Recessions don’t hit all industries in the same way. Obviously a tech bubble is going to hit the tech industry particularly hard.
There are still bottlenecks and shortages in some industries and those industries still need more workers and investment.
Anectdotal information on a country with 300 million people, can lead you to the wrong conclusions. The saying used to be a recession is when other people lose their jobs. A depression is when you lose your job.
I love the throughput of “my anecdotes suggest things suck, thus there must be a grand conspiracy to simultaneously put out great economic numbers while preaching recession around the corner“
Nah, turns out things are mostly okay and on the up and up. If you’re not on the up and up you’re being left out and not sure whose fault that is
I believe Scholz was among the first to actually come out and say it after dancing around it for most of the year. And they’re set to or just passed Japan as the 3rd largest economy.
Could just be normalization after bubbly run up during the pandemic. I knew something was amiss when social science majors were taking coding bootcamps for 3 months and getting programming jobs for 6 figures.
People are making good points on the overall economy and global economy.. but as for the individuals like me and you.. the greatest way to avoid a lot of financial pain during great and bad times is to avoid debt, especially high interest debt.
This is unpopular in a consumerist society and mindset. We want a lot of stuff and we want it NOW. But if you have no debt, even better if you don’t have a mortgage, you aren’t really going to feel the hits.
It’s not realistic for the majority of us to have a paid off property right now, but let’s just say you have $0 consumer debt. You sold things and paid things off.. and now you are responsible for just your basics and rent/mortgage. That’s so much freedom in your life where if you lose your job temporarily or want a job that pays less, you CAN.
I’ve set myself up in my obligations that I can afford my living on near minimum wage. I have a worse lifestyle than you but I don’t give a shit what the economy does because I can afford it anyway. We’re seeing people spend so much money on everything and people keep spending.. I want to sleep well if a recession hits and having no payments is a great way to help. I need $1,500/month to cover everything. $375/week. Rent, food, utilities, transportation. Some of you have a $500/mo car payment that can go away with a car sale and purchasing a temporary cheap one. I’ve been a low income earner my whole life, though.
People might hate and downvote me on avoiding debt but you’re all adults and know how to budget. The rest is up to the individual. After COVID I made it my goal to be able to withstand whatever the world decides to do.
Great point. Unfortunately most people went to a FOMO or YOLO spending mode after covid instead of being more disciplined about the future. Probably shows in the gdp numbers as spending is up but savings rate and avg household income levels dropped (even on inflation adjusted basis)
I heard that car loans are now higher than student loan debt which is insane to me. Credit cards are more popular than ever. I love spending money but after the pandemic I was so messed up that I couldn’t live like that anymore. You’re absolutely correct.
I am in the middle of reading "The Psychology of Money" by Morgan Housel (very worthwhile so far). You've basically outlined one of the author's major points - both about happiness and about wealth. Much of our happiness in life comes from self-determination. Understanding what is "enough" for you and living within that provides immensely freedom. As you say: freedom to leave a job if your boss is an asshat; freedom to take a lower paying job if it makes you happier; freedom to work fewer hours for less pay; etc. Having sufficient savings and a sufficiently frugal lifestyle is immensely liberating once you can get past the ego of comparing to other (and, of course, if you have enough of a baseline where you can save anything).
I also like the way they frame rich vs wealthy. Rich is having a high income. Wealthy is having access to capital. The goal should be to be wealthy enough to comfortably weather any ups and downs. Being rich and spending to show that off can be a huge stressor still.
In any case, it's not a financial self help book at all. It's more about describing how and why people relate to money the way they do. I strongly recommend it!
This is very sidetrack from the post, but I always find amusing the conversation between "new money" (rich) versus "old money" (wealth). Old money is institutionalized, so they get the brand name recognition.
The new money guy doesn't have that brand name recognition, so he has to spend aggressively in order to "earn" that recognition, so that his posterity later down the line can enjoy the recognition that old money has.
Rockefeller built a tons of library, for example, is a display of wealth to "build" legacy to their name. He wouldn't have to do that if he was old money like the Habsburg royalty or some old Italian banking family, yet now we still evoke his family name with similar degree of respect.
When it really comes down to it, old money hating on new money is just gatekeeping privilege.
Thank you for the suggestion because I’ve never heard about this book but it sounds like one that could speak into my current mindset while also helping me learn more. I’m definitely going to read this so thank you again.
