In this blog, as 2021 and the second year of the Covid pandemic end, please permit me a few unconventional comments.  I’ll apologize in advance if I offend.

Welcome to this week’s Steak House Index update.

If you are new to my blog, or you need a refresher on the SHI10, or its objective and methodology, I suggest you open and read the original BLOG: https://www.steakhouseindex.com/move-over-big-mac-index-here-comes-the-steak-house-index/

Why You Should Care:   The US economy and US dollar are the bedrock of the world’s economy.  

But is the US economy expanding or contracting?

Expanding.   Significantly.  In fact, in the 6 months of Q2 and Q3, growth nominal terms  exceed  $1.1 trillion of economic activity.    The world’s annual GDP is expect to end 2021 near about $93 trillion.   Annualized, America’s GDP settling in at $23.17 trillion — still around 25% of all global GDP.  Collectively, the US, the euro zone, and China still generate about 70% of the global economic output.  These are your big players.

The objective of this blog is singular.

It attempts to predict the direction of our GDP ahead of official economic releases. Historically, ‘personal consumption expenditures,’ or PCE, has been the largest component of US GDP growth — typically about 2/3 of all GDP growth.  In fact, the majority of all GDP increases (or declines) usually results from (increases or decreases in) consumer spending.  Consumer spending is clearly a critical financial metric.  In all likelihood, the most important financial metric. The Steak House Index focuses right here … on the “consumer spending” metric.  I intend the SHI10 is to be predictive, anticipating where the economy is going – not where it’s been.

Taking action:  Keep up with this weekly BLOG update.  Not only will we cover the SHI and SHI10, but we’ll explore “fun” items of economic importance.   Hopefully you find the discussion fun, too.

If the SHI10 index moves appreciably -– either showing massive improvement or significant declines –- indicating growing economic strength or a potential recession, we’ll discuss possible actions at that time.

The Blog:

Land of the Free.   Home of the Brave.   Great words.   They were written more than 200 years ago, at a time when America was young and life was far more challenging.  In fact, the words were later determined to be so great, that in March of 1931, they became the official American anthem, during a time when Americans faced tremendous adversity and bravery was essential simply to survive the hardships of the times.   

Fast forward to 2021.  Another 100 years have passed.   And I fear these words are a little watered-down in the America I see around me.  If I was being snarky, I might suggest today’s more appropriate motto might be, “Land of the governed, home of the frightened.”    At least this is the feeling I’m getting here in California.   But I’m never snarky.  🙂

As you probably know, once again, effective today at 9:21 am, California reinstated their “mask mandate.”   Once again, the state of California has mandated that every human entering into an indoor public space must wear a face mask.   This emergency order is in effect for the next 30 days, from December 15th thru January 15th. 

30 minutes later, just before 10 am, I entered the local Target store.   A very large sign at the entrance told me I must wear a face mask to enter.   Per the new mandate. 

But I left my mask in my pocket, civil disobedience bubbling up out of me like lava from an erupting volcano!  And then, as I entered the store without a face mask, a woman I did not know, without provocation, looked at me and exclaimed, “Do  not  put on a mask.”   I was shocked by her comment.  I was surrounded by civil disobedience!  🙂

And I saw that many other shoppers were with us … their noses, mouths and chins completely visible!  Then I smiled.   Me?   Ignoring the law?   Crazy talk!

But I did ignore the law and mandate.  Later, I might even decide to not wear a seat belt!  Crazy talk!

I did not wear a face mask inside the store.  Ironically, even before that stranger uttered her supporting words of insurrection, I had already decided, before entering the store, that I had no intention of wearing a face mask inside Target.   I had already decided that if confronted and told I must wear a mask, I would simply leave the store.  In other words, I would “vote with my wallet.”   But mask-free, with my smile clearly visible, unimpeded and unbothered by the missing and absent Mask Police, I bought my cat food and other kitty treats, checked out at the self-serve machine, exited the store and went on my merry way.  

Almost 2 years ago, in March of 2020, the state of California mandated a lockdown.   I felt the  emergency  order, in response to the novel Coronavirus, was a good idea at that time.   The disease and pandemic were brand new, the impacts and effects were completely unknown and unpredictable, and virologists and epidemiologists everywhere were painting doomsday scenarios.   I agreed then, and still believe the initial governmental response was correct:   Society had to be protected.   California — and the world at large — was in a state of emergency. 

