We have a large number of people who are estranged from our economy. In 1960, 5% of men were not working between the ages of 25 and 54. Today it’s more like 15%. If 15% of men are not working at any point in time, then a quarter of the people will have been out of work for a year or more over a four or five-year period. That’s destructive to the economy's productive potential. It’s destructive to their families. It’s destructive to the areas in which they live. It’s destructive to the moral fabric of our national life.

Eoin Treacy's view

I recently finished reading Coming Apart by Charles Murray. It’s a harrowing account of how the polarization in the economy is manifested in a growing rift between the privileged, insulated upper class and a benefits-dependent underclass.  

High food, energy, rent and auto costs are social problems. The economy is at close to full employment and wages are not keeping up. That suggests overheating. That burden of higher inflation falls hardest on the least well-off in society. Therefore, if inflation is not transitory, and proves to be persistently higher than is comfortably endured, which appears to be the case, it will have negative social consequences. Against that background, the Fed will need to take proactive measures to deflate asset bubbles. Raising rates and reducing the size of the balance sheet are aimed at reducing inflation and will cause a deflationary shock.


The downtrend in lumber prices is potentially signaling a significant reversal in building activity. At the same time, there is a significant backlog of construction projects. That suggests a great deal of volatility is to be expected in construction data.
Meanwhile, Blackstone is raising upwards of $50 billion in a replay of their residential real estate trade made in the aftermath of the credit crisis. https://www.yahoo.com/video/blackstone-preparing-record-50-billion-120000092.html That’s a perfect example of the gap between the entitled landlord and renters. It’s a recipe for social activism and potentially rent controls being adopted in a broad swathe of the global economy.

Blackstone peaked in December and has held a sequence of lower rally highs since.