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

[BatteredFanSyndrome]

18 minutes ago, EmirOfShmo said:

I talked to a neighbor last night about housing prices. He's been in the mortgage lending business for 25+ years at some of the bigger banks. He's at Fannie Mae now. He said the 90-day delinquencies were very high & he expects this to pop sooner than later. We got distracted when some other people joined us so I didn't get a chance to get more details on the delinquencies. 

I worked in mortgage servicing, primarily in default servicing, at Wells Fargo for 12 years until being laid off in 2018.  I've been getting a lot of random messages on LinkedIn since last summer from recruiters for mortgage servicing loss mitigation jobs, as servicers have been ramping up for what they know is coming.  I've passed on all the opportunities, as I know how the business works - hire like crazy, get all the mortgages modified or liquidated, and then layoff the majority that were hired during the rush.  But yeah - the lenders/servicers are always ahead of what is to come, just like back in 2006/2007.  Crap is going to roll downhill soon enough.

[EmirOfShmo]

6 minutes ago, BatteredFanSyndrome said:

I worked in mortgage servicing, primarily in default servicing, at Wells Fargo for 12 years until being laid off in 2018.  I've been getting a lot of random messages on LinkedIn since last summer from recruiters for mortgage servicing loss mitigation jobs, as servicers have been ramping up for what they know is coming.  I've passed on all the opportunities, as I know how the business works - hire like crazy, get all the mortgages modified or liquidated, and then layoff the majority that were hired during the rush.  But yeah - the lenders/servicers are always ahead of what is to come, just like back in 2006/2007.  Crap is going to roll downhill soon enough.

Pretty much what he said about the hiring right now. 

Last bubble there were some funds to invest in betting on the pending doom. I need to do some research to see what's out there now.

[PleaseBlitz]

Yesterday the CFPB issued a proposed rule that (in summary) would not allow any servicer to begin a foreclosure between August 31 and the end of the year.

 

https://buckleyfirm.com/special-alerts/2021-04-06/special-alert-cfpb-proposes-halt-foreclosure-starts-august-31-until-2022-and-create-new-loss-mitigation-requirements-servicers

[BatteredFanSyndrome]

6 minutes ago, PleaseBlitz said:

Yesterday the CFPB issued a proposed rule that (in summary) would not allow any servicer to begin a foreclosure between August 31 and the end of the year.

 

https://buckleyfirm.com/special-alerts/2021-04-06/special-alert-cfpb-proposes-halt-foreclosure-starts-august-31-until-2022-and-create-new-loss-mitigation-requirements-servicers

This is cool and all, but primarily just kicking the can down the road.  I signed off on stretching quite a few loans to 40 years @ 2% with a step rate in my days at Wells.  You'd be surprised how many people can't even make that happen.  Should be interesting.  

[PleaseBlitz]

3 minutes ago, BatteredFanSyndrome said:

This is cool and all, but primarily just kicking the can down the road.  I signed off on stretching quite a few loans to 40 years @ 2% with a step rate in my days at Wells.  You'd be surprised how many people can't even make that happen.  Should be interesting.  

 

Yea, the foreclosure prohibition is largely intended to (1) prevent a kajillion people from starting the process all in Sept and Oct (when many forbearances expire) which would overwhelm the servicers and (2) buy time for the economy to recover and get people working again so they can avoid foreclosure altogether (in other words, if you could afford the house in 2019, you hopefully will be able to again once things are back to normal).  So kicking the can down the road, in this instance, could actually be helpful for some (certainly not all). 

[BatteredFanSyndrome]

9 minutes ago, PleaseBlitz said:

 

Yea, the foreclosure prohibition is largely intended to (1) prevent a kajillion people from starting the process all in Sept and Oct (when many forbearances expire) which would overwhelm the servicers and (2) buy time for the economy to recover and get people working again so they can avoid foreclosure altogether (in other words, if you could afford the house in 2019, you hopefully will be able to again once things are back to normal).  So kicking the can down the road, in this instance, could actually be helpful for some (certainly not all). 

I applaud them doing anything at all really.  Its definitely better than nothing.  Reading through all that, makes me think there will be years and years of work on all this.  Perhaps, I might start listening to these recruiters when they present full time WFH options.

[PleaseBlitz]

30 minutes ago, BatteredFanSyndrome said:

I applaud them doing anything at all really.  Its definitely better than nothing.  Reading through all that, makes me think there will be years and years of work on all this.  Perhaps, I might start listening to these recruiters when they present full time WFH options.

