Automatic Job Storm Coming

A Decelerating Job Picture
Robotic Wipeout
Superhuman Level
Perfect Storm
Monetary Policy Error
Home for Christmas, then Hong Kong

Almost every weekday, some arm of the US government issues some sort of economic statistic. News media and financial analysts review and report it. Then 99.9% of the adult population, and probably 90% of the financial industry, forget all about it. And they’re probably right to do so.

The monthly jobs report isn’t like that. Yes, any single month doesn’t tell us much. Yes, the Labor Department’s methodology has some flaws, both major and minor. But imperfect as it is, the jobs report is our best look at the economy’s pulse. Jobs matter in a visceral way to almost all of us, as you know well if you’ve ever lost one. Almost any survey that asked questions around employment would reveal the angst that many Americans feel about the possibility of losing their jobs.

Image: Cristian Eslava

Right now, automation tops the list of things that might threaten our jobs. Artificial intelligence and robotics technology are rapidly learning to do what human workers do, but better, faster, and cheaper.

I’ve use the following chart before, but it’s a compelling illustration of how technology is reducing employment. It shows the rising rig count in the oil patch since mid-2016 – and yet the number of workers on those rigs is actually still falling. This is the impact of a new robot called an iron roughneck: Tasks that used to require 20 people now need only five. And the iron roughneck is not even that widely deployed in the oil and gas industry – the trend will hit hard in the coming decade. Roughneck jobs are relatively high-paying; it takes a great deal of training and skill to be able to do them.

Today I’ll give you some quick thoughts on the just-issued November jobs report, then take a deeper look at the automation problem/opportunity. I use both words because automation truly can be either. And then we look at the failure of the Federal Open Market Committee (FOMC) to take into account the major technological changes that are going to come our way over the next 10 to 12 years (if a host of studies are correct). I think that failure is likely to lead the FOMC to make the mother of all policy errors. And right now, a major monetary policy error is the most dangerous weapon of mass wealth destruction facing the US and the world.

Before we go on, let me briefly remind you that our Mauldin Economics VIP Program is open until December 13. VIP is our “all you can eat” package. For one low price, you get all our premium investment services and a few extra benefits as well. I believe our information will be invaluable as we move into a highly uncertain 2018. You can learn more about the VIP program here.