Is Working from Home Really Good?

 

via GIPHY

Granted, working from home seems like a novel idea and has been used extensively these past 24 months. Also, there seems to be a move to continue after the pandemic abates. But is it really good in the long term view?

I don't care how productive you may be from home, it hampers advancement within any organization. Seriously, the advantage of playing golf with the boss, is not about talking work while golfing, but rather talking a bit of golf during work. It is an entry into an interaction with the boss. That's an element that is missing with working from home. Out of sight is out of mind in most workplaces.

So you're not worried about advancement and are perfectly content with your current freedoms given to you by working at home. Do you have a clue about how any money making enterprise functions. A new enterprise is about expansion and a mature enterprise is about reducing costs. 

Working from home introduces the novel idea of  that home being anywhere in the world. How wonderful for you... until someone realizes you can be replaced by cheap foreign labor, that is also working from their home. 

Think your work is too valuable for something like that to happen? Which person is more likely to get the axe... someone that interacts on occasion with the boss or someone the boss rarely sees?

Out of sight... out of mind.

Near End of the Month, So January 2022 Inflation Numbers and Other Stuff.

 

ALL the inflation numbers are in and they are pointing upward, with the exception of PPI, which was flat. But the leading indicators of PPI are still in double digits. 

Quite a bit of chatter regarding energy prices and how they will ramp up inflation. There is no denying that, but every single number that excludes food and energy is up as well. Don't be misled by headlines screaming energy costs are going to cause double digit inflation. 

We might very well see double digit inflation, but if everything stays flat and energy were to drive up the overall inflation... then crude would need to be in the $180 @ bbl. We will be in recession, well before that occurs. Energy is a part of inflation, but not the entire story. Attempting to backward blame inflation on solely energy and current geo-politics, is to ignore the inflation prior to these events.

Those inflation factors are still prevalent and really no let up going forward the next couple of months. Previously the inflation was anticipated to peak in February (numbers due out in March), but those energy related and geo-political issues might edge up succeeding months. We were in the May/June timeframe of any year over year relief... which is prior to certain current events.

There is talk of the FED backing off rate hikes but maybe a bit premature. Granted the FED is looking for any excuse to avoid lifting rates, but they are behind the curve, so will raise rates, to make room for lowering them later on. 

As for Ukraine... they are not a member of the EU or of NATO, but a member of the UN. 30+ years ago, Iraq invaded Kuwait, which was also a member of the UN. A coalition was quickly and rapidly formed to kick Iraq out. Kuwait had oil, Ukraine not so much. 

Not sure how this thing will turn out, but it will soon become old news and everyone will move on. That is the sad state of things. There will be a period of media pictures and videos of bombs exploding, missiles being launched, but then this will become boring and no longer a driver of news ratings. 

Not unlike Covid, which still has a high death rate, but somehow is cured... at least to the extent it does not make more than a ripple in the news. Everyone is racing to get back to normal, which means accepting certain unpleasant facts. 

Currently the forecast for February CPI numbers (Due out in March 10th) stands in the range of 7.63% to 7.9%. 7.62% was the annual rate in February 1982. January 1982 was 8.39%.

Retail Trade Report for January-2022

 

The Census Bureau released the advance data for January Retail. Woohoo, it was up 3.8% AFTER a downward revision of last month by -2.5%. (Which wasn't the only revision.)

This was last month's graph...

In any case the 3.8% would appear to be stellar until you realize it is not adjusted for inflation. When looking at the past few months... it becomes clear that the amount of "stuff" we are buying has plateaued, while the cost of the same amount of "stuff" has simply risen. 

Frankly, I don't understand the hoopla surrounding this report. Of course, I am just an ignorant hillbilly and know nothing of these matters. 

Producer Price Index for January 2022

 

The Producer Price Index as released by the BLS, this A.M. 

The Producer Price Index for final demand increased 1.0 percent in January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This rise followed advances of 0.4 percent in December 2021 and 0.9 percent in November. On an unadjusted basis, final demand prices moved up 9.7 percent for the 12 months ended January 2022. 

In January, the index for final demand services rose 0.7 percent, and prices for final demand goods moved up 1.3 percent.

Again, an ever so slight deceleration in upstream stages. (note the Eurostat for US is my estimate as the actual info has not been published).

The retail report tomorrow, while also backward looking, could provide some indication of future activity.

Just read an article that said $115 per barrel of oil could drive inflation to 10%. My calculations indicate a figure nearer to 8.4%, which leaves the over 92% of the remaining to increase above that rate. Let's not fixate on just one part of the consumer purchasing basket, imo.

Breakdown of CPI DATA and Real Earnings, January 2022

 

The BLS report for January, Indicated a 7.5% yoy inflation rate with the month on month being 0.8% unadjusted or 0.6% after adjustments.

With this release comes a variety of other numbers...

I am at the 5.7% annual rate...

Not as bad as the overall, but nothing to be joyful about. Food was up, but the biggest portion was attributable to medical costs. Much of that was beginning of the year co-pays and deductibles. Hopefully, the following months will recede to rather low levels of medical inflation... compared to year's past. 

I had previously forecast January to fall between 7.04% ~ 7.40%. That 7.5% was a bit of a shock and now brings the 7.62% rate in February 1982 into play. The current forecast for February numbers, due out in March are 7.59%~7.9%, 7.74% as median. 

On to the earnings report.

The hourly real earnings (earnings after inflation adjustment) edged up 1¢. This would seem to indicate that earnings are at least keeping up with inflation. However...

Real weekly earnings slipped, due to a decrease in hours worked. This is the 2nd straight month and is not reassuring, imo.

As for the CPI forecast, more will be clear on Tuesday, with the PPI release. Let's keep our fingers crossed.