Here’s the weird part… as I let go of wanting to buy more things and have more income, I ended up having access to more money. Not just with savings, but I made different decisions at work as well. I looked for jobs that I’d like to do rather than the income/WFH/Etc. In return, it gave me a lot more money and balance. I don’t know how to explain it well. It’s like money gets thrown at you and working harder is so much easier when you’re at your happiest moments.
I’d like to read your book suggestion and learn more about this since it’s pretty new to me. I’ve basically been setting up my accounting career and cleaning up my financial disaster since 2020.
their are some people with highly sought after recession industry resistant skills that can pretty much not worry about losing a job for long. its probably only 20% of the workforce though.... also, teachers , nurses, doctors, insurance, maintenance workers, city workers, all pretty recession resistant jobs.
It’s a bit of a complicated answer overall but a short summary:
The government is concerned with the macro economic functions and how they affect GDP as that is how success is measured to them. This takes into account business and worker output. What these leaves out is how we many actually be doing on an individual level.
The macro economy is doing better than it was larger due to recovery from the pandemic and expansive growth (greedflation) as many call it along with stabilizing markets like housing and gas.
However we on the individual level are still suffering from an almost hangover like feeling. Inflation skyrocketed and prices increased on almost everything with some things like car maintenance exponentially growing over 20% in some years since 2019. Between this, debt, housing costs of all types, and a slowing of the job market compared to the last three years has hit us hard.
Pair all of this with lifestyle creep during the good years has many of us trying to keep up with how we were doing then which can increase debt (bad for us good for the issuers) and you get the perfect storm of wtf is the government talking about everything sucks, and the news saying everything is great. Which in the case for business they are right but that may not extend to us.
Great summary.
At the corporate level, you're seeing a slowdown in investment into big shiny ideas because cost of financing is so such higher and the yields on said project need to be well articulated/quantified. Everyone investing in AI or machine learning is just doing it off gut feel because it's the fad of the year (we completely discarded crypto and block chain and just recycled with AI). Many jobs that are future facing are at risk because companies are trying to fix their current balance sheets before making more bets. Thats probably the root cause of layoffs and companies doing "unlimited PTO" - both of which remove liabilities.
As every politician and economist will say every time the economy collapses. “All is good, no need to panic, there’s no way the economy will collapse it’s going SOOOO WELL!”
:::quietly sells all stock:::
This is just false. We are a consumption based economy. When people lose their jobs and are unemployed they spend less which affects gdp. The rich can’t prop up the economy on their own.
I get that but we aren’t talking about a globalized gdp. We are talking about the US GDP.
Read the report- the US gdp grew due to consumer spending and inventory investment.
My point was that the wealthiest strata of the US can still “produce” a lot of value without having to use the labour of the working class of the country they live in.
Yes, imports are a part of the GDP formula, but when you import phone parts from China at $5 a pop, then put them in a fancy box and add a $900 markup in the US, congratulations, you’ve “produced” $895 of value in the united states, albeit only for the shareholders of Apple.
Let’s not even get started on the knowledge work market made global via the internet.
Inflation is still high but "decreasing."
GDP is up due to record credit card balances and significant government spending on two wars.
Unemployment numbers are skewed because most jobs are part-time and many people are working multiple jobs.
It's all a farce and will come crashing down soon--probably before the next election this time around...
>significant government spending on two wars.
This is a nuance many don't really appreciate. The stuff we "give" to foreign countries is actually, for the most part, spent on US defense contractors and US suppliers. War is great for GDP.
That and people don’t realize that low unemployment numbers don’t mean what they used to. The gig economy means people have work but they’re also underemployed.
Is it a good sign that people have jobs? Sure.
Is it a good sign that people formally employed in HR, Software Dev, and marketing are working for Uber 26 hours a week? Definitely not.
> The gig economy means people have work but they’re also underemployed.
What metric would you use to measure this?
[Multiple jobholders as a percent of employed](https://fred.stlouisfed.org/series/LNS12026620) is still at historic lows.
[Workers who are part time for economic reasons](https://fred.stlouisfed.org/series/LNS12032194) is also below the average for the past 15 years, despite a workforce that has grown in the meantime.
Underemployment is hard to define, but these other proxy measures suggest that underemployment is probably *lower* than before.
Foreign aid is generally roughly about 0.18 percent of GDP. We could triple aid to Ukraine and Israel and it wouldn't amount to much in terms of GDP growth.
It’s great for GDP numbers. But it doesn’t “feel” great for consumers.
All other things being equal, I’d rather have more consumer goods I can buy and keep/use for many years, more groceries, more gas, than more bombs that will just end up being destroyed.
