The State of the Economy Thread - “Falling inflation, rising growth give U.S. the world’s best recovery”

[Nerm]

2 hours ago, Larry said:

 

Total direct and indirect labor costs of X might be 90% of the price of X. It might be 99%. But it cannot be 110%. 

 

Therefore, increasing the cost of labor by 50%, cannot force the price of X to increase by more than 50%. 

 

 

 

What if X (a hamburger) costs me 5 dollars in indirect and direct labor costs total to make?

 

Are you just saying that the price has to be higher than that to make a profit?  I understand that.  

 

What happens if the labor cost of X becomes more than anyone is willing to pay for X?

[CousinsCowgirl84]

5 hours ago, TryTheBeal! said:

Just want to point out that the “higher wages just mean higher prices” person in here wants to triple the gas tax because they own a Tesla.

Don’t be foolish. And no reason to be mousy.

Higher wages do mean higher prices, there isn’t any evidence or economic theory to the contrary is there? You are welcome to present it.

 

I own a Tesla, but I also operate a business whose vehicles use Diesel and Gasoline, drive about 50 miles a day and get about 16 miles a gallon on average. I don’t want to triple the gas tax because I own a Tesla. I want to triple the gas tax because I want everyone to own a Tesla. And pay for roads. And pay for green infrastructure.

[TradeTheBeal!]

“Green infrastructure” isn’t roads, it’s rails.

 

But anyway, guess what else can generate even more tax revenue than gas taxes?  And in a far more beneficial and equitable way?

 

Wait for it…HIGHER WAGES!!

[CousinsCowgirl84]

12 minutes ago, TryTheBeal! said:

“Green infrastructure” isn’t roads, it’s rails.

 

 

I don’t disagree with you, but also charging stations, and solar power generation, etc.

 

I can’t remember if it was here or somewhere else but I believe I have made the argument that we should not incentivize driving, especially for people who are poor.
 

Insurance, gas, a car payment, traffic citations, negative interactions with police could all be avoided if mass transit was actually a viable and attractive alternative to riding around in a beater.

 

12 minutes ago, TryTheBeal! said:

But anyway, guess what else can generate even more tax revenue than gas taxes?  And in a far more beneficial and equitable way?

 

Wait for it…HIGHER WAGES!!

 

Still waiting…

Edited November 25, 2021 by CousinsCowgirl84

[China]

North American fertilizer shortage sparks fears of higher food prices

 

A global shortage of nitrogen fertilizer is driving prices to record levels, prompting North America’s farmers to delay purchases and raising the risk of a spring scramble to apply the crop nutrient before planting season.

 

Farmers apply nitrogen to boost yields of corn, canola and wheat, and higher fertilizer costs could translate into higher meat and bread prices.

 

World food prices hit a 10-year high in October, according to the UN food agency, led by increases in cereal crops such as wheat and vegetable oils.

 

The Texas Arctic blast in February and Hurricane Ida in August disrupted US fertilizer production. Then, prices of natural gas, a key input in producing nitrogen, soared in Europe due to high demand and low supplies. Global urea prices this month topped $1,000 a tonne for the first time, according to BMO Capital Markets. Russia and China have curbed exports.

 

In the US, nitrogen fertilizer supplies are adequate for applications before winter, said Daren Coppock, CEO at the US-based Agricultural Retailers Association. Applying fertilizer before winter reduces farmers’ spring workload.

 

Click on the link for the full article

[China]

 

[Fergasun]

Since when is record low unemployment a bad thing?  Everyone should be happy about this.   If American had record low unemployment, no  one would call it "alarming". 

[EmirOfShmo]

 

Well, I suspect this will add to the inflationary pressure we're already seeing. 

 

China is imposing quarantines of up to 7 weeks for cargo ship crew, and it's bad news for the supply chain

 

China is imposing mandatory quarantines of up to seven weeks for returning Chinese seafarers.

Crew changes are getting more difficult due to stricter government requirements, says the Global Maritime Forum.

Ships are rerouting to work around China's restrictions, prolonging shipments.

China's strict COVID-19 quarantines are making it difficult for ships to change crews, contributing to lags in the shipping process that could worsen the supply chain crisis.

The country has a zero-Covid policy and is imposing ever more stringent containment measures as it tackles its latest wave of outbreaks. On Halloween night, for example, 30,000 people were locked inside Shanghai Disneyland after just one COVID-19 case was detected. And in the northern city of Shenyang, arriving overseas travelers face a 56-day quarantine.

 

https://news.yahoo.com/china-imposing-quarantines-7-weeks-073722246.html

[Larry]

2 hours ago, Fergasun said:

Since when is record low unemployment a bad thing?  Everyone should be happy about this.   If American had record low unemployment, no  one would call it "alarming". 

