Unshared Everything

August 12, 2022

Corporate earning are up as fears of recession loom large, and analyst are confounded.

How could cash be flowing so freely as the Fed raises interest rates on an already troubled economy. Your average working class family is certainly feeling the squeeze of inflation, but the job market is still sizzling hot if not cooling a bit as of late.

There is a popular opinion that the average household still has their savings in better shape after the influx on pandemic money and the incredible saving that were achieved by the whole country doing basically nothing for a year, ie. not spending frivolously. And if that is the case then it will surely be a temporary state, meaning earnings will fall later than first expected and we still get a tardy recession.

But I do not see that as the right way to frame this. It is as if we keep avoiding to notice that all the post traumatic effects of Covid are far less temporary than anyone predicted. Inflation was going to be temporary; supply shortages were going to be temporary; working from home was going to be temporary. It seems to be a theme of national traumas, akin to when George Bush resolved the terrorist problem a year after 9/11 by standing aboard an aircraft carrier, proclaiming victory before the 20 year war(s) really started.

Maybe the real theme of the current economy should be that we should not expect much change in consumer behavior. The people have spent the last two years wondering if they would catch a strain of the virus, if it would kill them or someone they love, if the vaccines were part of some conspiracy, if they can trust the government, or even if these United States could continue to be, well, united.

No, this is a trauma and trauma changes behavior permanently. Just ask yourself, what do I feel like I expect the future to be like? I bet the answer is very different than it was pre-covid. I’m not a fortune teller, but the sentiment I feel is that people are either planning for their security by investing (perhaps some in weaponry and munitions rather than financial instruments), or they are planning on the chance that they might not have a future to spend their money in and are treating themselves to items they have always wanted. Although my evidence here is anecdotal at best, I do know the calculus by which most of us make our spending decisions is far more emotional than methodical.

I would not be surprised if we see the exact opposite of the predicted economic pullback. After all when was the last time we collectively saw one coming straight at us and predicted it’s arrival. The attack almost always comes from the back, and I think we are looking a little to hard in one direction at the moment. Until next time, keep expecting the unexpected, watch your six, and above all don’t forget to enjoy the ride.

McGregor Jordan

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