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

[Renegade7]

Seeing houses in Zillow my wife and I like drop like lead balloons, one dropped by $50K in one update.

 

Is there any reason I should be concerned by these rate hike as a soon to be home buyer if the rates are going to inevitably come down and I refinance when it does?

 

I'm seeing what would be the principle dropping on these house so badly as folks get more deseperate to sell their houses, why isn't that cancelling out the higher interest rates for people that want houses anyway?

[tshile]

8 minutes ago, Renegade7 said:

Is there any reason I should be concerned by these rate hike as a soon to be home buyer if the rates are going to inevitably come down and I refinance when it does?

 Not saying it’s the best advice but here’s how I’d look at it:

if they continue to go up then you got your house at a lower rate and saved money

 

if they stay roughly the same then it’s a wash but you get to start living in the house you like

 

if they go down, you just need to be able to refi. You need the equity, the room  to roll the fees in to the monthly payment or the cash on hand, a plan that means living there long term so the cost is the refi makes sense, the credit/job and income stability to have it go through smoothly. 
 

instead of trying to time the rates just set yourself up to have a good way out. 
 

and realize there’s always a chance something catastrophic can happen but you can’t really control that and you shouldn’t live on fear of that. 

Oh if rates go down values go up, keep that in mind when thinking about future refi and valuation. Also, when things goes nuts again you’ll be able to dump the PMI if you have it. 

[CousinsCowgirl84]

1 hour ago, Renegade7 said:

Seeing houses in Zillow my wife and I like drop like lead balloons, one dropped by $50K in one update.

 

Is there any reason I should be concerned by these rate hike as a soon to be home buyer if the rates are going to inevitably come down and I refinance when it does?

 

I'm seeing what would be the principle dropping on these house so badly as folks get more deseperate to sell their houses, why isn't that cancelling out the higher interest rates for people that want houses anyway?

Buy a house as soon as you can.
 

The only reason I can think of to be worried about interest rates in the short term is that they can affect your cash flow if you have significant debt (variable interest rate loans and credit cards) since it will raise the minimum monthly payments on your cards.  Since your monthly budget is, erm, important… if you are getting a mortgage that pushes your monthly budget to the limit and the interest rates go up and increase your minimum payments on those loans you might not be able to live within your budget. 

[LD0506]

[hail2skins]

LD's post reminds of a segment Smerconish had this morning with Nicholas Eberstadt, who wrote a book "Men Without Work" in 2016 and has an updated post-pandemic version that was just released. He wrote an op-ed piece in the WaPo on the subject this week. Eberstadt alluded that a decent number of the men of prime working age (25-54) who are not actively looking for jobs seem to live on disability payments, and when Smerconish asked what they did all day, Eberstadt said "look at video screens." Check out the piece for the economic implications:

 

https://www.washingtonpost.com/opinions/2022/09/20/american-post-pandemic-labor-shortage-explained/

[China]

Yellen Worries Over Loss of ‘Adequate Liquidity’ in Treasuries

 

Treasury Secretary Janet Yellen cited concerns about the potential for a breakdown in trading of US Treasuries, as her department leads an effort to shore up that crucial market.

 

“We are worried about a loss of adequate liquidity in the market,” Yellen said Wednesday in answering questions following a speech in Washington. The balance-sheet capacity of broker-dealers to engage in Treasuries market-making hasn’t expanded much, while the overall supply of Treasuries has climbed, she noted.

 

Treasury debt outstanding has climbed by about $7 trillion since the end of 2019. But big financial institutions haven’t been as willing to serve as market-makers, burdened by the so-called supplementary leverage ratio, or SLR, which requires that capital be put against such activity, as well as against reserve holdings.

 

Yellen noted that the Federal Reserve now has a standing repurchase facility to provide a liquidity backstop to the Treasuries market; that “can be helpful,” she said.

 

Click on the link for the full article

[PeterMP]

On 9/24/2022 at 8:36 PM, hail2skins said:

LD's post reminds of a segment Smerconish had this morning with Nicholas Eberstadt, who wrote a book "Men Without Work" in 2016 and has an updated post-pandemic version that was just released. He wrote an op-ed piece in the WaPo on the subject this week. Eberstadt alluded that a decent number of the men of prime working age (25-54) who are not actively looking for jobs seem to live on disability payments, and when Smerconish asked what they did all day, Eberstadt said "look at video screens." Check out the piece for the economic implications:

 

https://www.washingtonpost.com/opinions/2022/09/20/american-post-pandemic-labor-shortage-explained/

 

I know this post is older, but there has not been a "flight" from the labor force post-pandemic.  The difference between labor participation rates now and before the pandemic are 1%.  That isn't a flight.  It is also on par with where we were in the late 1970s. 

