Week Ending in October 25, 2024

Initial jobless claims decrease…For the week ending October 19, initial jobless claims had one of its best weeks in quite some time. It decreased by 15,000 to 227,000.

What does it mean – While better this week, the four-week moving averages still shows an increase in initial claims and continuing claims. Initial claims increased by 2,000 to 238,500 over the last four weeks while continuing claims increased by 17,500 to 1,860,750.

While the media and this administration keep avoiding the economic reality, the American people know exactly how it is hitting their pocketbook and the ones they love who cannot find adequate work.

September retail sales increased 0.4% month-over-month…Following an unrevised 0.1% increase in August.

What does it mean – Here is a look at how America spent money in September.

• Gasoline station sales declined 1.6% month-over-month.
• Food and beverage store sales increased 1.0% month-over-month.

• Electronics and appliance store sales declined 3.6% month-over-month.
• Furniture and home furnishing store sales fell 1.4% month-over-month.
• Building material and garden equipment and supplies dealers sales jumped 0.2% month-over-month.
• Health and personal care store sales increased 1.1% month-over-month.
• General merchandise store sales rose 0.5% month-over-month.

Housing starts decreased 0.5% month-over-month…Multi-unit starts decreased 4.5% month-over-month while multi-unit permits were down 8.9%.

What does it mean – While the number of units under construction at the end of the period decreased 1.9% month-over-month, multi-units and single family are still plagued by higher interest rates and inflation creating more difficulty for buyers and the builders.

Total industrial production declined 0.6% yr/yr…Capacity utilization rate was 2.2 percentage points below its long-run average.

What does it mean – Manufacturing output declined 0.4% following a downwardly revised 0.5% increase (from 0.9%) in August. While some of the fall off can be blamed for the Boeing strike, manufacturing has struggled to gain a foothold in this economy.

 Debt continues to stress U.S. Households…The percentage of U.S. households expecting to fall behind on their debt continues to rise.

What does it mean – Due to the increasing pressure of inflation, more regulations, higher taxes, more “Big Government” spending on social programs that never seem to go away, but only increase, and now include $ billions for NGO’s who support these programs and the massive increase to provide for non-citizens. The U.S. citizens generosity is being stretched beyond its ability to support massive government programs and the American dream. This administration’s policies are in complete contradiction to what protects and fosters a free and prosperous society.

The Green New Deal…Bad policy costing taxpayers $trillions and shunned by the very tech giants who individually pushed for it.

What does it mean – While U.S. Vice President and 2024 presidential candidate Kamala Harris once explained cloud storage as, “It’s on your laptop, and it’s then therefore up here in this cloud, that exists above us, right? It’s no longer in a physical place.” Hmmm.

Unfortunately for VP Harris, your data does reside in a physical space and requires lots of energy. While confused by the metaphor or idea of cloud computing and confirming that it is not just hanging out in “this cloud” above your head, Kamala has been a huge backer of “The Green New Deal”. Unfortunately, “big techs” massive appetite for energy to power their server farms (the cloud) hit reality and they now must spend their own money to meet consumer demand. This could mean a massive shift in energy is coming.

According to recent reports and news from both Google and Amazon, they both inked what are likely multiple-billion-dollar deals with power companies to build small scale, modular nuclear reactors. At the same time, Microsoft announced it has agreed to pay for the revival of the shuttered Three Mile Island nuclear power plant in Pennsylvania. One must ask, why?

These companies need, no, they require and demand massive amounts of reliable energy to power their constantly growing appetite for electricity due to the expansion of “the cloud” and data centers to support generative Artificial Intelligence (AI). Solar and Wind can’t get the job done. Both are intermittent power sources. Both unreliable. For data centers to work and AI and technology evolve and to reach its full potential, data centers need non-stop, reliable, 24/7 electricity. Big Tech companies are now seeking a tried-and-true technology centered around nuclear and natural gas to supply their energy demand.

According to First Trust and economist Brian Wesbury, over the past 20 years, governments around the world have spent or have incentivized companies to spend $18.8 trillion dollars on green energy and just 1.4% of that was on nuclear. Last year alone, the total was $3.5 trillion, with less than 1% going toward nuclear. According to the Department of Energy’s own reports, many governments have shut down nuclear power plants.

Interestingly, over 40% of the $18.8 trillion in green spending was based on what the movement calls “sustainable debt issuance,” including government subsidized loans of nearly $7.5 trillion in government subsidized loan programs. i.e. taxpayer funded.

