Investing in the Automation Economy

The “recovering” economy has richly rewarded some while leaving large swathes of the population behind. For better or worse, that dynamic will continue to play out in 2015 and beyond.

The U.S. economy finished 2014 with some positive momentum, at least by some measures. Retail sales rebounded ahead of Christmas. And a flurry of new hiring brought the official unemployment rate down to 5.8%, the lowest since 2008.

That’s all good, but headline economic statistics put out by the government are notoriously misleading. Dig deeper and we discover that 6.9 million people are working part-time jobs because they can’t find full-time work. The actual labor force participation rate didn’t improve in 2014. Workforce participation remains as low as it’s been since Jimmy Carter was president.

Even the New York Times (December 12, 2014) is taking notice: “The United States, which had one of the highest employment rates among developed nations as recently as 2000, has fallen toward the bottom of the list.” This is the somber reality: “Working, in America, is in decline…the share of prime-age men — those 25 to 54 years old — who are not working has more than tripled since the late 1960s.”

Most of these jobless Americans aren’t even counted as officially unemployed! They just…aren’t working.

Some economists worry that things could get worse before they get better – especially for low-skilled workers and debt-ridden college graduates. Millions of hourly and part-time positions that require no college degree are being filled by college graduates who can’t find employment in their fields of study. (You’re likely to find “sociologists,” “philosophers,” and “art historians” waiting tables at a restaurant near you.)

Machines Threaten to Make
Many Workers Obsolete

Millions of service and factory jobs could be eliminated in the coming years thanks to automation. Computers and robots will increasingly do more of the tasks that people now do, and with greater efficiency and lower cost. That’s bad news for a large portion of the workforce. But it’s not necessarily a bad thing for the economy. High-tech automation could be a great opportunity for investors.

ROBO-STOX Global Robotics and Automation ETF (ROBO) invests in companies operating within the following categories: industrial robots, service robots for use by government or businesses, personal robots, and ancillary businesses related to robotics and automation.

According to Zacks Investment Research, “This ETF could be an ideal choice for those seeking a play on a high growth industry that has both proven itself, and has plenty of room left to run. The trend towards greater levels of automation is clear …”