 

https://fred.stlouisfed.org/series/CIVPART

 

Labor force participation among prime working age men are down, but with the cost of child care and more females going to college and so females having better (full time) job opportunities, that isn't surprising.  The "official" (i.e. full time and legally getting paid) parent is becoming more likely to be the female.  If we want to see labor force participation to go back to where it was in the 1990s, we probably need to do something about the cost of daycare vs. the median wage/CPI.

 

 

http://cdn1.vox-cdn.com/assets/4642429/Screen_Shot_2014-06-19_at_4.23.30_PM.png

 

If you want both parents to work (which is required to have a high labor force participation rate), then it needs to make economic sense to do so and right now for many people that's not the case.

Edited October 14, 2022 by PeterMP

[China]

It's almost impossible to find a CEO who isn't bracing for a recession

 

Top business leaders are preparing for the worst.

 

Federal Reserve officials maintain they'll be able to get surging inflation under control without triggering a recession, but almost every chief executive in the United States is getting ready to face an economic downturn in the next 12 to 18 months, according to a recent survey from The Conference Board.

 

"Our CEOs are overwhelmingly bracing for a recession — both in the United States, and in Europe," says Steve Odland, the head of the business trade group.

 

It seems almost impossible to find one who doesn't foresee a global downturn, with 98% of chief executives in the survey gearing up for a recession in the United States, and 99% prepping for one in Europe.

 

CEO confidence has now eroded to lows last seen during the Great Recession, the survey found.

 

The Fed's fight against high inflation has been getting tougher, stoking worries that the rapid fire of aggressive interest rate hikes will lead to a downturn. Executives and professional investors have begun issuing more somber warnings.

 

One of the world's most powerful CEOs, Jamie Dimon, delivered a gloomy assessment that startled Wall Street this week during an interview with CNBC.

 

The head of JPMorgan Chase & Co. said he expects the United States will be in a recession "six, nine months from now," and Europe is already in one.

 

Back in June, Dimon forecasted an economic "hurricane" on the horizon. That storm seems to have strengthened, and now he seems sure it's about to hit.

 

Click on the link for the full article

[skinsmarydu]

Jamie Dimon is an asshole.  (My mortgage is with Chase, so I'm allowed an opinion.) 

[TheGreatBuzz]

I don't think they are really saying anything surprising.  Best bet is being able to lower your head and bear through it.

[China]

Rent Going Up? One Company’s Algorithm Could Be Why.

 

On a summer day last year, a group of real estate tech executives gathered at a conference hall in Nashville to boast about one of their company’s signature products: software that uses a mysterious algorithm to help landlords push the highest possible rents on tenants.

 

“Never before have we seen these numbers,” said Jay Parsons, a vice president of RealPage, as conventiongoers wandered by. Apartment rents had recently shot up by as much as 14.5%, he said in a video touting the company’s services. Turning to his colleague, Parsons asked: What role had the software played?

 

“I think it’s driving it, quite honestly,” answered Andrew Bowen, another RealPage executive. “As a property manager, very few of us would be willing to actually raise rents double digits within a single month by doing it manually.”

 

The celebratory remarks were more than swagger. For years, RealPage has sold software that uses data analytics to suggest daily prices for open units. Property managers across the United States have gushed about how the company’s algorithm boosts profits.

 

“The beauty of YieldStar is that it pushes you to go places that you wouldn’t have gone if you weren’t using it,” said Kortney Balas, director of revenue management at JVM Realty, referring to RealPage’s software in a testimonial video on the company’s website.

 

The nation’s largest property management firm, Greystar, found that even in one downturn, its buildings using YieldStar “outperformed their markets by 4.8%,” a significant premium above competitors, RealPage said inmaterials on its website. Greystar uses RealPage’s software to price tens of thousands of apartments.

 

Click on the link for the full article

[Cooked Crack]

 

[Larry]

Gas prices been going down here for like two months. 
 

