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

[tshile]

On the one hand: free market

On the other: is this a good thing for our society? Seems maybe not. Maybe affordable housing doesn’t need to be an investment avenue for the top .5% of the country when they have so many other investment opportunities, and for most people owning a home is their biggest (or only big) investment they can make

[PeterMP]

8 minutes ago, tshile said:

On the one hand: free market

On the other: is this a good thing for our society? Seems maybe not. Maybe affordable housing doesn’t need to be an investment avenue for the top .5% of the country when they have so many other investment opportunities, and for most people owning a home is their biggest (or only big) investment they can make

 

I'd say no.  Any individual isn't likely going to be very successful at maximizing profits and that's what individual home sellers likely were.

 

Large companies who are investing are going to maximize profits.  That means that quality is going to go down or costs are going to go up.

 

(Which we're seeing now with rents going up and part of the reason that is inflation going up.

 

I've written before that I think a lot of our printing money and deficit has caused inflation but just not inflation seen in the CPI.  Now though I think we're starting to see that trickle down into CPI as things like rents going up.

 

On one hand, I'm not ready to run around and start saying that high inflation is unavoidable (and especially that we're going to see stagflation), but I wouldn't be shocked if we don't see some economic problems that come at the level of either longer term high interest rates, inflation, or unemployment that we're not used to recently (since the mid-80s.

 

I know nation states aren't individuals, but I still have issues wrapping my mind around the idea that a nation state can spend without any limits without any impacts.)

[tshile]

37 minutes ago, PeterMP said:

 

I know nation states aren't individuals, but I still have issues wrapping my mind around the idea that a nation state can spend without any limits without any impacts.)

Well and my limited understanding is it’s not that they can spend without limits and impacts, it’s that when done certain ways works out. 
 

and a big problem we seem to have us one political party is willing to do that and try to stick to “the rules” while the other isn’t (and then blames the original idea for the problems that result as opposed to admitting that their own actions screwed up the plan)

 

kind of like how the playbook for the 2008 financial crisis supposedly included reversing course once things got better to prepare for next time. Except when things got better the GOP was in control so instead we got their tax cut plan that doesn’t pay for itself, the benefits for individuals expire in 7 years, and nothing was done to reverse course and cover what was done to get out of the crisis. 

[China]

The housing market is on fire. The Fed keeps adding gasoline

 

Bidding wars. All-cash offers. Homes selling for $1 million over asking. The housing boom has officially reached the ridiculous stage.

 

Despite surging home prices that are rising at the fastest pace on record, the Federal Reserve continues to prop up the housing market by purchasing $40 billion of mortgage bonds each month.

And while the Fed is finally "talking about talking about" removing some of its support, some fear the US central bank is creating another housing bubble as it deliberates.

 

That's because the Fed's emergency strategy is artificially lowering the cost of mortgages, and further boosting prices that already looked stretched in many markets.

"The Fed just continues to pour more gasoline on that fire," said Peter Boockvar, chief investment officer at Bleakley Advisory Group.

Of course, the central bank certainly deserves credit for its historic efforts to prevent the Covid recession from morphing into an all-out depression.

Springing into action early last year after the pandemic hit, the Fed rapidly slashed interest rates to zero, launched emergency programs to unfreeze credit markets and promised to buy a staggering $120 billion of Treasury and mortgage bonds a month.

That unprecedented support, along with trillions of dollars of stimulus from Congress and the Trump and Biden administrations, set the stage for a rapid recovery.

 

But given how fast the economy is rebounding and the fact that inflation is surging, it may be time for the Fed to start tapping the brakes — at least on its bond-buying program.

Federal Reserve Chairman Jerome Powell acknowledged during his Wednesday press conference that the jobs market is likely to be "very strong" in the near future and there is a risk that inflation isn't going away as quickly as many economists think it will.

 

Click on the link for the full article

[TheGreatBuzz]

I can’t get over the people that continue to buy in this market.  Did we not learn anything from 2008?

[Cooked Crack]

 

lmao. Guessing we not going to be seeing something like that on Fox.

[China]

Wells Fargo tells customers it’s shuttering all personal lines of credit

 

Wells Fargo is ending a popular consumer lending product, angering some of its customers, CNBC has learned.

 

The bank is shutting down all existing personal lines of credit in coming weeks and no longer offers the product, according to customer letters reviewed by CNBC.

