Takeaway: Heavy Truck Smackdown. Generation Enterprise? Two Debates Down, Two To Go. Newswire. Did You Know?

Heavy Truck Smackdown. The Commerce Department says you are a heavy weight truck if your GVW is over 14,000 pounds—which means you are nearly always bought for commercial purposes. Over half of heavy truck sales consist of massive “class 8” rigs that include 18-wheelers. Last week, the department reported that heavy truck sales were down -29.0% YoY in August. That’s the fifth negative month in a row.

So long as we have been keeping data (since 1968), a YoY heavy truck sales decline of this magnitude has always occurred (and only occurred) during or just before a recession. Ditto for the last 11 months of YoY declines in industrial production: These have also been closely associated with a current or subsequent recession. Which is another way of saying that these two indicators—heavy truck sales and industrial production—are closely correlated with each other.

Neil Howe / The Zeitgeist - heavy trucks

Trucks are bought to bear traffic. We don’t have all the data yet for actual freight traffic in August. But the numbers we do have show a worrisome picture: While the ATA’s truck tonnage rose briskly, the Cass Freight Index is down. Meanwhile, most indicators of rail, intermodal rail, and inland waterway traffic also fell. Truck company operators themselves attribute falling purchases to weak demand, uncertainty about the future, and a hangover from overpurchasing last winter (perhaps to beat an electronic logging compliance deadline). Most companies seem worried about keeping drivers busy. The ATA reports that driver turnover has fallen to its lowest rate since 2011. That’s not a good sign.

A more benign interpretation would be to chalk all this up to the declining significance of “stuff” in generating GDP. As I have noted elsewhere (see “Immaterial World”), the post-GFC decade has witnessed an accelerating decline in industrial production as a share of GDP, both globally and domestically. Thus far, since the rise of the dollar, the slowdown gripping U.S. thing-producers seems to be compensated by a speed up in weightless service producers. So maybe we don’t need to worry. Then again, given the speed of this late-cycle decline, we may be deluding ourselves. Another month or two of data will clarify the outlook.

Generation Enterprise? A popular myth about Millennials is that a large share of them are super-entrepreneurs, all scrambling around trying to invent the next Snapchat or Whatsapp. As I have repeatedly explained, the truth is quite the opposite: By most measures, Millennials are the least entrepreneurial generation of young adults we have seen in many decades.

According to the Kauffmann Foundation survey, the rate of business start-ups under age 35 has been dropping since the late 1990s—while rising for older age brackets. Similarly, according to Census data, Millennials are thus far less likely to be self-employed at every age than Boomers or Xers were at the same age. New U.S. business formation has been in overall decline for the last decade (file this under “declining business dynamism”)—and Millennials are leading the way. They are also, by the way, leading the decline in geographic mobility: Americans of all ages are moving less, but the moving rate among the young has fallen the most.

Another popular myth is that Millennials have short time horizons and change jobs a lot. Also false. In fact, they are as likely to value “long-term planning” as older generations and (per the BLS) have the same median job tenure in their late 20s as Boomers or Xers did at the same age. According to Census data, the share of workers age 22-29 who change jobs in a given month has actually declined significantly since the late-90s, from about 4.5% to 3.0%.

Why is popular perception so misguided? Probably because it is largely shaped by older Boomers and Xers, who take it for granted that youth gravitates toward risk, rebellion, and free agency. They don’t understand that the Millennials peer personality is pushing in a different direction—away from risk and toward conventional norms and social acceptance. Some surveys show “fear of risk” to be the single biggest reason why Millennials shy away from start-ups. Silicon Valley? Millennials love the birthplace of digital IT—but move there far more often as Ivy-League degreed employees with luscious benefits than as entrepreneurs. Boomers and Xers took the risks and founded most of the digital winners. Millennials simply want to join their teams, and help them turn winners into empires.

All these themes are spotlighted by “The Millennial Economy,” a just-released national survey by Ernst & Young and Economic Innovation Group. The survey confirms that, yes, Millennials admire entrepreneurs and agree (no doubt because they’ve been told so often) that they are a very entrepreneurial generation. But it also identifies the myriad reasons why Millennials actually shrink from going it alone—not enough money, too risky, don’t know how, etc. All very prudential. So how do Millennials believe they can actually get ahead? This survey question is illuminating:

Neil Howe / The Zeitgeist - millennials

The dominant answer is to stay with one company and work your way up the ladder. Among whites, more chose this risk-averse path than both start-ups and job-hopping combined. (Interestingly, black women are the only Millennial demo in which a plurality chose starting your own business.) Not coincidentally, perhaps, the survey shows that white Millennials worry the most about being worse off economically than their parents as they grow older.

Two Debates Down, Two to Go. As the entire world knows by now, Donald Trump lost the first debate last week—and then compounded his loss, as he is wont to do, by doubling down on a peevish vent. Rather than learn more about immigration, the South China Sea, or tax reform, the American public was asked to ponder whether the Venezuelan Miss Universe of 1996 was fat-shamed. Hillary Clinton’s best strategy has always been to bypass policy, supposedly her strong suit, and simply paint Trump as temperamentally unfit for office. Trump is doing all he can to oblige her.

Last night, Governor Tim Kaine and Senator Mike Pence went at it in the VP candidates’ debate. Kaine was apparently tutored by Joe Biden who (in his 2012 debate against Paul Ryan) hectored and interrupted Ryan to distraction. Kaine did the same, but the overall effect was not attractive for the undecided voter. For the most part, Pence remained calm, resolute, and patient. He stayed on point and refused to be shaken. The Donald should be expressing heartfelt thanks to his running mate for doing all he could to stop the negative momentum of the first debate. Unfortunately, he can’t do much. VP debates have never had much influence on poll numbers.

