Our American Farrago, Part 2

I recently declared my conversion from an optimist to an optimalist (a willingness to accept failure while remaining confident that success will follow). The downside of being an optimist is occasionally failing to recognize storm clouds. Optimalists fully recognize these warnings and prepare for them, while looking forward to clear skies on the other side. As I noted in my last post, we’ve got multiple farragoes in America at the moment. They’ll eventually pass, but it sure makes things confusing in the meantime.

In that vein, there are some significant storm clouds out there and I’m gonna flex my optimalist muscles by recognizing them (while also looking forward to the blue skies that are sure to follow).

U.S. Treasury Yields Are Dropping. The benchmark 10-year Treasury note has started to slip, down about 300 basis points from March, signaling that investors are becoming more bearish about long-term growth prospects for the economy. That sentiment is driven by the Fed’s announcement about raising interest rates beginning in 2023 and the growing reality that a divided Congress won’t be able to keep spending money like a drunk sailor. Long-term, all of this is for the good because it will put the economy back on a level playing field. But to paraphrase Bette Davis, fasten your seat belts because the transition might be a little bumpy.

The Great Labor Shortage Continues. When you see signs like the above in a small town like Southport, you know something weird is going on. Trades, retail and service sectors in particular just can’t find people to hire. The popular explanation is that people have become used to government support, but there’s probably more to it than that. In any event, until we have a fully revived workforce, full economic growth will be suppressed.

The Diplomacy Deficit. Joe Biden just completed his big diplomatic tour of Europe and beyond, but it masked a yawning gap in our diplomatic infrastructure. Uncle Joe has failed to nominate ambassadors to any of the countries that make up the G7. He hasn’t yet nominated a representative to NATO. The Economist noted that “Mr. Biden has proposed an activist foreign policy and an audacious domestic agenda, but he lacks many of the leaders he needs to pursue either effectively.”

The Delta Variant. This new mutation of the coronavirus is now present in 85 countries and is the dominant strain of infection in parts of Europe, Asia and Africa. Right now, it’s a race between vaccines and these new mutations. I’ll put my money on the vaccines, but’s it’s creating a lot of havoc and heartache in the meantime.

Dude, Where’s My Car? You can fly anywhere you want, but good luck finding a rental car. It’s “carpocalypse.” Major car rental companies sold more than 770,000 vehicles last year to offset the drop in business during the pandemic, meaning one of every three rental cars that were in service are now no longer available. Coupled with a post-pandemic surge in travel, it’s led to an average national car rental price in early May of $395. That old “Seinfeld” clip about rental cars is even truer now than it was then.

A Perfect Storm. Climate change in the West has created a biblical drought that is ravaging agriculture and creating perfect conditions for an apocalyptic fire season. The heat dome that covered the Pacific Northwest over the past week led to 45 deaths in the Portland area. My sister said it was so hot in Portland earlier this week (116 degrees) that “it took my breath away.” Meanwhile, there’s been a run on air conditioners across the region, which will produce more greenhouse gas emissions, which will . . . well, you get the picture — a perfect storm.

That’s enough storm clouds for now. Some of them will pass quickly, but others may linger for a while. As noted earlier, one of the first casualties in a farrago is the loss of situational awareness. So whatever you do, be aware.