 

Agreed.  It may not be legal for them to do it, but not sure if anyone will make an issue of it.  

[EmirOfShmo]

A little morning humor...

 

What’s Driving The Competitive Housing Market

 

The past year has seen the most demand for housing since before the 2008 crash, and both real estate market experts and potential home-buyers are trying to understand what’s driving it. The Onion looks at the factors driving the competitive housing market.

 

 

Particularly good episode of House Hunters that HGTV aired last night.

New bench ad from realtor Deb Carmona, complete with updated headshot.

Nation eager to get next financial crisis going.

Can’t bear to look at these same godforsaken walls for one more second.

Shelter finally back in style.

Droughts throughout country resulted in poor house harvest this year.

Americans found themselves flush with cash after switching to making coffee at home.

Foreclosure sounds more sophisticated than eviction.

Once you get in the habit of buying stuff online, you just sort of start clicking on anything that pops up.

Desire among Americans to upgrade home before next pandemic.

 

https://www.theonion.com/what-s-driving-the-competitive-housing-market-1846630643

[China]

Consumer-fueled economy pushes GDP to 6.4% first-quarter gain

 

Economic activity boomed to start 2021, as widespread vaccinations and more fuel from government spending helped get the U.S. closer to where it was before the Covid-19 pandemic struck, the Commerce Department reported Thursday.

 

Gross domestic product, the sum of all goods and services produced in the economy, jumped 6.4% for the first three months of the year on an annualized basis. Outside of the reopening-fueled third-quarter surge last year, it was the best period for GDP since the third quarter of 2003.

 

Economists surveyed by Dow Jones had been looking for a 6.5% increase. Q4 of 2020 accelerated at a 4.3% pace.

 

“This signals the economy is off and running and it will be a boom-like year,” said Mark Zandi chief economist at Moody’s Analytics. “Obviously, the American consumer is powering the train and businesses are investing strongly.”

 

In a separate report Thursday, the Labor Department said initial jobless claims fell to a pandemic-era low last week, but the number was higher than expected.

 

Click on the link for the full article

[CousinsCowgirl84]

https://www.google.com/amp/s/www.marke****ch.com/amp/story/u-s-gains-disappointing-266-000-jobs-in-april-but-all-signs-still-point-to-faster-hiring-in-months-ahead-11620391689
 

high unemployment and high inflation....

 

stagflation doesn’t sound like fun... the price of printing money? We aren’t there yet but we are obviously trending in the wrong direction. Can the government spend the economy out of this? Not a rhetorical question.

 

@PeterMP maybe this is exposes a drawback of some of the aspects of MMT?

 

 

 

 

Not looking to blame Biden or “democrats”, obviously Covid was a huge shock to the economic system 

 

 

 

Edited May 8, 2021 by CousinsCowgirl84

[TheDoyler23]

I remember reading that 2021 will be a year of “inflation scares” and thing will settle as the year draws on. 
 

I’m sure the GOP will add to the paranoia of this while they take credit for a recovery they unanimously sought to prevent from happening. 

[PeterMP]

22 hours ago, CousinsCowgirl84 said:

https://www.google.com/amp/s/www.marke****ch.com/amp/story/u-s-gains-disappointing-266-000-jobs-in-april-but-all-signs-still-point-to-faster-hiring-in-months-ahead-11620391689
 

high unemployment and high inflation....

 

stagflation doesn’t sound like fun... the price of printing money? We aren’t there yet but we are obviously trending in the wrong direction. Can the government spend the economy out of this? Not a rhetorical question.

 

@PeterMP maybe this is exposes a drawback of some of the aspects of MMT?

 

 

 

 

Not looking to blame Biden or “democrats”, obviously Covid was a huge shock to the economic system 

 

 

 

 

But inflation isn't that high and is not expected to be that high.

 

Also not sure if that's really exposes a drawback of MMT.  It is an indication that MMT is wrong (though not really).

 

(MMT says that inflation is independent of money supply.  It is only associated with supply and demand.  Then inflation could happen if demand is high and supply is low.  Which is what we're trying to do. You jump start an economy by raising demand, which makes it more likely that people will hire.  An increase in current inflation isn't really an indication of a drawback or or negative impact of MMT.)

