April 2023 Newsletter

We used to make everything now we do not?

     There are 25% fewer companies and plants that make stuff than there were in 1997. Pandemic induced supply chain woes along with inflation; as well as the increased cost of shipping has tilted the tables back to the U.S. Maybe just maybe we can regain some of our lost industries along with new projects. We need to regain momentum and create jobs and opportunities here at home. There is no greater elixir for domestic unhappiness than jobs and opportunities.

     Construction spending on new plants rose in 2022 at an unprecedented rate. Spending reached $108 billion dollars. This was the highest on record. This was higher than what was spent on schools, hospitals/health care, or offices. Many of these are companies moving back to the U.S. that have been abroad for decades. Semiconductors and batteries are big contributors to the renaissance. Those industries have been beneficiaries of the government’s efforts to be less dependent on foreign supply. Semiconductors are especially important for our economic independence. It is just not a good idea to not be able to build a rocket or truck without a foreign chip, but that is where we are today.

     Supply chain woes have prompted many to want and need domestic supply of many products. You cannot sell it if you do not have it. Many worldwide manufacturers need efficient and speedy supply to fulfill orders. Domestic supply can help with the problem. U.S. competitiveness ebbed for many years after 2001. Now the pendulum is swinging back our way. Over the past 2 years 800,000 new manufacturing jobs have been added. The total workers shortage for new manufacturing jobs is now 800,000. Factory jobs today make up 10% of our workforce; and with any luck that percentage will grow.

     We historically have made and have innovated our way to the top of the heap in many categories. Think Henry Ford and the automobile assembly line or Boeing Aircraft. There are many others. We invented the lithium battery, and the Chinese and Japanese have perfected battery manufacturing. Elon Musk and company are the new electric car leader and are perfecting manufacturing right here at home, along with batteries. Ford, GM, and VW are all getting on the battery electric bandwagon. Not all cars will be built in the Midwest.

     Huge federal and state subsidies and loans have spurred many new industries to build here. Georgia has added many new plants: Rivian off I-20 in Rutledge, Senyon in Chatham County, SK batteries in Commerce, Bryan County Hyundai EV’s, 2 Solar plants, this list just keeps growing.

     Reshoring and nearshoring are happening also; but it often comes with a learning curve. Many still depend on Chinese parts to get the job done. As volume and more manufacturing happens the suppliers will follow.

     Green jobs are coming and the transition to renewable energy will create many opportunities in the months and years to come. We are just in the first inning of a huge energy and climate change transition. Many manufacturing jobs and opportunities will revolve around this transition. One thing is for sure: everything does not need to be made in China. We can do it right here at home.

Interest Rates / Economy

     Last year and so far this year, inflation and interest rate increases have taken over the headlines. That and the Fed’s seeming endless .25% rate increases are starting to make a dent. The economy is slowing, and inflations grip is easing somewhat. Hopefully in the next two quarters or so the Fed will pause increases and inflation will continue to ease. It is not easy going off of 0% rates. We are still adjusting to the new reality of higher interest rates. It is not free to borrow and it will continue to become more expensive to do so. The Stock Market will be the first to respond to the prospect of the stopping interest rate increases. Any signs of inflation decreasing will be a big positive for stocks going forward.

Thanks, Andy McClung CFP TM    

RE: Wall Street Journal John Keilman/ Forbes Curt Mueller/ RDN news Michelle Thompson


2023 Market Results

S&P 500                          +7%

NASDAQ Composite   +14%

Dow Industrials            +1.3%

Russell 2000                 +.06%

World ACWI                +7.1%

Source Wall Street Journal 04/11/23  

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