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

[PokerPacker]

15 hours ago, Llevron said:

 

This is not a thing lol

 

Indeed.  The field of IT is very wide-ranging.  Smart people have built some very strong idiot-proof systems for the idiots to administer and break.

Edited June 15, 2022 by PokerPacker

[tshile]

And dumb people build dumb systems daily

we got the whole range of possibilities covered 

[China]

Treasury Bond Yield Inversion Raises Worries Over Recession

 

One of the more reliable warning signals for an economic recession is shining alarmingly brighter.

 

The “yield curve” is watched for clues on how the bond market feels about the long-term outlook for the U.S. economy. On Tuesday, a closely followed part of the yield curve lit up again for the second time this year.

 

At the center of the investing world are Treasurys, the IOUs the U.S. government gives to investors who lend it money. The yield curve is a chart showing how much in interest different Treasurys are paying.

 

On one end are shorter-term Treasurys, which get repaid in a few months or a couple years. On the other end of the chart are longer-term Treasurys, which take 10 years or decades to mature. Short-term yields closely follow expectations for what the Federal Reserve will do with overnight interest rates, while long-term yields move more on expectations for economic growth and inflation further in the future.

 

Usually, longer-term Treasurys offer higher yields than shorter-term ones, resulting in a chart with an upward sloping line. That’s in part because investors typically demand higher yields to lock away their money for longer, given the possibility of future rate increases by the Fed and the risk of inflation. But when investors are worried about a sharp downturn, perhaps because the Fed is pushing short-term rates too high too quickly, they’re willing to accept less for a Treasury maturing many years in the future.

 

When yields for short-term Treasurys are higher than yields for long-term ones, market watchers call it an “inverted yield curve.” And when that chart has a downward sloping line, Wall Street starts getting nervous.

 

Click on the link for the full article

[tshile]

Worth reading (every time the inverted yield curve enters trending conversation)

https://www.marke****ch.com/story/what-an-inverted-yield-curve-says-about-the-stock-market-and-recessions-11648596049
 

 

[China]

Fed’s aggressive rate hikes raise likelihood of a recession

 

Federal Reserve Chair Jerome Powell has pledged to do whatever it takes to curb inflation, now raging at a four-decade high and defying the Fed’s efforts so far to tame it.

 

Increasingly, it seems, doing so might require the one painful thing the Fed has sought to avoid: A recession.

 

A worse-than-expected inflation report for May — consumer prices rocketed up 8.6% from a year earlier, the biggest jump since 1981 — helped spur the Fed to raise its benchmark interest rate by three-quarters of point Wednesday.

 

Not since 1994 has the central bank raised its key rate by that much all at once. And until Friday’s nasty inflation report, traders and economists had expected a rate hike of just half a percentage point Wednesday. What’s more, several more hikes are coming.

 

The “soft landing” the Fed has hoped to achieve — slowing inflation to its 2% goal without derailing the economy — is becoming both trickier and riskier than Powell had bargained for.

 

Click on the link for the full article

[Cooked Crack]

 

[EmirOfShmo]

This is good. How does Maher & the other dude forget the stock market collapse early in the pandemic?

 

 

[NoCalMike]

4 hours ago, EmirOfShmo said:

This is good. How does Maher & the other dude forget the stock market collapse early in the pandemic?

 

 

 

Maher probably genuinely forgot, but the conservative on the panel certainly knows damn well about it, but gladly attempted to reinforce Maher's ignorance for his benefit.  Ball shut him down big time and re-iterated the point that when conservatives want to talk about the economy being over-stimulated, they always go immediately to working class folks and any stimulus they receive and frame it as if that is where all the money went, when in reality it's often wall street and the wealthy that get the brunt of the money, the ones who most of the time don't need it in the first place.  This is how our economic policy seems to work, nothing for the working class if it isn't also an opportunity to empty the coffers for the wealthy.

[CousinsCowgirl84]

“Propping up the stock market” is a synonym for “propping up 401Ks” just saying. 
 