Recall Rush Limbaugh back during Bush 1, informing his audience that there were concerns that our unemployment rates were too low. And this might trigger inflation. 
 

And you had to listen a bit. But what he was saying is that if unemployment is too good, this might cause wages to rise. (Without saying "we don't want wages to rise".)
 

And I realized that he was warning us that we have to be careful to make sure that the economy doesn't trickle down. 

[LD0506]

[China]

Fighting the Inflation Profiteers

 

In a time of high inflation, you hear a lot about companies “passing costs” on to customers. In order for companies to maintain their God-given right to earn a profit, they must raise prices to offset the cost of producing goods and getting them into peoples’ hands. And thanks mostly to the hidden risk, exposed by the pandemic, of neoliberal gospels like just-in-time logistics, deregulation, and offshoring, prices really are going up.

 

But there’s something else mixed in with this latest bout of inflation. Companies aren’t just passing costs onto us. With corporations using inflation as a cover for raising their prices, you and I are passing profits onto companies.

 

“Executives are seizing a once in a generation opportunity to raise prices,” reads a Wall Street Journal storyexplaining that around two-thirds of the largest publicly traded companies are showing profit margins higher today than they did in 2019, before the pandemic. Over 100 companies show profit margins of 50 percent or more above those 2019 levels.

 

In other words, inflation is being enhanced by exploitation. Profiteers are using the frenzy around higher prices as an excuse to reel in much more than increased costs. President Biden has only tiptoed around calling this out and taking action. But telling a story about corporate price-gouging and sustaining a push against it is a key component to resolving the crisis—and, perhaps, reversing Biden’s slump. 

 

Corporate executives are not hiding their handiwork; instead, they’re boasting about it in financial disclosures and earnings calls. “We have not seen any material reaction from consumers,” said the chief financial officer of Procter & Gamble, the world’s largest consumer goods company, which has hiked prices three times in the past year. “What we are very good at is pricing,” said Colgate-Palmolive’s CEO. “We find that taking several small price increases is more effective than one large price jump,” added the CFO of Unilever. Dollar Tree, a discount store which has the word “dollar” in its name, has decided to permanently set its price point at $1.25, stating specifically that the move is “not a reaction to short-term or transitory market conditions.” 

 

Click on the link for the full article

[China]

Oil drops 13% in worst day of 2021, breaks below $70 as new Covid variant sparks global demand concerns

 

Oil posted its worst day of the year on Friday, tumbling to the lowest level in more than two months as the new Covid-19 strain sparked fears about a demand slowdown just as supply increases.

 

The leg lower came amid a broad sell-off in the market with the Dow dropping more than 900 points. The World Health Organization warned Thursday of a new Covid variant detected in South Africa. It could be more resistant to vaccines thanks to its mutations, although the WHO said further investigation is needed.

 

U.S. oil settled 13.06%, or $10.24, lower at $68.15 per barrel, falling below the key $70 level. It was the contract’s worst day since April 2020. WTI also closed below its 200-day moving average — a key technical indicator — for the first time since November 2020.

 

International benchmark Brent crude futures slid 11.55% to settle at $72.72 per barrel.

 

Both contracts registered their fifth straight week of losses for the longest weekly losing streak since March 2020.

 

A decrease in travel and potential new lockdowns, both of which could hit demand, come just as supply is about to increase.

 

Click on the link for the full article

[EmirOfShmo]

More info in the thread...

 

Edited November 29, 2021 by EmirOfShmo

[Cooked Crack]

 

 

[Cooked Crack]

Quote

A year since Floridians approved Amendment 2 to gradually raise the state’s minimum wage to $15, a Republican lawmaker is again looking for a way to pay workers less.

 

State Sen. Jeff Brandes of Pinellas County refiled a joint resolution that would authorize the Legislature to establish a subminimum wage potentially as low as $4.25 an hour that employers could pay to new hires during their first six months.

 

First, lawmakers would need to pass the resolution to place it on the 2022 ballot; then, it would need 60% approval from voters.

 

[China]

Sub-minimum?

 

I take it they don't know the definition of minimum.  Anything below the minimum then becomes the new minimum.  Sub-minimum is just stupid wordplay to try and not have a higher minimum.

[PeterMP]

On 11/24/2021 at 9:46 PM, CousinsCowgirl84 said:

Higher wages do mean higher prices, there isn’t any evidence or economic theory to the contrary is there? You are welcome to present it

 

Higher wages don't have to mean higher prices.  The easy thing is that higher wages could come at the expense of lower (corporate) profits with no changes in prices.

[CousinsCowgirl84]

3 minutes ago, PeterMP said:

 

Higher wages don't have to mean higher prices.  The easy thing is that higher wages could come at the expense of lower (corporate) profits with no changes in prices.

That could happen, but it doesn’t.