There is a reason the private sector banks would not do these loans. This Green New Deal would never have happened without the help of government and climate activists like Greta Thornberg, nor would our energy infrastructure be in such bad shape if the government was actually held accountable for its actions and invested money as if it was their own. Could you imagine what $18.8 trillion would have done for our planet if we focused on issues we actually could control.

Here is a look at CO2 production in 1960 vs. 2020. CO2 is a leading cause to global warming or climate change according to Climate.Gov and the United Nations. Do you actually think the UN is going to control China when it is China that manipulates and controls almost every division of the UN and funds the majority of the leaderships pet projects at the expense of the US taxpayer?

1960 COo2 Production

2020 CO2 Production

As a result of free markets and demand for cleaner, safer, more reliable, and better technology and services. The United States has some of the cleanest air quality in the world and is the most productive nation in the world.

Yet today we let our collective emotions and fear of climate change dictate our energy policy. Or, as President Obama’s Chief of Staff, Rahm Emanuel famously said, “You never let a serious crisis go to waste. And what I mean by that it’s an opportunity to do things you think you could not do before.” Hmmm.

The climate crisis is that crisis. It has led to the largest pay to play political Ponzi scheme in history. $ trillions in government subsidies and grants have propped up countless green companies that have failed miserably yet found the funds to donate to the very politician’s Political Action Committees or PAC’s that voted to fund those companies or Green New Deal initiatives. HMMM. Right now, leadership in DC and the lobbyists benefiting from this boondoggle are begging you to stop looking.

Hyped up on fear and talking points, The Green New Deal Junkies and Lobbyists in DC, Sacramento and across our nation, spent your tax dollars with little to nothing to show for it. They used a “crisis” to enrich and promote their power and ideology at the cost of the taxpayer, entrepreneur, and most importantly, you, the American Citizen.

Compounding the issue, is that much of this was done while the Federal Reserve held interest rates below the rate of inflation for 80% of the time during the past fifteen years. Nine of those years at nearly 0% interest rates. This will surely cause an issue in the debt markets when these loans mature or need to be refinanced at current rates and these companies have almost nothing to show in terms of revenue to pay off the loans or refinance them.

Back to reality – One positive that has come from The Green New Deals constant dependence on taxpayer subsidies and constant fear mongering that the “sky is falling” has led its biggest backers, big tech, back to reality.

Proven clean energy – “Big Tech” is investing in Nuclear and Natural Gas to provide what their clients and customers need and demand. When results mattered and push comes to shove, “Big Tech” moved quickly to make sure they filled the gap for their customers and ensured their margins for the future. Now forced to spend their money, they are choosing a proven and dependable source. As citizens, we pay for and depend on an energy grid that is dependable, consistent, and efficient.

Unfortunately, for us taxpayers we lost close to $18 trillion in the hope that it may one day work. But until then, keep an eye on reality. The good news is the private sector is pivoting from government and political correctness and solving the problem. Google, Amazon, and Microsoft aren’t relying on politically correct green energy (solar or wind) policy. They are buying electricity provided by nuclear power and companies that supply natural gas.

My good friends at First Trust pulled this amazing quote from one of my favorite economists, Milton Friedman. He said, “There are four ways in which you can spend money. You can spend your own money on yourself. You can spend your own money on somebody else. You can spend somebody else’s money on yourself. Finally, you can spend somebody else’s money on somebody else. Spending your own money (whether on yourself or on someone else) means you will care about it. But, when you spend somebody else’s money, especially on somebody else, you don’t care how much you spend or what you get for it.”

When it is dependent on your money…When shareholder value matteres, corporate America is starting to realize that if they don’t change course and protect shareholder value, they will be replaced with management that will. By Fire or by Force. Big Tech is having its moment of clarity as it depends more today on energy than ever before. Due to long-term demand for reliable energy and being forced to spend their money, they have reversed their course and are going with what works, not feelings or popular but facts. Proving once again that the free markets provide the very best solutions and are truly only sustainable in a free society.

Our nation is the greatest nation in the world. Not because of the size of our government, but because government is limited. That its power comes from the “consent of the governed.” Our Declaration of Independence says it best and is the standard which all governments aspire to resemble, but their leaders fear.

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed,—”  The Declaration of Independence – 1776

Let’s roll America!!!

Doug De Groote, CFP®, MBA, CTC
Managing Director

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