I don’t think it’s crazy to say printing a lot of money and giving everyone a lot of money (regardless of whether they needed it or not) attributed to inflation. But what was the alternative? And how do you isolate that from other factors that probably have a bigger role in inflation? 

[Fergasun]

Are they complaining about the $400B (I think that is larger than reality) that went to working class families? I thought Bill Maher was progressive?  

 

More of the advanced child tax credit aimed at those families who make under $150k.  

 

Less cheap credit to large financial institutions and wealthy. 

 

To be honest once we recovered from 2007 to 2009, the cheap credit should have been turned off, but too many voters look at the stock market. 

 

The bubble from 7k up to 30k post 2009 is insane.  Personally I think 401k is somewhat of a scam...  how will all the boomers withdrawing for their retirements around the same place work? 

 

But honestly, around 16k Dow the stock price intrigues me to actually invest.

[tshile]

29 minutes ago, CousinsCowgirl84 said:

But what was the alternative?

Provide better long term economic policy that makes it so it isn’t 60-70% of the people that are very vulnerable to large economic shocks

 

 

Edited June 21, 2022 by tshile

[Larry]

2 hours ago, CousinsCowgirl84 said:

“Propping up the stock market” is a synonym for “propping up 401Ks” just saying. 

 

As I understand it, individuals represent a trivial portion of the stock market.  (I think I've read that out of all stocks owned by individuals, 99% of them are owned by 0.1% of taxpayers.) 

 

Claiming that propping it up is being done for them is a lot like the Republicans cutting Warren Buffet's taxes in half, and Joe Average's taxes by 1%, and calling it "a middle class tax cut".  

[CousinsCowgirl84]

7 hours ago, tshile said:

Provide better long term economic policy that makes it so it isn’t 60-70% of the people that are very vulnerable to large economic shocks

 

 

It wasn’t the alternative in the moment. It’s the alternative now, when we have time to plan.

5 hours ago, Larry said:

 

As I understand it, individuals represent a trivial portion of the stock market.  (I think I've read that out of all stocks owned by individuals, 99% of them are owned by 0.1% of taxpayers.) 

 

Claiming that propping it up is being done for them is a lot like the Republicans cutting Warren Buffet's taxes in half, and Joe Average's taxes by 1%, and calling it "a middle class tax cut".  

the statement that individuals represent some small x percentage of the market is actually counter to your claim that propping up the stock market is only helpful for the wealthy.  Who do you think manages the money in your retirement accounts? Hint, it isn’t you, the individual, in most cases.
 

Edited June 21, 2022 by CousinsCowgirl84

[tshile]

9 minutes ago, CousinsCowgirl84 said:

It wasn’t the alternative in the moment. It’s the alternative now, when we have time to plan.

Oh definitely. No, i agree with you. But I was just pointing out there is a different way of handling this. But yes, it requires long term thinking and planning. 

[tshile]

6 hours ago, Larry said:

As I understand it, individuals represent a trivial portion of the stock market.  (I think I've read that out of all stocks owned by individuals, 99% of them are owned by 0.1% of taxpayers.) 

Um. It’s my understanding 401ks have been a solid addition to the stock market…

 

there’s lots of info out there but I’m having a hard time finding a solid number.

 

https://stern-capital.com/how-much-401k-money-is-in-the-stock-market
 

While I’m dubious of your 99% claim, I’d point out it’s the $ amount that matters not the number of shares. 
 

i mean I got hundreds of shares in a Texas drilling company. 
 

it isn’t worth **** and I can’t even sell it because no one will take it for free. But I got hundreds of them. 

[NoCalMike]

It's kind of "odd" that the narrative shifted from "no one wants to work" to Larry Kudlow saying unemployment rising to about 5% would be good to slow the economy down some.  I swear it's just an ever changing narrative about the working class and what a drag they are on the wealthy's resources. 

[gbear]

Actually, I suspect unemployment rising to 5% would result in an economic speed-up not slow down.

