 billion by 2030 according to an article discussing the Tuna Fish Market size in Fortune Business Insights. 

Its not only the tuna industry that will grow but demand but likely all eligible food sources. This means we must protect as well as build our ecosystems to enhance our natural sources of food. I think of the Great Lakes as an ecosystem must be maintained and enhanced for the benefit of the region. 

(Ahhhh my dream of owning a part-time small commercial fishing boat to feed local stores is alive and well! It is one of those things that is more of a thought than a practical reality. That would be nice but not a show stopper. However, I love boats so getting a small commercial fishing boat wouldn't be the issue it would be the license. Once you have the product the customers and branding in this case would be easy.)

I suspect that in the near future we will find ways to start reversing the damaging footprint we created and recede some of the ecological impact to foster a rejuvenating environment.  That will put us on a much more sustainable path. You can read 'Escanaba Harbor, Great Lakes Fish Rejuvenation and Perpetual Sustainable Economies'

The Tuna Industry

The Wooded Pathway Gallery

The Power of Hate Speech: The Brain on the Aphrodisiac of Belittling

The Raft of the Medusa

1818

Théodore Géricault

Hate is a disease in our society and all to often nestles itself into our collective conscious and lashes out for relevance in a world where the demographics of the nation are changing. Where hate speech rises and spreads like lightning through rumor networks and online social media platforms there is a growing force to challenge that which hampers our ability to master the next leg of our national challenges (innovation and human capital.). As elusive as it seems our futures are integrally tied to bringing people together for a worthwhile cause and not embellishing in hate speech that does the opposite exploiting divisionary exclusivity.

A Hypothetical Example of Clan/Group Based Hate

Let me give you a hypothetical scenario.... 

An in-group, as defined by a particular race/ethnicity, cultural, and religious background targeted a minority family in an area in an effort to punish them for some perceived wrongs and their willingness to say "no" (By extension act like a 1st class citizen.) Let us say we are dealing with a large social network formed around sports identities (Sometimes there is a history of bullying in groups learned while young so its a good example of socialized inappropriate behaviors that may have become socially customary. The mediocre quality of sports playing doesn't appear to be a factor in the decision to engage in anti social leaning antics. It really could be any group but I have come across other studies about some sport cultures so that argument can be supported.). As hate speech frequency increased, pushed by a few toxic individuals who exploited those differences for self gain, the empathy of the entire group declines. 

What would normally be reasonable people and behaviors become a common projected target for unrealized self-conscious failures. 

False police reports, social networks, mixed in with a speckle of extremism that created secondary waves of hate further violating the rights of the family and leading to behaviors that could be seen under certain lights as ethnic-religious based cleansing. 

The Power of Hate to Distort

There are many questions that come out of this running hypothetical example used as a way to further understand the influence of extremism and hate in our society. One of those question is how could seemingly descent people and reasonableness be overshadowed by hate and aggression? So much so that it likely violated many laws (depending on how one views the purpose and application of such laws.) and in the aftermath there was increased resistance to meaningful change to ensure it doesn't happen again. As hate rises the environment became increasingly distorted and dangerous as the narrative morphed and each person found a reason to further hate the targets of disdain (Doesn't matter the race or religion. However, the initial example was Muslim and Blacks. These are often the most targeted by extremism leaning groups. Certainly any religious, ethnic or other background can engage in such behaviors that we should discourage in society.) 

If you want to know how this works think of worst thing you can think of Muslim, Black, Jews, Hispanics, White (We have to include them since post Gen Z they will also be minorities) and then spread that without any facts. It is easy to manipulate social networks that already hold bigoted views by making up stories and spreading them to everyone you can in hope that they will find the rumors juicy enough to spread that onto others in an effort to punish the family. As each person hears the story they believe it without critical examination and then act on that without any knowledge. They became flying monkeys and extension of hate based cleansing simply because it was socially supported and encouraged within their somewhat homogeneous networks (Also the difference between those who follow and those who lead. Those who are capable of Alpha leadership question information while those who are Beta followers believe without critical thought because their social cues told them to.).

A Study on Hate Speech and Neurological Decline of Group Empathy

There are more and more studies coming out how certain behaviors persist and the psychological and sociological drivers that are influencing our ability to see each other as part of the same community/society. Polices have come and gone but the problem persists because we have not created a shared vision of what a universal democracy with maximum economic participation looks like (Logically we don't have an option that will be positive except to create a shared sense of direction and understanding. It doesn't get votes but it still could be true! Maybe? 🤷) 

Creating singular communities requires a healthy understanding of differences and a shared commitment to not support hate speech and those who engage in it (There are differences between opinion and grossly fabricated stories designed to enflame and direct hate.). That also includes not encouraging hate in politics or the use of such superficial differentiators in decision making (This is also why we don't want politics to be divided by religion, skin color or other factors that separate our society. All/both parties should be race and religion neutral. A few words of wisdom that may be valuable to the long term perspective.) 

A few key points from the study entitled, 'Exposure to hate speech deteriorates neurocognitive mechanisms of the ability to understand others’ pain.' (Mazurek &Wojciechowski, 2023)

-30 healthy adults

-2 groups. One group is exposed to hate speech and the other group is not exposed to hate groups.

-fMRI was used to determine associated brain activation to the hate speech or neutral language. 

-Using whole brain and regional interest analysis impacts the right temporal parietal junction (rTPJ) when exposed to derogatory comments about Pole or Arab migrants (I did this study on Iraqi Immigrants once and it was an eye opener. The differences in perceptions are most interesting. I have also looked at this problem for a while formally and informally so I can shed some insight into this.).

-Results exposure to hate speech for 15 minutes reduced empathy over pain of migrants for both Poles and Arabs.

-Hate speech might lead to prejudice, dehumanization and lack of empathy.

-Hate speech is not localized to any specific group but to any group in which hate speech targets. (I call this a universal truth that applies broadly across mankind. It can be experienced in every culture and place.)

A Few Thoughts

Hate influences how we see and relate to others and chips away at the roots of our futures. Those who spread hate do so to dehumanize their targets which often sets the stage for greater atrocities. As preexisting bias is tapped for the dramatic flare of hype, the targets become every more responsible for the hate groups choices and behaviors. It can go on in some circumstances until those deemed at fault for the perpetrators shortcomings have been stripped of their value in society, stripped of their most fundamental rights and ultimately stripped of justice. There is no empathy for "the other" where hate has diseased the foundations collective contribution (i.e. the lost human capital problem that represents a massive source of national development momentum.)

Pluta, A., Mazurek, J., Wojciechowski, J. et al. Exposure to hate speech deteriorates neurocognitive mechanisms of the ability to understand others’ pain. Sci Rep 13, 4127 (2023). https://doi.org/10.1038/s41598-023-31146-1