Monday, November 16, 2015

More signs of cost push inflation.

The company I work uses Direct Travel service which sends out travel alerts. More and more, the alerts have nothing to do with weather delays and are now almost all related to worker strikes across Europe.



Essentially, workers around the globe be they Walmart, McDonalds, waiters in CA and WA state and other essentially unskilled labor like cabin crews in England and now Germany are wondering why their employer's stock price is in the clouds while their personal finances are in the dumps.  These people cannot afford to buy houses anymore.  They do not make enough in many cases to move out of their parent's basements or to start families.

More and more the corporations will be "asked" to share their profits and it will lead to drastically lower profits for these corporations going forward. 

Almost worthy of a separate post is the fact that the airlines are at a special kind of Ponzi peak right now with profits benefiting from relatively cheap labor and ultra cheap fuel prices while at the same time recent airline consolidation has removed the heavy fare competition environment.  In other words, full priced tickets without all the costs.  So it has been a great time to be in the airlines but know this: they are cyclic.  Cost push inflation is going to raise their input costs.  Labor and fuel will rise and I doubt that fully priced tickets can be raised another notch without producing diminishing revenue.  The traveler is not made of money.

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