 

Normally, an economy working at peak efficiency requires some "frictional unemployment." These are the people looking for jobs or are between jobs.  If you think about an expanding economy, it would mean more production in some way.  This usually happens from new businesses and new industry. If an economy has 0% unemployment, then there are no workers to hire into these new positions and businesses.  As we get closer to 0% unemployment, we have less people to hire, and this has nothing to do with qualified potential employees.  

 

Have you seen a bunch of help wanted signs?  I know I get a dozen emails a day looking to hire somebody with my qualifications.  These are all potential economic growth opportunities left unrealized.

 

Twenty years ago when I studied macro economics, it was assumed 5% frictional unemployment was the sweet spot for an optimal economy.

[China]

The dream of owning a home is out of reach for 4 million Americans

 

The record run-up in home prices and rents exacerbated the affordable housing crisis in the US, and rising interest rates stand to make it even worse, according to Harvard University's annual State of the Nation's Housing Report released Wednesday.

 

Although quickly rising mortgage rates are already appearing to cool overheated housing markets, they are putting the homeownership dreams of millions of Americans even further out of reach, researchers and housing industry experts said.

 

The income needed to qualify for a home has skyrocketed: The mortgage, property tax and insurance payments for a median-priced home of $340,700 cost $700 more per month in April 2022 than they did a year before. And the annual income needed to qualify for such a home is $28,000 higher in April 2022 versus last year, according to Harvard's Joint Center for Housing Studies, which analyzed data from Freddie Mac and the National Association of Realtors.

This has priced out about 4 million renters over the past year alone, said Daniel T. McCue, senior research associate at the Joint Center for Housing Studies.

"If the door is closing on affordable home ownership, it would lock in some significant inequities in housing," he said Wednesday during a webcast panel discussion about the report.

 

Click on the link for the full article

[skinsmarydu]

[Renegade7]

I remember watching CNBC during March 2020 and for a couple months after and them breaking down the automatic pauses that kept triggering to stop the negative runs spiraling out of control. 

 

https://www.npr.org/2020/03/09/813682567/how-stock-market-circuit-breakers-work

 

Good for Maher and anyone else forgetting how utterly terrifying that was for a lot of folks because the circuit breakers kept cutting on to prevent the a potential bottoming out of the stock market.

 

We sitting so pretty right now it seems some forget what that downward drop of the v-shapped recovery felt like.  Truly remarkable how quick some forget how bad that was and how close we got to how bad it could've been

Edited June 28, 2022 by Renegade7

[China]

Job cuts are rolling in. Here's who is feeling the most pain so far

 

The dominos are starting to fall in the U.S. economy.

 

As the Federal Reserve pumps the brakes on the economy, many American companies are retrenching. There is a growing fear that as the central bank aggressively hikes interest rates to fight high inflation, it could tip the U.S. economy into a recession, and executives are cutting back.

 

A host of companies have announced job cuts or hiring freezes in just the last two weeks. They range from Tesla and JPMorgan Chase to Redfin and Coinbase.

 

Netflix last week announced a second round of job cuts for the year, this time eliminating around 300 positions. Earlier this year, the entertainment company announced it had lost subscribers for the first time in more than a decade. Since then, Netflix has eliminated roughly 450 positions.

 

A key question on the minds of many economists is whether this is the tip of the iceberg with a lot more job cuts coming, or whether it will stop here – a much-needed froth clearing from a sizzling economy.

 

Fed Chair Jerome Powell says he and his colleagues are trying to stabilize a job market that is "unsustainably hot." Wages have been rising at a fast clip in an economy where the unemployment rate is at 3.6%, which is very close to its pre-pandemic low.

 

"You have two job vacancies essentially for every person actively seeking a job, and that has led to a real imbalance in wage negotiating," Powell said when answering questions at a press conference two weeks ago.

 

The Fed chair is aware of the pain that will be inflicted on more people as he wrestles with inflation and tries to tame it.

