This week in 1998, Celine Dion’s “My Heart Will Go On” topped the UK pop chart. It’s hard to overstate the significance of a song like this. Inspired by (and featured in) the 1997 film Titanic, the song was synonymous with grandiosity, wanderlust, romantic yearning, and the sort of lustful breathlessness of the film’s leading actors, Leonardo DiCaprio and Kate Winslet. Dion piped the song like she was Whitney Houston impersonating a siren sitting on the edge of an iceberg. Her voice went on...and on…and on.
Today the song seems a little cringy—trite, sentimental, and overexposed. And I find myself reaching for the dial within seconds of hearing it. But back in 1998, the song was a massive hit. It took home an Academy Award for Best Original Song. It also cleaned up at the Grammy Awards. It even took home a Golden Globe.
The song was originally intended for Norwegian singer Sissel Kyrkjebo, but through a series of events—mostly, the composer for the film felt like doing Dion and her marketing team a favor—Dion’s version was chosen, eventually becoming synonymous with the movie. The real Titanic is sitting at the bottom of the Atlantic Ocean off the coast of Newfoundland. But the movie and Dion’s song will forever have avoided the iceberg of obscurity.
Welcome to this month’s economic indicators, where we try to avoid our own economic iceberg and navigate our way through some challenging waters. In some ways, things have never been better. Note that Rapid City’s current unemployment rate of 1.8% is the lowest in the entire US right now. So, in terms of employment, we have never been better. The same is true with wages. The average weekly wage in Rapid City is over $1,000 for the twelfth straight month, showing no signs of going back. In fact, in the last five years, Rapid City’s wages have grown by 29%, higher than all its competitor cities and one of the highest in the country.
But here’s the thing—inflation inched up again since last month and overall consumer spending was slightly down on a year-over-year basis. We simply aren’t out of the woods yet. The recent fed announcement to keep rates steady was an admission as such. So, while every night in my dreams I may hear the Federal Reserve whispering sweet nothings about a soft landing, waking up is an iceberg hit to the hull of reality.
This brings me to tariffs, which are suddenly big news. Put simply, they work better as a negotiating tactic and less well in practice. Why? Because tariffs assume countries have their own vertical supply chain of specific sectors in house—sort of the way things were in the 60s, 70s, and 80s. And by imposing tariffs, it helps suppliers inside that country. Sounds great in theory, right?
But the truth is that the world economy no longer exists like it did half a century ago. Supply chains now span hundreds of countries across dozens of companies and sectors. Take the iPhone, for instance, which spans over 50 different countries and has tens of thousands of workers. This is less of a supply chain and more of an ecosystem. You really can’t tariff your way into replicating the iPhone’s supply chain in the United States without taking a decade (or more) and adding 50% to the retail costs.
It’s a losing strategy if implemented. And it invites counter-tariffs, which complicate other supply chains for other products. From there, it’s a hop, skip, and a jump to a tariff war. While our hearts will go on, the economy will be headed for a crash.
Stay safe and God-speed.
Tom
