PP Thomas the Barron opened our meeting at the Luskin Center right
on time. All of us had grazed our way through the buffet line and were sitting
at our tables at attention. Tom called on PP Peter More to lead the flag pledge
and it was a good choice. Peter came to California 48 years ago and became
a permanent resident. His trading business became a success as did his family.
Though the headlines these days are troubling, he has never doubted choosing
America as his country. His words were comforting to native born and immigrant
alike.
Uplifted, I was called on for the Thought of the Day. All were relieved to
find I had again stolen my material from wiser men. Mark Twain once
proclaimed, with a twinkle, “Life is Short—Break the Rules!” He may have also
first said “America has a tilt and everything loose ends up in California.” No one
could guess who said “If dogs don’t go to Heaven, then, when I die, I want to
go where they went!” It was Will Rogers.
PP Admiral Edwin Gauld was summoned to lead us in song. He wisely
chose a fine tune more easily produced than the Banner and we hit all the notes
to “God Bless America” with enthusiasm.
Our Membership Chair, PP Mark Rogo, introduced his Special Guest,
Carmilla Sears.
PP, AP, IPP Diane Good announced that her BOD had decided to have
An “End of Year” party this year rather than a Demotion. It will be held at
“Whisky Red’s” in Marina del Rey, on the largest patio on the beach, on Sunday,
June 26. All Members will be charged and are likely to show up.
Our able Program Chair, John O’Keefe, promised us a “very young”
economist to speak today and delivered Leo Felor, a Senior Economist at
the Anderson School at UCLA. He joined the faculty in 2020 and is experienced
in Labor Economics, Urban Economics, Banking, and lots more. He labored on
the macroeconomic forecast dubbed the Annual Anderson Forecast which was
just released yesterday, so our meeting was most timely. Leo attended Stanford
for his BA and MA in Economics and Brown for his PhD. He offered and explained
a good number of cogent insights, but don’t expect a bottom-line wrap up from
me or the other listeners (evident from their confused questions).
“People are spending-but gloomy and fearful.” We suffered -3.4% in
GDP in 2020-the worst contraction since WWII. The Fed spent $9 Trillion buying
up assets (bonds) so rates would not go through the roof. The US Treasury
handed out $6 Trillion in employer and employee support which helped GDP rise
by 5.7% in ’21. Still, GDP is $500 Billion lower than estimates made in 2019.
The US is still the #2 manufacturing nation, but not in consumer goods
production. We didn’t close down like much of the world, but our supply of
consumer goods is way down and demand high.
Air fares have recovered to 125% of pre-Covid rates, but not clothing
sales. Millions resigned from the travel and hospitality sectors even though
wages were raise by 16% in one year. Our worst unemployment rate was 13%
during 2020, but that has now dipped to 3.8% in early ’22. Overall, wages are up
5%, but did not keep up with the prices of many important goods-like gasoline,
for example. A wage/price spiral is visible.
The unexpected Ukraine War has driven gas to $6/gallon—the most
obvious and troubling sign of inflation. China is in brutal shutdown, causing lots
of supply chain disruptions. Now that inflation is rampant for the first time in
over 30 years, we are rushing to buy earlier and pulling prices higher. The Fed
short-term rate will likely hit 2.25% in a few months, but 3.5% might be necessary
to slow (but not stop, we hope) the economy.
Was the last $1.5 T of general support in ’21 too much? Demographics will
keep housing demand up but trade-up purchases are much less attractive with
the mortgage rate over 5%. Homebuilders have a lot of near-finished houses
waiting for fixtures, windows, etc. due to the chaotic supply chain.
Leo’s data was varied and reliable and well-explained. It’s up to us to turn
It into usable information or even wise predictions. A lot of the US citizenry polls
as blaming the current administration for our problems (inflation up-stocks
down). Did we think free money could last forever? This week, we’ve bigger fish
to fry-on Capitol Hill, some folks are trying to help our democracy last a few
decades longer. Some things are more important even than the price of gas!
YOPP Dwight