 

"We don't seek to put people out of work," he said. "But we also think that you really cannot have the kind of labor market we want without price stability."

 

So far, the job cuts have been mostly contained to a few industries, according to Andy Challenger, senior vice president at Challenger, Gray & Christmas, a company that tracks layoffs nationwide.

 

"We haven't seen a huge amount of cuts yet," he says. "But we're seeing these large increases in layoffs in a handful of industries that seem to us to be potential bellwethers for the rest of the economy if things slow down significantly in the next few weeks and months."

 

A lot of recent layoffs have come from what have been hot, high-growth parts of the economy that did especially well during the pandemic.

 

For instance, the exercise equipment company Peloton took off when gyms closed. Similarly, Netflix's popularity soared when people were stuck at home, binge-watching TV shows and movies.

 

Click on the link for the full article

[China]

When I read these articles I always have to check myself, because it doesn't match what I see on a day-to-day basis.  And then I think that I live in the DC area which is much wealthier, and more stable economically, so there aren't fewer cars on the road; people are still driving to get their Starbuck's and going out to eat a lot.  But that's not what the rest of the country experiences.

 

How Americans cope with inflation: Less gas, lots of frozen pizza and cheap coffee

 

Americans are cutting back at the gas pump — and not just the amount of fuel they put in their tanks. Consumers are also changing the way they fill their grocery bags with rest-stop food and other essentials.

 

The trigger: soaring inflation.

The average price of gas is hovering around $5 a gallon after it recently crossed that mark for the first time on record. Households are paying much more for gas at the same time that inflation has made grocery purchases more expensive, too.

Gas station convenience stores typically serve as an ideal substitute to a grocery store when all that's needed is a case of water, a couple bags of chips, a carton of milk or a late-day coffee grab on the way home from work. This impulse buying behavior is a good barometer of the health of the consumer at any given time.

 

Click on the link for the full article

[Long n Left]

1 hour ago, China said:

When I read these articles I always have to check myself, because it doesn't match what I see on a day-to-day basis.  And then I think that I live in the DC area which is much wealthier, and more stable economically, so there aren't fewer cars on the road; people are still driving to get their Starbuck's and going out to eat a lot.  But that's not what the rest of the country experiences.

 

How Americans cope with inflation: Less gas, lots of frozen pizza and cheap coffee

 

Americans are cutting back at the gas pump — and not just the amount of fuel they put in their tanks. Consumers are also changing the way they fill their grocery bags with rest-stop food and other essentials.

 

The trigger: soaring inflation.

The average price of gas is hovering around $5 a gallon after it recently crossed that mark for the first time on record. Households are paying much more for gas at the same time that inflation has made grocery purchases more expensive, too.

Gas station convenience stores typically serve as an ideal substitute to a grocery store when all that's needed is a case of water, a couple bags of chips, a carton of milk or a late-day coffee grab on the way home from work. This impulse buying behavior is a good barometer of the health of the consumer at any given time.

 

Click on the link for the full article

Just moved my daughter from Florida to Charleston this weekend. Loaded up the Uhaul, and drove it up Friday, leaving Gainesville at 10am. A trip that usually takes about 5 1/2 hours, took almost 7 1/2. Traffic was insane everywhere.

 

301, A1A, 95, 17, and other, smaller roads between Savannah and Charleston that I am very familiar with, and use often to avoid traffic on busy weekends/holidays were all slam packed. Bumper to bumper in places I’d never seen that kind of traffic. 
 

If Americans are changing their habits, it is being displayed nowhere this weekend. After dinner last night in downtown Charleston, we walked to a bar restaurant that my daughter and her partner love for a “dessert drink.” Hour plus wait for a table at almost 9:30.

 

Prices are up almost across the board, but, at least this weekend, it does not seem to be changing the average American’s holiday desires. At least from what I just experienced the past couple days.

Edited July 3, 2022 by Long n Left

[Cooked Crack]

 

[The Evil Genius]

How is Biden doing this? He's killing the UK economy too!