Capital Is Optimizing Again

In my calculations of utilization of labor and capital, there is a derivative of one equation that tells to what extent capacity and labor is being optimized. Here is the graph of current monthly data.


As the lines get closer to 0%, they are more optimized. When they reach 0%, they are fully optimized.

The graph shows that capacity is being fully optimized again as it was during the troubling 3rd quarter of 2104. Yet labor is being less optimized now. Capital has made improvements to their position, while labor has actually lost.

Disclosure: None.

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Gary Anderson 3 years ago Contributor's comment

Eventually, capitalism will devour labor. Trump tax cuts could make it even worse. Why capitalism does not want labor to flourish seems to be a function of globalization. But slowing of labor's discretionary income could bring on the recession. Automation may contribute to this weakness as well as a lack of unions.