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Structural Unemployment, China/REE, Base Metals Usage

November 11, 2021


Good Morning:

Structural Unemployment, China/REE, Base Metals Usage


Structural Unemployment


An article this morning in the Wall Street Journal is titled 'High (U.S.) Unemployment Not Structural Problem' says that "Fears high unemployment levels are structural in nature and beyond the aid of monetary policy are wrong, a new paper from the Federal Bank of San Fransisco argues".  Here is a link to the referenced paper, which is titled 'Is Structural Unemployment on the Rise?'.  I suggest you consider reading both articles, and think hard and reach your own conclusions about the issue of U.S. Structural Unemployment - reading time for the WSJ article 3 minutes, and for the Fed paper 8 minutes.  I see U.S. Structural Unemployment as an issue I may not have thought about entirely correctly up to this morning - although now having read the referenced articles I so believe my previous conclusion that there is important U.S. Structural Unemployment was, and continues to be correct.


Structural Unemployment is defined as (per Wikipedia): "a form of unemployment resulting from a mismatch between the sufficiently skilled workers seeking employment and demand in the labour market. Even though the number of vacancies may be equal to, or greater than, the number of the unemployed, the unemployed workers may lack the skills needed for the jobs - or may not live in the part of the country or world where the jobs are available".


Until this morning I have written on more than one occasion that the U.S. suffers from Structural Unemployment that will be difficult, if even possible, to remedy because of the approximate 40% of its manufacturing jobs that have been lost after 1999 and won't (or so I think) be returning.  What the Fed paper has focused me on this morning is (1) the definition of Structural Unemployment set out in the previous paragraph, and (2) importantly, the loss in U.S. jobs in the past three years in the construction and real estate sectors.  According to the paper "construction employment declined nearly 25% from the start of the recession through the end of 2009".


The paper concludes that there is a substantive relationship "between the bursting of the (U.S.) residential real estate bubble and the need for many unemployed construction workers to find work in other sectors" (the paper mentions 'health care') and "the effects of both these factors are likely to be transitory rather than permanent".  The Fed paper does not mention the loss in manufacturing jobs, and to me (importantly from my perspective) seems to rely for its conclusion on an underlying assumption that the U.S. can function in 'service economy mode' at the same level of overall economic success that it functioned at when it was a vibrant 'manufacturing based economy'.  I simply do not buy into such an assumption, nor do I buy into a belief that U.S. Government Quantitative Easing or other subsidization programs will result in reestablishment of the number of comparative high-paying jobs that existed in the U.S. Manufacturing and Construction Sectors prior to 2008.


All that said, I continue to believe - based on the foregoing definition of 'Structural Unemployment' - that the U.S. is faced with a serious, and likely irresolvable, 'Structural Unemployment' problem.  Again, I recommend you read both the referenced articles, as I think this a (if not the) fundamental issue faced by the U.S. and its Governments (at the Federal, State and Municipal levels) going forward.


China's Rare Earth Advantage


An article this morning titled 'China's Rare Earths Advantage Has Been Known For Decades - Which Means The Market Surge Is Unfounded' includes a number of Charts purporting to show where Rare Earths were produced in 2009 (97% China), and includes what I think is a useful 'read and think about' overview that you ought to read - reading time 8 minutes.


Emerging Market Base Metals Usage Change, 1995 - 2010


An article last Friday titled 'Emerging Markets Hearts Commodities' has a chart that purports to show the percentage of global consumption of Aluminum, Copper, Nickel and Zinc in the 'developing world' - reading time 3 minutes.  The chart compares the % of global consumption by the 'developing world' of those four base metals in 1995 and 2010.  Reading the chart the approximate %'s are:  (1) aluminum, from 40% to 70%, (2) copper, from 40% to 70%, (3) nickel, from 26% to 53%, and (4) zinc, from 46% to 70%.  An obvious question, which the article does not address, is (assuming the statistics are credible) how much of the usage of each of those four commodity metals are used by the developing countries internally, and how much of the usage of each of those four commodity metals are used in products that end up being sold by the developing country manufacturers to developed country consumers?


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Daily Press Release Price/Volume Changes - Today's Featured Data Component offers tables that each trading day show updated price and volume changes for all Companies in our Company Universe that issue Press Releases on that trading day.  You can find these tables by clicking on 'Today's Press Releases Price/Volume Changes' button found in the upper right portion of our website's Home Page immediately below the 'Resource, stock Indice & Currency Rate Charts' button.  There are two different types of tables, being those that sort and report on the day's trading activity by:


·           Press Release Type (e.g. Drilling and Discovery); and,


·           Sub-Industry (e.g. gold, silver, etc.).


I invite you to visit StockResearchPortal and review this feature - particularly if you are an investor or trader in resource equities.

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Consider joining the Mining Stocks and Oil & Gas Stocks Groups on Linkedin by clicking on one or both of the following images.


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Best Regards,

Ian R. Campbell


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