But when does the emergency end?   Earlier this year, the California Third District Court of Appeals was asked precisely that question and said the Governor still had emergency powers.  At least he did in November of 2020.  But they also said “timing is everything…” and I wonder if they would rule the same way today, if asked about this new mask mandate?   Are we still in a state of emergency?   And if we are, when does it end?  When we run out of Greek letters?  

The latest variant — dubbed a “variant of concern” by the WHO, or “VOC” for short — is making its rounds.   So, by governmental decree, today we must wear a mask because of Omicron — the 13th variant of the original virus and the 5th “Variant of Concern” according the the WHO.  If history continues to repeat itself, in another month or two, California may impose masks mandates or lockdowns because of the next VOC … and months later the next VOC and so on.  For months or years into the future, this pattern could repeat.   Imagine:  This might continue indefinitely.  In fact, given the pattern, and the epidemic fear many folks have of catching any cold, flu, or Covid variant, California could pass laws making us a permanent mask-wearing state.  Oh joy of joys!

Home of the brave?   Not so much.   Land of the free?   Hmmm….

This is my opinion.  You don’t have to agree … and I welcome a lively debate with anyone interested in a non-judgemental debate.   But I fear for the freedoms granted us when America was born.  You must be brave to be free.  Because freedom can be dangerous.  It requires that we make individual choices that might end badly for each one of us.   Let me be clear:  I’m not suggesting all American’s have unfettered freedom.  When my choices could potentially abridge the freedoms of others, there must be limits.  I fully agree.  There are true emergencies … and public health is a real thing.   But, paraphrasing the old expression, “I know it when I see it, and this is not it.”   Again, my opinion.

Not when 79% of California’s citizens have received at least one vaccine dose.  And almost 2/3 are fully vaccinated.  It’s time to move on … get things back to normal … business operating fully … and it’s time to take a bit more personal risk.  If we choose to.   Or, if we choose to, we can wear a mask. 

https://usafacts.org/visualizations/covid-vaccine-tracker-states/state/california

No, these vaccine statistics do not eliminate individual risk.  Risk remains.  For all of us.  For many things including Covid.  And thus, we should each have the right to decide if we want to wear an N95 (or other) mask for personal protection.  But after almost 2 years, 2 vaccinations PLUS a booster shot, I’m done with the state of California ordering me to wear a mask.  I may choose to, for any number of reasons, but it will be my choice going forward.   But I believe the state of emergency is over.   I believe that if everything in an emergency, then nothing is.   If the public health emergency is over, and mandates like this remain in place, then the land of the free is no longer as free as I believe it should be.  My choice … my opinion.  

But the unknown woman at the Target entrance clearly agrees.   She, too, has had enough.   Fortunately for her, with me she had a friendly ear.   I can only imagine what might happen if she made the same comment to someone who harbored an opposing opinion.   There could have been blood in the aisles at Target!  🙂

What does this rant have to do with economics, you may be wondering?   “Free market” economics have made America exceptional.   I didn’t say problem free … I said exceptional.  I’m only talking about our economic strength and vitality.   The word free is critical to, and foundational to, our economic strength.  Right now, in China, we see what happens when the government decides to change long-standing economic rules on the fly.   Many Chinese companies are suffering greatly.   China is in a world of hurt right now, and it is likely to get much worse before it gets better.  I only hope the economic contagion doesn’t spill over into other global markets.  I like free markets, I believe in free markets, and when I see governmental overreaching — like today’s mask mandate here in California — I worry. 

OK, time for a steak.  Which, this Saturday at least, you will probably have to enjoy at home.  Because most of the SHI10 restaurants are full this weekend:

Yes, there is one 9pm slot open in Dallas … and a couple in Philly, but many markets are completely booked this weekend.   Here’s the longer term trend. 

The FED finished their last 2021 meeting earlier today.   In their press release, they commented: 

“With progress on vaccinations and strong policy support, indicators of economic activity and employment have continued to strengthen. The sectors most adversely affected by the pandemic have improved in recent months but continue to be affected by COVID-19.  Job gains have been solid in recent months, and the unemployment rate has declined substantially.  Supply and demand imbalances related to the pandemic and the reopening of the economy have continued to contribute to elevated levels of inflation.  Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.”

I completely agree.   The FED and our steakhouses both suggest that as 2021 ends the US economy is on solid footing.  

This is my final post for 2021.   I’m taking the rest of the year off … so I wish you, your family and friends, and all those you love and care about, very happy holidays and a Happy New Year.  I’ll reconnect early in January.   Until then, please be well. 

<:>  Terry Liebman