[CousinsCowgirl84]

Raw materials are seeing rapid inflation.. copper steel lumber... wouldn’t those be leading indicators of inflation in consumer goods?

[Llevron]

46 minutes ago, CousinsCowgirl84 said:

Raw materials are seeing rapid inflation.. copper steel lumber... wouldn’t those be leading indicators of inflation in consumer goods?

That’s been the case for like 8 months though right? I feel like I have been hearing about it since we bought this house at least and that was in the middle of the pandemic.

[PeterMP]

1 hour ago, CousinsCowgirl84 said:

Raw materials are seeing rapid inflation.. copper steel lumber... wouldn’t those be leading indicators of inflation in consumer goods?

Probably not much as determined based on CPI because home prices aren't part of CPI.  CPI is based on rent.

 

I don't think a lot of people generally buy things with cooper, steel, and lumber in a way that will move CPI. People also seem to think this is mostly a short term bubble (at least for steel and lumber, copper is a little bit different.)  I'm doubtful we'll see much change in the CPI basket if it is short term for things like lumber and steele.

 

 But certainly we can wait for inflation to hit something like 3% before panicking about inflation.  When you come in announcing stagflation when inflation is still under 3% it makes it seem like you are rooting for it (and against the US economy).

 

Edited May 9, 2021 by PeterMP

[Chump Bailey]

https://hbr.org/2020/08/equality-in-the-u-s-starts-with-better-jobs

 

And remember, many service workers don’t even get 40 hours a week, so their annual pay is much lower. Brookings Institute estimates that 53 million Americans make less than $17,950 a year. Many live so close to the edge that they rely on government assistance. Twenty-five million working people and families received $61 billion in Employed Income Tax Credits in 2019. Forty percent of Americans, disproportionately Black, cannot absorb an unexpected $400 expense. Such families have no cushion when the full impact of Covid-19 hits, as has been made clear by the long lines at food banks.

 

 

 

 

[tshile]

9 hours ago, PeterMP said:

But certainly we can wait for inflation to hit something like 3% before panicking about inflation.  When you come in announcing stagflation when inflation is still under 3% it makes it seem like you are rooting for it (and against the US economy).

Unfortunately this is now how people who get their economic information by perusing headlines work/think

 

theres a significant portion of this country that’s been preaching hyper inflation for the better part of the last 12-14 years. They can’t help themselves but try to gloat about it all. Being correct and understanding the situation isn’t a requirement.

 

probably time to buy gold and enjoy the run up these same people will cause. Might as well make money off them. 

[CousinsCowgirl84]

15 hours ago, PeterMP said:

Probably not much as determined based on CPI because home prices aren't part of CPI.  CPI is based on rent.

 

I don't think a lot of people generally buy things with cooper, steel, and lumber in a way that will move CPI. People also seem to think this is mostly a short term bubble (at least for steel and lumber, copper is a little bit different.)  I'm doubtful we'll see much change in the CPI basket if it is short term for things like lumber and steele.

 

 But certainly we can wait for inflation to hit something like 3% before panicking about inflation.  When you come in announcing stagflation when inflation is still under 3% it makes it seem like you are rooting for it (and against the US economy).

 

https://www.cnn.com/2021/05/09/investing/stocks-week-ahead/index.html

 

Dismissing the possibility of inflation when there is data showing a possibility of it is equally as foolish.
 

 

[PeterMP]

5 hours ago, CousinsCowgirl84 said:

https://www.cnn.com/2021/05/09/investing/stocks-week-ahead/index.html

 

Dismissing the possibility of inflation when there is data showing a possibility of it is equally as foolish.
 

 

 

But some inflation isn't stagflation.  There's a difference between there might be some inflation and something that's a significant economic problem that hasn't happened in this country since the 1970s is going to happen are two different things.

 

Could there be some inflation?

 

Yes.

 

Is there much reason we'll have an economic problem that we haven't seen 40 years when inflation was over 6%+ and over double digits some years?

 

No.

[CousinsCowgirl84]

25 minutes ago, PeterMP said:

 

But some inflation isn't stagflation.  There's a difference between there might be some inflation and something that's a significant economic problem that hasn't happened in this country since the 1970s is going to happen are two different things.

 

Could there be some inflation?

 

Yes.

 

Is there much reason we'll have an economic problem that we haven't seen 40 years when inflation was over 6%+ and over double digits some years?