There's things we've known about gas prices, for decades. 
 

1). When the global price goes up, pump prices go up instantly. 
2). When the global price goes down, pump prices go down slowly, weeks later. 
3). In both cases, oil company's profits go up hugely. 
4). And, right now, it's all Biden's fault. Because the government needs to give the oil companies more. 

[EmirOfShmo]

No way! We all know it's Brandon's fault...

 

 

[LD0506]

Have Feinstein retire, appoint Porter to her seat

[TradeTheBeal!]

The collector car market appears to be cooling.  Which is to say that it no longer resembles an erupting volcano.

[The Evil Genius]

15 minutes ago, TradeTheBeal! said:

The collector car market appears to be cooling.  Which is to say that it no longer resembles an erupting volcano.

 

But who's going to buy my '99 626 now?

Edited October 19, 2022 by The Evil Genius

[TradeTheBeal!]

3 minutes ago, The Evil Genius said:

 

But who's going to buy my '99 626 now?

DOES IT HAVE THE OSCILLATING VENTS?!?

[The Evil Genius]

I made that joke and then realized I bought a 'new 99 Protege 1 week before driving to California.  I loved that car until it died at 155k (despite the engine being replaced under warrenty at 25k). 

 

Good times. 😆

[China]

 

Full Thread

[Larry]

TL:DR

 

The global economy is on the brink of collapse, over fears that the Republicans might do what they've already said they're going to do. (And have done in the past). 
 

And they intend to do it anyway, and yell real loud that Biden did it. 

[PleaseBlitz]

Not sure if this belongs in this thread, but yesterday the 5th Circuit decide the CFPB, the primary consumer financial services watchdog, to be unconstitutional.  

 

https://buckleyfirm.com/special-alerts/2022-10-20/special-alert-fifth-circuit-finds-cfpb-funding-unconstitutional-—-now-what?mkt_tok=NDAzLVJJVi05NzIAAAGHlgIabKqHkFCU_3FmPWwIsLOjTWw7xQZ1cnx8SOIKeHKpiMqwof2K1jJv9Z6QBtTZm9VB0G6sdM9t5wLp2-DLXKcUtPKJHfg4cH1RhJY

 

Quote

The Fifth Circuit ruled last night in CFSA v. CFPB that the Consumer Financial Protection Bureau’s funding structure is unconstitutional, triggering a potential wave of implications discussed below.

 

A panel of three Fifth Circuit judges unanimously held that the CFPB funding structure created by Congress violated the Appropriations Clause of the Constitution, which provides that “no money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” It ruled that, although the CFPB spends money pursuant to a validly enacted statute, the structure violates the Appropriations Clause because the CFPB obtains its funds from the Federal Reserve (not the Treasury), the CFPB maintains funds in a separate account, the Appropriations Committees do not have authority to review the agency’s expenditures, and the bureau exercises broad authority over the economy. The court rejected the bureau’s arguments that the funding structure was necessarily constitutional because it was created by and subject to Congress, and distinguished other agencies that are funded outside of the annual appropriations process.

...

If upheld, the Fifth Circuit’s view regarding the constitutionality of the bureau’s funding, combined with its remedy, pose an existential threat to the agency. Under the court’s logic, the CFPB cannot act consistent with the Constitution, because its actions all depend on the expenditure of funds.

For example, bureau examinations and investigations, like bureau rulemakings, depend on the expenditure of funds. The receipt and processing of complaints requires the expenditure of funds. Indeed, the work of every bureau official or employee relies on a funding mechanism that the court has found unconstitutional. Simply put, without funding, the agency cannot act.

But the immediate implications are less dramatic. Challenges to the bureau’s funding structure have been pending for many years, and while it is likely that the panel’s decision will encourage more challenges, particularly in the Fifth Circuit, the existential threat depends on whether the panel’s decision remains the law. The bureau is likely to seek further review, either in the Supreme Court or before the full Fifth Circuit, and either court could reverse the panel’s decision. Indeed, other courts, including the D.C. Circuit, have reached the opposite conclusion after considering the relevant constitutional text and precedent. And, assuming it decides the question, the Supreme Court may be reluctant to adopt an interpretation of the Appropriations Clause that limits Congress’s authority to fund agencies or government programs outside of the annual appropriations process, especially given the many important agencies and programs that are currently funded outside that process.