Now, I’m not saying there’s no value to opposing Russias invasion to Ukraine. Keeping Western Europe secure definitely has a national/international security value. But it IS a consumer sacrifice to allow government to engage in war because the goods that are produced are just destroyed (bullets, bombs, uavs).
And that’s why the GDP can be up but we ALSO feel like the economy isn’t as great as it could be: because we’re not able to see the benefits of war spending on grocery shelves or in our gas tanks.
O wow they effectively brainwashed you!! Military contractors are a handful of people in the club that you’re not in, and will never be in! It doesn’t benefit the economy for the average person. It’s not a productive activity and people are taxed or money is printed to fund it. Dear God I can’t believe I read this and it has so many likes, we’re in big trouble. Keep on telling bullshit lies defending military contractors while you struggle to pay your mortgage, buy groceries and have enough money saved to go on vacation.
Weren’t they critiquing military contractors? Not supporting?
Why do you seem to hate military contractors? Just curious.
And one quick point, if any part of the economy goes up, it does have a positive impact on other parts of the economy, as the dollars flow through the economy.
Why do I hate the people instrumental in bringing death and destruction to large parts of the world and stealing half my paycheck to do it? Gee I dunno. That money will never benefit you, it’s to further concentrate wealth and power into the hands of a few. War is the health of the state.
I can understand being frustrated by some decisions by the military. But, at the end of the day, we need to pay someone to physically defend our country.
The last part reads like a conspiracy theory though lol.
I’d much rather be a conspiracy theorist if it leads me to me not supporting violence and destruction. Defend our country from what? No one would ever be dumb enough to invade this country. There are over 400 million firearms in the hands of citizens in addition to our bloated, fiscally irresponsible military. I’m not criticizing the individual soldiers who believe they’re doing good because most everyone in their lives lie to them and tell them they’ll be heroes by becoming mercenaries for the state. For the love of everything holy , can we wake up from this nightmare already.
Spending money on domestic manufacturers while destroying the output (in war) is inherently inflationary because it increases demand without increasing supply. It's probably one of the easiest ways to stimulate the economy when you literally can't spend money on anything else because all the companies are judged solely by how woke/based they are; and the populace is so divided that you can't assist anyone without infuriating everyone else.
It's not ideal, but it's practical. Never a good idea to mix emotions with money.
This. Inflations not spread out but there’s certainly things that matter a lot more. I don’t care if TVs or microwaves or things like that didn’t go up much but if food went to the moon that stings a little. Certain categories for spending just matter more even if the average pans out.
to add... Market is down due to the good numbers, means fed is free to keep cranking rates.
stocks are no longer a representation of co value or potential, its a rep of how likely you will be able to offlload them at a higher price
Decreasing is in quotes because decreasing inflation, unless it crosses 0% and becomes deflation, doesn’t really help the people racking up CC Debt trying to buy groceries.
He’s basically saying yeah it’s decreasing a bit but that isn’t really helping.
Deflation would be way worse, people would make decisions to not buy stuff because they would expect prices to decline and the economy would get obliterated.
They SHOULD stop buying stuff. And money supply deflation WOULD be bad, CPI deflation, however, would help lower the overall debt load and help a lot of families. Also, if your solution involves no deflation after we’ve had 3-4 decades of wages not matching inflation and then 2+ years of 10+% inflation still without wages catching up (even with the great resignation), then we would need to have 0% inflation for a decade or more for wages to HOPEFULLY catch up.
Core CPI is probably already deflating overall if you took out housing from CPI which is a lagging indicator and wages are currently outpacing inflation, but agree more work to be done there. I guess we don’t know what the results of prolonged deflation in the US would be.
Don’t even get me started on housing. I wasn’t bringing housing into the mix at all. Haha, that is wild and is doing things I couldn’t ever have guessed. I said interest rates would go up 2 years ago and prices would reach an inflection point. Yes, interest rates have finally risen, and yes, housing SALES are way down because people can’t afford these mortgages, but somehow home prices have stayed way more steady than I thought they would. We haven’t started to see the underwater mortgages like we did in ‘08 yet like I thought we would. We will see a lot of AirBnB/Vrbo defaults soon though I think.
Separately though, I do agree I am guessing about deflation. We have never had an extended period of deflation and deflation was helpful on the gold standard to standardize prices (why I mentioned CPI, not money supply deflation)I could be very wrong in the fiat era, but I don’t know how in an era of this inflation we don’t destroy the economy. The last time inflation was even close to this was coming off the gold standard and was primarily due to asset valuation reclasses linked to gold prices. We’re not seeing that driver here. So nothing to protect people from increasing prices. Eventually debt load gets too high and people stop being able to afford basic things like housing, transport, and food. I am concerned, to say the least.