Overall, the ten days since the first (Trump-Clinton) debate have trended badly for Trump. Back in mid-September, he was within one percentage point of Clinton in the Realclearpolitics national poll tracker. By this evening, the gap has widened to 3.8 percentage points. Betting odds, which had once closed to around 62-38 Clinton have now widened back to 72-28.

Neil Howe / The Zeitgeist - realclearpoliticsOCT

Debates two and three loom very large in importance for Trump. He has to find a way to come out on top in them if he is to have a realistic chance of catching up to Hillary. He also has to hope that the majority of the relatively large share of undecideds this year (nearly 30%) find a reason to prefer him rather than her in a choice between two candidates they don’t especially like.

NEWSWIRE

  • A large plurality (44%) of Millennials say that climbing the corporate ladder is the best way to advance their career—twice the share that say starting their own business is the key (22%). While some high-profile Millennials have made a splash with startups, this generation as a whole is too risk averse and financially unstable to be entrepreneurs. (EY and EIG)
  • After cleaning out the overstocked home of his elderly father, columnist Wayne Moriarty traces trends like frugality, hoarding, and even recycling back to the Silent Generation. He wisely observes that, growing up amid the backdrop of the Great Depression, the Silent quickly learned the value of a dollar. (The Province)
  • Well over half (55%) of e-commerce shoppers start their product search on Amazon’s website or mobile app, up from 44% a year ago. Despite the efforts that traditional brick-and-mortar brands like Walmart and Best Buy have made to push into e-commerce, Amazon is still the unrivaled king. (BloomReach)
  • Contributor Ilana Strauss notes how Millennials’ penchant for communal living is not unique, but is rather the historical norm. She makes a solid point: For most of human history, people have lived in large, non-family groups—the idea that a household is limited to the “nuclear family” is a much more recent development. (The Atlantic)
  • Political history professor and Boomer Robert Rupp muses about how Millennials overtaking Boomers in sheer number will benefit both culture and politics. He summarizes: “Our generation was like an orange in the ostrich’s throat…But now we have the Millennials in the majority. The good news is that they are more knowledgeable, tolerant and locally active than the Boomers.” (Charleston Gazette-Mail)
  • Craft beer’s multiyear streak of double-digit percentage sales growth has ended—but not because of a lack of demand. With thousands of breweries competing for a small number of coveted hop varieties, many can no longer get their hands on enough to satisfy customers. (The Wall Street Journal)
  • New data show that the birthrate for women ages 15 to 19 hit another record low in 2015, declining 8% year over year to 22.3 births per 1,000 women. More than previous generations of youth, cautious Millennials are either practicing safe sex—or are abstaining entirely. (National Center for Health Statistics)
  • 63% of Xer survey respondents say that not having enough money for retirement keeps them up at night—compared to roughly half of Millennials and Boomers. Hit hard by the recession during the formative adult years, “Generation AnXious” is feeling the pressure to make up for lost time and wages. (American Funds)
  • The Department of Transportation recently released a set of safety guidelines and state mandates intended to pave the way for widespread driverless car use. Automakers and regulators will soon confront the vast logistical, practical, and technological challenges standing in the way of driverless car adoption. (The New York Times)
  • Author Colby B. Jubenville believes that because Millennials spent childhood being coached by parents and teachers, they are more responsive to workplace mentors than Gen X. He’s right that Millennials work best when supervised: “[T]he Gen X generation has been called the ‘lost generation.’ I believe [M]illennials might be best described as the ‘found’ generation.” (The Washington Times)

DID YOU KNOW?

No Credit for Young Men (and Women). We’ve mentioned before that Millennials shy away from credit cards. (See: “Credit Cards Lose Their Charge.”) That message is confirmed by New York Times analysis of Federal Reserve data, which finds that, even as overall U.S. credit card usage ramps up, the share of Americans under age 35 with credit card debt has fallen to its lowest level since 1989. Burdened with heavy student loan debt, many Millennials simply cannot risk digging themselves into a deeper hole. Others are wary of encountering the same financial hardships that plagued their parents: According to 32-year-old Jason Towner, “I was seeing what was happening around the world, and what was happening in my backyard, and I was thinking, ‘[Credit card ownership] is not a great idea.’” While avoiding indebtedness seems prudent, financial experts worry that Millennials’ credit card aversion will further push back milestones (like home ownership) that require a credit history.

The New Gridiron. For decades, college freshmen have dreamed of making it big on their school’s football, basketball, or baseball teams. But now, a new Wall Street Journal article reports that many Millennials are eschewing these campus mainstays for nontraditional sports such as ultimate Frisbee and fishing. Why? For one, safe alternative sports are a good fit for risk-averse Millennials. After suffering a head injury in lacrosse, 21-year-old Trent Sears opted for broomball, a game in which players sweep a ball across an icy surface with a broom. Another upside is the friendly, inclusive nature of these sports. Tufts University student-athlete Qxhna Titcomb lauded that, in ultimate Frisbee, “You always see people cheering for and high-fiving both their teammates and opponents.” Ultimately, 22-year-old lumberjack champion Billy Adams believes that at its root, sport should be a feel-good experience in which everyone has the chance to succeed: “Everyone deserves to have the same feeling that I had on that stage, at something they’re good at.”