 

The revolving credit lines, which typically let users borrow $3,000 to $100,000, were pitched as a way to consolidate higher-interest credit card debt, pay for home renovations or avoid overdraft fees on linked checking accounts.

 

“Wells Fargo recently reviewed its product offerings and decided to discontinue offering new Personal and Portfolio line of credit accounts and close all existing accounts,” the bank said in the six-page letter. The move would let the bank focus on credit cards and personal loans, it said.

 

Wells Fargo CEO Charles Scharf has been forced to make difficult decisions during the coronavirus pandemic, offloading assets and deposits and stepping back from some products because of limitations imposed by the Federal Reserve. In 2018, the Fed barred Wells Fargo from growing its balance sheet until it fixes compliance shortcomings revealed by the bank’s fake accounts scandal.

 

The asset cap has ultimately cost the bank billions of dollars in lost earnings, based on the balance sheet growth of rivals including JPMorgan Chase and Bank of America over the past three years, analysts have said.

 

It has also affected Wells Fargo’s customers: Last year, the lender told staff it was halting all new home equity lines of credit, CNBC reported. Months later, the bank also withdrew from a segment of the auto lending business.

 

With its latest move, Wells Fargo warned customers that the account closures “may have an impact on your credit score,” according to a frequently asked questions segment of the letter.

 

Click on the link for the full article

[Ball Security]

I wonder what kind of timing they are giving customers before closing their LOCs.  I’m not a customer, but if I was, I’d close all accounts from there immediately.

[TradeTheBeal!]

Wells Fargo s all kinds of shady.  They make Cap One look like St. Judes.

[Simmsy]

1 hour ago, TryTheBeal! said:

Wells Fargo s all kinds of shady.  They make Cap One look like St. Judes.

I'm always curious about how people feel about certain banks. How do you all feel about PNC? I've had them for years, I like them a lot.

[Ball Security]

46 minutes ago, Simmsy said:

I'm always curious about how people feel about certain banks. How do you all feel about PNC? I've had them for years, I like them a lot.

I’ve never used them, but I did a project there once.  I definitely wouldn’t lump them into the same bucket as Wells.  It’s good that the are working out for you.

[TradeTheBeal!]

1 hour ago, Simmsy said:

I'm always curious about how people feel about certain banks. How do you all feel about PNC? I've had them for years, I like them a lot.

I have no experience with PNC.

[LD0506]

[Cooked Crack]

 

 

[tshile]

In an effort to stay away from the bs inflation hype that has no substance to the discussion and just serves as clickbait to rile people up, here’s a good write up. 
 

https://equitablegrowth.org/a-temporary-increase-in-inflation-is-not-a-long-run-threat-to-u-s-economic-growth-and-prosperity/

 

 

Edited July 13, 2021 by tshile

[Cooked Crack]

 

 

Edited August 6, 2021 by Cooked Crack

[Larry]

Number of jobs added, per month, in thousands.  

 

(Source:  BLS Data.   Select options "Seasonally adjusted" "total nonfarm", "All employees, thousands", "Total nonfarm".  "Retrieve data").  

 

Biden :  681

Trump:  -60

 

Trump, first three years:  183

3 years prior to Trump:  224

 

[Cooked Crack]

 

 

[NoCalMike]

Has anyone checked out those Russell Brand videos on how corporations are using the banking system to avoid taxes?  It's a good example of how the uber-wealthy are doing things that are technically not illegal aka loopholes to screw the American people, something could be done to regulate those loopholes away, but neither party will likely do it.

[PleaseBlitz]

On 7/8/2021 at 5:50 PM, Simmsy said:

I'm always curious about how people feel about certain banks. How do you all feel about PNC? I've had them for years, I like them a lot.

 

I've been with PNC since i worked for them in 2010-2011.  I really like them.  

[China]

On 6/19/2021 at 10:46 PM, TheGreatBuzz said:

I can’t get over the people that continue to buy in this market.  Did we not learn anything from 2008?

 

Apparently not:

 

Home burned to studs sells 'significantly over' $850K listing price

 

A California home that was destroyed down to its "bare bones" is now under contract with an accepted offer reaching well over the original, $850,000 asking price.

 

The four bedroom, two bathroom, 2,395-square-foot dwelling is located in the city of Walnut Creek – roughly 1.5 hours from San Francisco. 

 

"Bring your contractor, architect, and designer: this is more than a fixer and the potential is limited only by imagination," read the listing for the single-family residence. 