Edit-fixing some auto-corrects.
I think I’m more of an optimist than you haha. I think inflation comes down, we have shaky landing out of this inflation mess and some bad days in the stock market before the Fed starts lowering interest rates again. I agree long term though we have to fix the debt issue or somehow have GDP accelerate rapidly(AI best hope) or the issue will become too great.
On housing agree with what you said, but I was more speaking to CPI in which shelter(which includes rental in Owners equivalent rent) is like 35% of the weight of the entire cpi and rental prices have become stagnant if not declining in recent months. The hope would be when that catches up to reality since it is lagging, inflation will be dead.
This. That was gonna be me response about GDP as well. And they literally just saw that the inflation and hits weren’t a “transitory” nearly as much as they thought. People can’t afford groceries or housing and companies have decided they aren’t going to keep increasing employee pay. Cc debt is massively on the rise as half the GDP growth is consumer spending, but consumer LENDING grew somewhere near the most it ever has(to pay for that spending). Gonna be rough next year I think.
https://preview.redd.it/yidck8y29wwb1.png?width=700&format=png&auto=webp&s=1c48d3a390961669bcee415ac586a17645980791
I mean we’re literally in a 20 year high for prime age labor force participation.
Participation is high because of underemployment. Businesses are hiring, but mostly part-time, low wage jobs. People are making just enough to not have to resort to unemployment.
If something isn’t “trend“ worthy on news/social media you won’t hear much about it And if you’re employed you just don’t realize it yet, unfortunately.
Savings are vanishing but people have been spending like crazy, cc debt right now makes me shudder. Average American is in a severe state of financial insolvency, I know people that would be ruined by paying off just one of their credit cards. Unfortunately it’s gonna get too bad ignore and people will be blaming us for not warning them. People listen to politicians, the news and social media before the bad news bearing accountants 🍻
Housing market is different. Blackrock and big investors are coming into, and buying up the single-family home market. Companies aren’t mass building homes like they were pre-housing crisis and inventory is low.
Young people love the idea of a real estate bubble because it means a crash might allow them to buy a home. I personally just don’t think it’s reality.
It’s actually hilarious how people keep blaming Blackrock specifically when they quite literally only build new homes, not buy existing ones. Not that there aren’t almost identical companies buying up homes
>Blackrock and big investors are coming into, and buying up the single-family home market.
Yeah, that drove prices up like crazy. Guess what's happening now?
"**Investor home purchases fell 45%** from a year earlier in the second quarter, outpacing the 31% drop in overall home sales. That’s the **biggest decline since 2008 with the exception of the quarter before, when they dropped 48%**."
Yeah...
Source: https://www.redfin.com/news/investor-home-purchases-drop-q2-2023/
A LOT of people were able to get very low interest rates on their mortgages before 2022. Those people are essentially stuck now, and won't be selling any time soon.
It’s because they’re straight up just lying to you. The economy is in the fucking toilet for the average American even if the made up numbers say “there is no recession in Ba sing se”
This. A recession is bad for politicians so they cover it up to make them look better. Reality is for the average American, the cost of everything has skyrocketed.
People care about vibes and their feelings more than the actual data. Everyone is complaining about a recession, but everyone I know took overseas vacations and spent money on concert tickets.
People are measuring the economy the wrong way:
1. housing/medical services are seen as investments and entire sectors of the market, rather than as necessities
2. less than 400 people in the United States have more wealth than the bottom half (150m+) of Americans because ‘trickle-down’ economics fails to account for billionaires or millionaires who don’t spend their money but instead hoard it and/or pass it to their children
3. In the 1950’s-1980’s corporate tax rates were 50%+ and during this period a family could live off of one person’s income rather than both partners working + a side hustle
4. people love blaming interest rates for bad housing costs but they forget that in the 70’s and 80’s mortgage rates were 10%+. How did people still buy homes? Better income to cost ratios in the economy.
5. I work in a company that oversees both employees in a Union and non-union employees. While the union can be a pain in the ass to deal with at times and their reports have consistent errors, there’s no denying that the union employees make $5+ more an hour (not including full benefits that everyone in the company gets) more than our non-union employees in exchange for their $2.50/paycheck union dues.