 

No.

stagflation is a combination of high inflation coinciding with high inflation.

 

here is a definition:

 

Stagflation is a combination of stagnant economic growth, high unemployment, and high inflation.1 

 

it doesn’t specify a duration.... or a severity. Stagflation is definitely a possibility, especially if the government keeps increasing the money supply (Eg Direct payments, ppp, ect which I would think is different from government spending on things like infrastructure)

 

Anyway, I guess I got you to move from “inflation is a fairy tale told by scary scared conservatives” to “there could be some inflation”...

Edited May 10, 2021 by CousinsCowgirl84

[PeterMP]

1 hour ago, CousinsCowgirl84 said:

stagflation is a combination of high inflation coinciding with high inflation.

 

here is a definition:

 

Stagflation is a combination of stagnant economic growth, high unemployment, and high inflation.1 

 

it doesn’t specify a duration.... or a severity. Stagflation is definitely a possibility, especially if the government keeps increasing the money supply (Eg Direct payments, ppp, ect which I would think is different from government spending on things like infrastructure)

 

Anyway, I guess I got you to move from “inflation is a fairy tale told by scary scared conservatives” to “there could be some inflation”...

 

"high" indicates a severity.  Nobody who is being honest or has any economic literacy is going to say we have stagflation if inflation hits 3.5%.

 

And here's what I said to start:

 

"Probably not much as determined based on CPI because home prices aren't part of CPI."

 

"But inflation isn't that high and is not expected to be that high."

 

Inflation isn't expected to be that "high".  As in not stagflation high.

 

Both indicate that the there could be some inflation. 

 

Would it be surprising if inflation got 3%?  No.

 

Would even be surprising if inflation got to 3.5% for a short period of time?

 

No.

 

Since we got off the gold standard in 1974 the average yearly rate of inflation is 3.78% so 3.5% is still below that.  Is it higher than what we'd like and the Fed would ever target?  Yes.

 

Is it stagflation?  No.

 

I haven't moved.  If you'd shown up and said inflation might go up.  I wouldn't have said anything.  You said staglfation, which isn't just inflation isn't going to up, but that it will be high and further coupled with low economic growth.

 

Based on where we are now, that's like worrying that you have lung cancer because you've been coughing for a day.

Edited May 10, 2021 by PeterMP

[CousinsCowgirl84]

On 5/9/2021 at 11:24 PM, PeterMP said:

 

"But inflation isn't that high and is not expected to be that high."

 

 

https://www.cnbc.com/2021/05/11/stock-market-futures-open-to-close-news.html

 

Higher then inspected inflation. Who would have guessed it....

 

 

nflation accelerated at its fastest pace since 2008 last month with the Consumer Price Index spiking 4.2% from a year ago, compared to the Dow Jones estimate for a 3.6% increase. The monthly gain was 0.8%, versus the expected 0.2%.

Excluding volatile food and energy prices, the core CPI increased 3% from the same period in 2020 and 0.9% on a monthly basis. The respective estimates were 2.3% and 0.3%.

 

Edited May 12, 2021 by CousinsCowgirl84

[techboy]

On 5/9/2021 at 9:45 PM, CousinsCowgirl84 said:

stagflation is a combination of high inflation coinciding with high inflation.

 

here is a definition:

 

Stagflation is a combination of stagnant economic growth, high unemployment, and high inflation.1 

 

I was curious about your source (and why you didn't cite it), so I decided to find it.

 

Given that the subtitle is "Why Stagflation (Probably) Won't Reoccur" I guess I know why you decided not to link or cite it. 😄

 

"First, the Fed no longer practices stop-go monetary policies. Instead, it commits to a consistent direction. Second, the removal of the dollar from the gold standard was a once-in-a-lifetime event. Third, the wage-price controls that constrained supply wouldn't even be considered today. "

 

It's not like the article is written by Gregory Mankiw or anything, I just think it's funny.

 

 

[No Excuses]

There’s a supply crunch in many commodity areas and a demand boom with reopenings. Why are people surprised that consumer prices are going up? 

[CousinsCowgirl84]

25 minutes ago, No Excuses said:

There’s a supply crunch in many commodity areas and a demand boom with reopenings. Why are people surprised that consumer prices are going up? 

 

You wouldn’t expect high consumer demand during high unemployment.  It’s the combination that is weird.

 

 

29 minutes ago, No Excuses said: