We’re told again and again that the economy is “improving” or “heating up,” and yet all the data that’s not cooked or spun by the government says the opposite.
I believe the lesson here is we must be frugal, and we must change our cost structures to be lowcost producers. This is an old saw but a true one.
Here are a few facts for you to consider.
Diesel fuel is now below $2 per gallon. Together with the Cass Freight Index showing truck freighting levels falling below the tepid “recovery” years of 2010 and 2011, this says there is a real decline in trucking in this country. Consider that alongside other economic indicators like classically recession-predicting low prices for copper, aluminum and steel, and the extremely low Baltic Dry Index for shipping levels and prices.
Economist David Stockman keeps sounding the alarm on nefarious jobs reports, which are rigged to count any job of any type, thereby hiding the fact that good-paying, full-time jobs have been in decline for dozens of years, and since 2007, the only categories that have increased are part-timers and government-funded health-care system managers. Dig around in Stockman’s web page at davidstockmanscontracorner.com.
All this and more bodes a food market where “value” becomes more important to strapped consumers, and beef loses even more market share.
“But we have record-high retail beef prices,” some may shout, despite the bear market in livecattle prices. There’s an answer for that, but you won’t like it. Private consultant and economist Bill Helming has repeatedly warned that this is a supply-driven market, propped up by a simple lack of beef, and also for several months by a lack of competing proteins. Now that pork, chicken and the U.S. dollar are on the move again, beef is facing tougher market challenges. U.S. protein consumption is rising again, but recession economics says consumers will cut back as things begin to openly look more bleak. More layoffs is the typical open wound that starts consumer- mentality bleeding, although weak credit card usage and mediocre sales in this Chrisftmas season say consumers may already be pulling back.
In mid-December, a Pew Research Center study said the middle class has continued to shrink. The report said middle-class Americans now comprise just less than half, or 49.9 percent, of the nation’s population, down from 61 percent in 1971. The upper-income tier rose from 14 percent to 21 percent in the same period, while the lower-income tier increased from 25 percent to 29 percent.
I urge you to stop watching television news, which is now controlled almost entirely by five or six entities, and learn to use the Internet to dig for truth. Read Stockman, read the web pages of the Austrian economists Ludwig von Mises and Friedrich Hayek.
Be prepared.
I have written many times in recent years about the indubitable fact that low-cost beef producers are statistically always the highest-profit producers. Low-cost, low-debt producers are also the ones most able to weather downturns in the overall economy, which still hits beef hard because we’re priced higher, on a per-unit-of-protein basis, than pork or chicken. Yes, our product tastes better, but cost is very important.
This is the path forward, not pie-in-the-sky planning for an improbable King Beef utopia.