 

More at link. 

[China]

There's Only a 25 Day Supply of Diesel in the U.S.: Report

 

The U.S. is getting worrying close to a nationwide diesel shortage. Bloomberg reports that demand for the fuel is up, but at the same time supply in the United States remains at the lowest level of the season, ever. On the other hand, gasoline prices remain relatively steady. The current average price for a gallon of gas is now $3.82, according to AAA, still considerably lower than the current average price for a gallon of diesel at $5.34.

 

The country now has just a 25 day supply of diesel, and that’s the lowest level since 2008. On top of that, demand for diesel is at its highest seasonal level since 2007 because of higher trucking, farming and heating use.

 

 

Click on the link for the full article

[China]

On 10/16/2022 at 10:53 AM, China said:

Rent Going Up? One Company’s Algorithm Could Be Why.

 

On a summer day last year, a group of real estate tech executives gathered at a conference hall in Nashville to boast about one of their company’s signature products: software that uses a mysterious algorithm to help landlords push the highest possible rents on tenants.

 

“Never before have we seen these numbers,” said Jay Parsons, a vice president of RealPage, as conventiongoers wandered by. Apartment rents had recently shot up by as much as 14.5%, he said in a video touting the company’s services. Turning to his colleague, Parsons asked: What role had the software played?

 

“I think it’s driving it, quite honestly,” answered Andrew Bowen, another RealPage executive. “As a property manager, very few of us would be willing to actually raise rents double digits within a single month by doing it manually.”

 

The celebratory remarks were more than swagger. For years, RealPage has sold software that uses data analytics to suggest daily prices for open units. Property managers across the United States have gushed about how the company’s algorithm boosts profits.

 

“The beauty of YieldStar is that it pushes you to go places that you wouldn’t have gone if you weren’t using it,” said Kortney Balas, director of revenue management at JVM Realty, referring to RealPage’s software in a testimonial video on the company’s website.

 

The nation’s largest property management firm, Greystar, found that even in one downturn, its buildings using YieldStar “outperformed their markets by 4.8%,” a significant premium above competitors, RealPage said inmaterials on its website. Greystar uses RealPage’s software to price tens of thousands of apartments.

 

Click on the link for the full article

 

Company that makes rent-setting software for landlords sued for collusion

 

Renters filed a lawsuit this week alleging that a company that makes price-setting software for apartments and nine of the nation’s biggest property managers formed a cartel to artificially inflate rents in violation of federal law.

 

The lawsuit was filed days after ProPublica published an investigation raising concerns that the software, sold by Texas-based RealPage, is potentially pushing rent prices above competitive levels, facilitating price-fixing, or both.

 

The proposed class-action lawsuit was filed in US District Court in San Diego.

 

In an email, a RealPage representative said that the company “strongly denies the allegations and will vigorously defend against the lawsuit.” She declined to comment further, saying the company does not comment on pending litigation.

 

The lawsuit accused the property managers and RealPage of forming “a cartel to artificially inflate the price of and artificially decrease the supply and output of multifamily residential real estate leases from competitive levels.”

 

Click on the link for the full article

 

[China]

U.S. Economy Returned to Growth in Third Quarter

 

Economic growth rebounded over the summer, the latest government data shows, but slowing consumer spending and a rapidly weakening housing market mean the report will do little to ease fears of a looming recession.

 

Gross domestic product, adjusted for inflation, rose 0.6 percent in the third quarter, a 2.6 percent annual rate of growth, the Commerce Department said Thursday. It was the first increase after two consecutive quarterly contractions, and slightly exceeded forecasters’ expectations.

 

The third-quarter figures were skewed by the international trade component, which often exhibits big swings from one period to the next. Economists tend to focus on less volatile components, which have showed the recovery steadily losing momentum as the year has progressed.

 

“Ignore the headline number — growth rates are slowing,” said Michael Gapen, chief U.S. economist for Bank of America. “It wouldn’t take much further slowing from here to tip the economy into a recession.”

 

But the return to growth in the third quarter provided further evidence that the economy is not yet in a recession, and there is still some path — albeit a narrow one — to a “soft landing,” in which the Federal Reserve brings down inflation without causing a recession.

 

Click on the link for the full article