[PeterMP]

1 minute ago, CousinsCowgirl84 said:

That could happen, but it doesn’t.

 

Then we should be asking why it doesn't happen.  Because in a functional free market it is a completely viable option.

[CousinsCowgirl84]

8 minutes ago, PeterMP said:

 

Then we should be asking why it doesn't happen.  Because in a functional free market it is a completely viable option.

It doesn’t happen partially because corporations are very efficient at making profit, and can operate at economies of scale and scope beyond what a individual consumer or “input aka employee” has.
 

I’m not exactly sure what you are picturing a “functional free market” to be? 

Edited November 30, 2021 by CousinsCowgirl84

[Jabbyrwock]

1 hour ago, PeterMP said:

 

Then we should be asking why it doesn't happen.  Because in a functional free market it is a completely viable option.

 

Study of the "pass through" effect of minimum wage hikes is heavily influenced by papers produced by Aaronson in the early to mid 2000's (with co authors French and MacDonald).  Basically the conclusion was that pretty much all of the cost of the minkmum wage hike is passed through to consumers.

 

There have been other studies that question this result (including variables like one time large hikes versus graduated hikes, or when the hike occurs).  But in terms of the a ademic literature, the Aaronson series is a good starting point.

[tshile]

1 hour ago, PeterMP said:

 

Then we should be asking why it doesn't happen.  Because in a functional free market it is a completely viable option.

Of course it’s viable. 
 

but in a stock market driven economy, where people are not rational but irrational and selfish, it’s the one most seem to chase. 
 

I mean, if supply chain issues during a crisis and workers wanting more is causing everything to grind to a halt, how come companies are raising rates higher than expenses and making more money than before the pandemic ?

 

https://prospect.org/economy/fighting-the-inflation-profiteers-biden-kennedy/?utm_source=fark&utm_medium=website&utm_content=link&ICID=ref_fark

 

because they can. And they’re selfish. And people are continuing to pay for things with prices going up. 

Edited November 30, 2021 by tshile

[Larry]

2 hours ago, PeterMP said:

 

Higher wages don't have to mean higher prices.  The easy thing is that higher wages could come at the expense of lower (corporate) profits with no changes in prices.

While theoretically possible, I'm really not expecting to see many employers choosing to pay for their worker's raises entirely out of their own pockets. 

[CousinsCowgirl84]

5 hours ago, tshile said:

Of course it’s viable. 
 

but in a stock market driven economy, where people are not rational but irrational and selfish, it’s the one most seem to chase. 
 

 

irrational and selfish? Can you explain to me how raising prices to cover increasing costs is irrational?
 

5 hours ago, tshile said:

 

I mean, if supply chain issues during a crisis and workers wanting more is causing everything to grind to a halt, how come companies are raising rates higher than expenses and making more money than before the pandemic ?

 

because demand is also higher due to all the free money that has been given out. There is no price pressure because there are enough people are willing and happy to pay top dollar.

 

 

5 hours ago, tshile said:

And they’re selfish. And people are continuing to pay for things with prices going up. 

Making money is selfish? Are we all guilty?  Companies have a moral responsibility to not make money or else they are selfish?

[Simmsy]

On 11/24/2021 at 9:11 AM, goskins10 said:

 

 

Hmm... let me see - I don't give a **** about his so called problem. How about not driving monster gas guzzlers. As far as I am concerned people like this POS can go **** themselves. I had a guy whine abotu the cost of health care - that ACA was too expensive and would change his life. He promptly retired from his job and went on a 18 month vacation all around the country with his new wife. Whining just to whine - and they should just shut the **** up. 

 

You can't get both rising wages and good labor market and have no inflation. It's not how it works. I have a friend who is the store manager for a target on the eastern shore - hard core right wing cesspool. She is seeing record sales in this "democrat destroyed" economy. Many of those people are getting child credit checks every month. A bunch of idiots. 

I work in the construction business, these guys are the biggest ****ing crybabies I've ever seen in my entire life. If they were ever tough, it was long ago, because these guys are soft, dumb and slow. They've been doing this work since highschool, usually a family member got them into it and its ALL they know. Most of the people I've worked for are around the mid 50 to mid 60 range, so they came up at the perfect time to make money.

 

ALl of these guys took their money, bought a McMansion(s) (not sure how to spell that), bought garages as big as their mansions, bought all of these brand new vehicles that they never use and then **** about having to pay for all of the stupid **** that THEY bought. They then turn to someone who works for them (like me) and wants me to feel bad that they have to pay for all the stupid **** they bought. They complain about having to pay me, but have no problem raking in all the money, doing minimal work and all of the ****ing. These are also the same people who say they economy is terrible while they pile up their money...but the economy is only good when Trump is president...don't ask them to explain that.

 

These people will find any excuse to be the victim, especially when it comes from their own actions.