 

 

The four bedroom, two bathroom, 2,395-square-foot dwelling is located roughly 1.5 hours from San Francisco (Melinda Byrne/Key Realty)

 

Click on the link for the full article

[NoCalMike]

I'd probably sell my house right now if I could talk my wife into hunkering down in a small rental or even townhouse rental for the next 3-5 years during which the real estate bubble is likely to pop.  Last time I checked listings, our house is being shows as approx 250k over what we bought it for five years ago.  I know it is very inflated due to the real estate market, I have no illusion that the value will remain that high over the long term and I have no plans to do something stupid like borrow against it or anything crazy that a lot of people tend to do during these times. 

[China]

Why Americans hate and fear the poor: Joanne Samuel Goldblum on the price of inequality

 

Another side effect of the pandemic: Many more Americans are aware how stressful and exhausting it is to be poor
 

It is expensive to be poor in America. These costs are both small and large. Together they accumulate into a sum that is almost insurmountable.

 

For example, people in poor and working-class communities often pay more for the same goods and services — which are subpar by comparison — than people who live in more affluent communities. There are fewer opportunities for wealth accrual, because homes in working class and poor communities appreciate in value much more slowly (if they do at all), even when adjusting for the ways that racial segregation exacerbates that dynamic.

 

There is also a largely unregulated financial services sector that targets poor and working-class people, including check-cashing services, "payday loans," rent-to-own furniture and electronics companies and high-interest auto lenders.

 

People in poor and working-class communities often lack access to reliable public transit, meaning that getting to work or school is inordinately expensive. Lack of affordable child care services is another "hidden" cost that limits the upward mobility of poor and working-class people.

 

Poverty and other forms of material deprivation also inflict a type of mental and emotional trauma on their victims. Navigating America's labyrinthine and threadbare social safety net programs is like a job in and of itself, one that is very time-consuming, frustrating, exhausting and all too often humiliating.

 

Growing up in a poor or working-class community also has a negative impact across one's adult life: Social scientists and other researchers have repeatedly shown that access to economic resources and other social capital early in life is directly correlated to a person's future health, job opportunities and overall life chances.

 

Click on the link for the full article

[China]

On 4/3/2020 at 11:25 AM, gbear said:

Yes, so much our debt is social security.  However, we have been paying for social security on as we go basis since Vietnam.  Now as we start to draw more out of it than we are putting into it, how do you think it will be paid?  It will be paid with current federal tax dollars not social security tax dollars unless we suddenly cut social security payments.  The interesting question I get from that is whether it is even worth separating the social security tax from the federal tax.  Currently the separation only helps those making a lot of money (relative term) because social security is only collected up to $128,400.  Every dollar after that is not subject to the social security tax. 

 

As for whether this administration could pull off something requiring the amount of coordination needed, I share your doubts. I just don't see any easy way forward regardless of who is in charge, and this would go against so many economic theories I studied in college and since,  Despite the difficulties in implementing a plan like mine, I still see it as the easiest/least bad path forward if one is trying to maintain productivity and our current economic model.  I sincerely hope a smart mind than mine comes up with the better path.

 

Social Security trust funds now projected to run out of money sooner than expected due to Covid, Treasury says

 

The Social Security trust fund most Americans rely on for their retirement will run out of money in 12 years, one year sooner than expected, according to an annual government report published Tuesday.

 

The outlook, aggravated by the Covid pandemic, also threatens to shrink retirement payments and increase health-care costs for older Americans.

 

The Treasury Department oversees two Social Security funds: The Old-Age and Survivors Insurance and the Disability Insurance Trust Funds. Those programs are designed to provide a source of income respectively to former workers who have retired at the end of their careers or to those who cannot work due to a disability.

 

Officials said that the Old-Age and Survivors trust fund is now able to pay scheduled benefits until 2033, one year earlier than reported last year. The Disability Insurance fund is estimated to be adequately funded through 2057, eight years earlier than in the report published in 2020.

 

Though the two funds are separate under law, the Treasury Department said the hypothetical combined funds would be able to pay scheduled benefits on a timely basis until 2034.

 

Senior administration officials said in a press briefing Tuesday afternoon that a spike in deaths among retirement-age Americans in 2020 helped keep the programs’ costs lower than projected. They added that the ultimate, long-term impact of the coronavirus is less clear as costs and revenues return to their extended forecasts. 

 

Click on the link for the full article

[Cooked Crack]