Quote of the Week
“Anything worthwhile takes time to build. We all want success now, but that’s not how success works. After all, if we had immediate success, we wouldn’t build the character we need to sustain true success. The struggle, adversity, triumphs, and victories are all part of the building process, and we must embrace all of it.” – The Carpenter, by Jon Gordon
Ready, drum roll please, the results are in. According to the impartial Congressional Budget Office, the shutdown has cost the economy $11 billion dollars. This is enough to reduce the first-quarter growth by about 0.4 percentage points. Just a little history; every shutdown cost unrealized economic growth. Both the Democrats and the Republicans have initiated government shutdowns and the individual or the Party that initiates the shutdown gets the blame. My opinion only; law should be passed to make government shutdowns illegal.
So much for statistics. The real harm is to the people affected by the shutdown. The shutdown cost 800,000 government workers to miss four weeks of pay. Over 100 million people in this country live paycheck to paycheck. I am sure that a lot of credit card bills were not paid on time resulting in late fees and poorer credit scores. Just multiply that by all the other bills that were not paid on time. Now let’s add in the 4 million government contract workers that were also not paid.
The government workers will get their back pay. The contract workers won’t get any back pay, plus they are usually the lowest paid workers. What did it accomplish? Absolutely nothing.
U.S. stocks finished mixed last week following strong performance since the beginning of the year. The International Monetary Fund (IMF) cut its 2019 and 2020 global growth forecasts, but that was hardly a surprise given trade tensions, the China slowdown, and declining PMI’s in Europe and Japan. Our thoughts on the economy are still the same even though the markets have rallied since the beginning of the year. We still believe that we are in for rough seas going forward and we have positioned the portfolios in accordance with the trend. Ignoring the trend can be hazardous to your economic health. Hope is not a good investment strategy.
Last week the Dow was up 0.1%, the S&P 500 was down 0.2%, the Nasdaq was up 0.1%, the MSCI EAFE was up 0.5%, and the 10-yr Treasury Yield was down 0.03%. For the year the Dow is up 6.0%, the S&P 500 is up 6.3%, the Nasdaq is up 8.0%, the MSCI EAFE is up 5.5%, and the 10-yr Treasury Yield is up 0.7%.
That Computer Just Took My Job!
Recently, while dining with friends, the subject of the impact of technology (artificial intelligence) on jobs came up. The comment was made that, as usual, jobs are being and will be eliminated by computers and technology. In that regard the following article is interesting.
What The AI (Artificial Intelligence*) Jobs Of The Future Will Look Like
By Anna Codrea-Rado
Robots aren’t stealing jobs, but they are drastically changing what they look like.
As the founder of an artificial intelligence startup, Joseph T. Rogers already has one of the jobs of the future. At his company, WorkDone, he’s building a browser plug-in that uses machine learning to analyze repetitive tasks and create an AI bot** to automate these processes, freeing up employees to engage in higher-value work.
As business leaders begin to reap the benefits of AI – such as lower operating costs, increased efficiency, and revenue growth – they first need to understand just what these future jobs will look like.
Here’s a look at what history teaches us about the impact of automation on the job market, what the future might hold, and how businesses can start adapting to these changes.
What History Tells Us
Technology has long been blamed for decimating industries or making jobs redundant. But historical data tells us a different story.
A 2015 study by the management consultancy firm Deloitte found that over a 144-year period, technology created more jobs than it destroyed in England and Wales. Analyzing census data from 1871-2015, the study concluded that technology was, in fact, a “great job-creating machine.”
The same is true in the United States. Research by David Autor, professor of economics at MIT, found that during the 20th century, the employment-to-population ratio rose. During that period, automation and technological progress did not make human labor obsolete. (They just shifted the laborer’s role.)
“It’s the story of technology throughout history,” Rogers said. “The guy who replaced the horseshoes when those wore out, ten years later was replacing the brakes on a Model T.”
For Rogers, the main misconception that AI will take away jobs is based on the reality that ‘jobs of the future’ is an abstract concept, while current roles — the ones morphing — provide a paycheck. Although the future is exciting, it’s also unknown. Dell Technologies’ Realizing 2030 report found that 85 percent of jobs that will exist in 2030 haven’t yet been thought up.
Despite fears around the unknown, research from McKinsey reports that, on the whole, job growth will outpace job loss. Researchers found that while 15 percent of the global workforce — 400 million workers — could be displaced by automation by 2030, this will be offset by the jobs gained. In the same period, labor demand is predicted to grow by up to 33 percent of the global workforce — the equivalent of 890 million new jobs.
- Scott Clendaniel, who runs AI and advanced analytics for the financial services firm Legg Mason, has seen firsthand the role of AI in the workplace. “Within the past 24 months, I have not seen an AI project wipe out large numbers of employees,” he reported. “What happens instead is those folks are put into jobs where AI doesn’t make as much an impact, and they can stop spending time copying data from one spreadsheet to another.”
In a 2017 global study with 1,000 large companies, Accenture identified three primary job categories that will arise as a result of AI innovations.
According to the study’s authors — trainers, or humans who will teach AI systems how to perform tasks, will make it easier for users to interact with bots** by teaching them how to answer questions with compassion and empathy. Explainers, then, will bridge the gap between technologists and business leaders by demystifying the complexity of AI at the executive level.
Finally, sustainers, who will help ensure that AI systems are running as intended, will focus on the ethics and compliance of the algorithms. (Other job titles from the study include: smart-machine interaction modelers, context designers, and automation ethicists)
“These roles are not replacing old ones,” the study’s authors H. James Wilson, Paul R. Daugherty, and Nicola Morini-Bianzino wrote. “They are novel, requiring skills and training that have no precedents.”
Titles that involve AI ethics are particularly prescient. Usually thought of in relation to driverless cars, there are applications that reflect all aspects of business. In addition to his role as the CEO of WorkDone, Rogers is also an AI ethicist; a large part of what he does relates to the impact of AI on the future of work.
Cognizant of the fact that his startup will disrupt jobs, Rogers has built job creation into his business model. “WorkDone has been created as a public benefit corporation with a percentage of revenue dedicated to helping workers displaced by AI get to their next thing,” he reported. “That might be retraining or something else completely.”
A Soft Landing
Over the next 10-15 years, the labor market will look vastly different. Getting there will involve a significant transition period whereby companies adopt AI into business processes, innovation strategies, and corporate culture.
What business leaders do during this transition period is vital to realize growth and profitability, and creating new roles dedicated to implementing the change is an important step, explained Clendaniel.
Currently, there is a disconnect between the rate at which AI capabilities are advancing and businesses are able to deploy them. “The industry as a whole is very fond of jargon,” Clendaniel said, “But the executives who need to put the programs into place are not.”
This is where the greatest need for roles within the “explainers” category comes into play. Most departments will soon need a position like an AI strategist who can determine whether or not to deploy AI for a specific application. “You’re seeing more jobs that are essentially data science translators,” Clendaniel explained. “These roles act as the in-between for business folks and those working on the AI projects.”
Yet perhaps the trickiest challenge will be how company culture will adapt to the widespread adoption of AI. Executives need to ensure workers facing the prospect of starting a completely new role, or those who need retraining or redeployment, are managed through this shift in a way that makes them feel they still have an important place in the organization. “People need to continue [feeling] valuable and having self-worth,” Rogers said.
Managers and department heads will also need to rewrite career paths (perhaps even their own). Rogers emphasizes the need for these plans to be made in consultation with the affected workforce.
“There needs to be a frictionless way of getting the people who are out of a job into their next thing,” he said. He added that in an ideal world, it will be the worker who shapes what their own new role looks like, rather than their manager dictating it to them.
And while job titles and functions are up in the air, in the end, he was clear about one thing. “Business leaders need to proactively provide a soft landing.
Codrea-Rado, Anna. “What The AI Jobs Of The Future Will Look Like.” https://www.forbes.com/sites/delltechnologies/2018/12/13/what-the-ai-jobs-of-the-future-will-look-like/#2139810a2053. Accessed 28 January 2019
*The theory and development of computer systems able to perform tasks that normally require human intelligence, such as visual perception, speech recognition, decision-making, and translation between languages.
**An autonomous program on a network (especially the Internet) that can interact with computer systems or users, especially one designed to respond or behave like a player in an adventure game.
By the Numbers x 2
ALL WERE HIGH – At the end of 2017 (12/11/17), 10 Wall Street equity strategists forecasted the closing value of the S&P 500 as of 12/31/18. Their predictions ranged from a low of 2675 to a high of 3100, up from an actual 12/31/17 close of 2674. The actual 12/31/18 closing value for the S&P 500 was 2507, equal to a 4.4% total return loss. The actual index close was lower than all 10 predictions (source: Barron’s).
DEAD WRONG – In the 12/31/17 issue of USA Today, writer Adam Shell wrote of “18 stocks to Consider for 2018: All of the 18 names are seen rising +25% or more, according to analysts.” Instead 17 of the 18 stocks lost money in 2018, and an equal investment in all 18 stocks fell 26.1% for the year (source: BTN Research). – Michael A. Higley, BTN 01-28-2019
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