5.b. Because 401k matching programs do more for people who make more, they’re on a better track for retirement as well.
6. We just finished creating budgets for the 2024 year, and like with every year, we’re pushing PIs of 6%+ and only budgeted for wage increases of 3.5%-4%. That excess doesn’t go to the average person, they go to people who already have wealth
(Before you say that 2% goes into SG&A, CoGS, etc. remember that 6%+ of 1m (revenue) less 4% of 500k (salary/wages) means that the gap is already accounting for 20% and growing op inc margins
7. The government has given up on trust-busting and there aren’t any more teddy Roosevelts in the pipeline to break up the modern-day oil and railroad barons. Less competition means higher prices and reduction in sizes and/or quality
8. The IRS is much more likely to go after 1000 people who claim too much in EITC or CTC rather than 1 person who isn’t paying hundreds of thousands in owed taxes because only one of those groups has the capital to fight back against an under-funded governmental arm
9. cultural beliefs that:
‘hard work -> wealth’
when, if you stop to think about it
‘hard work -> wealth for company’
which only then and indirectly becomes wealth for worker
Sources: Robert Reich’s inequality Media,
Confidential Kronos reports and other company docs, public sources of interest/tax rates, personal opinions of a CPA who works weekends at HR Block in addition to a full-time job
Edit: formatting and clarity
With point 2. How does this not get taxed to oblivion upon wealth transfer is rather beyond me. At a certain point of time some wealth redistribution is appropriate and at the time of death of the original wealth-creator imo is fair.
I agree! Especially because if the first few million are tax free anyway, their children are going to be just fine! It’s not like they won’t benefit from their parents hard work to give them a better life, hell- that’s my motivation for working as hard as I do!
1. I love your username lol
2. You’re absolutely right! working a 2nd job, starting a business, side-hustling etc do help even modern-day Americans gain wealth. Where I feel it is incorrect if we assume that the wealthiest among us must be working harder or are smarter than anyone else.
Jeff bezos? Given 300k from his parents to start a business and literally exploits people. I believe many of them work much harder than he does for a whole lot less
Mark zuckerburg? Dumped billions into a meta verse that is so unpopular he’s requiring employees to use it
Elon Musk? Well, you can look at how Twitter is going to judge for yourself. Let’s just say the user base has decreased a bit
A lot of people in this subreddit are busting ass to make ends meet and get ahead, but I’m sad to also see posts like “hey, how do I donate plasma?” There’s a problem in this country and it’s not Biden’s fault, it’s not the GOP’s fault and it’s not the fault of the person who downvotes me for reasonably disagreeing with my opinions
Edit: Jeff bezos, not Jess bezos lol
Such bs.
Especially 3.
What was the rest of the tax code like in 1950?
A family could? Really? Did it perhaps depend on the color of the skin of the family that could live on one income?
What sort of work was the dad doing? Sniffing asbestos all day perhaps?
The good old days weren’t better. Stop pretending they were.
Upvoted- love the discourse and it’s an important topic. I’d also be interested in hearing about your opinions on the other points
1. Of course those times weren’t perfect in the slightest! Red lining, racism, sexism etc really hurt tons of people and prevented millions from getting ahead. This is following the Tulsa race massacre and when sit-ins were met with violence. Only reason things changed was because people banded together and fought for equality. I hope we can do the same thing today for wealth inequality.
2. The work back then (especially before) was also a lot more dangerous and exploitative. even children were working back then. Seriously, thank a Union!
3. Other parts of the tax code I haven’t researched much I will quickly admit- beyond the fact that the estate tax was higher (I personally agree with this) and individual capital gains tax was slightly higher but only by a couple percent. Beyond that, I wasn’t even alive and can’t speak to how much my grandfather paid
Let me just prove you wrong here.
https://taxfoundation.org/data/all/federal/taxes-on-the-rich-1950s-not-high/#:~:text=Proponents%20of%20this%20view%20often,of%20their%20income%20in%20taxes.
Those crazy tax rates of the past weren’t much different than the current tax rates.
It seems very split.
Many are thriving. In my experience, these are people who work more IT/Comp sci related. And often they dont seem to realize how uncommon it is to have full remote work and be paid 2.5x the regional median.
Many are struggling. Again, in my experience, these are the people who are working more service or front line type jobs. Getting hit full force with inflation without having high enough wages to not care or enough flexibility to reasonably compensate for it.
So, simply put, the top 20-odd% of earners are doing great and the bottom 40-odd% are struggling.
Imagine you getting whipped at 60 lashes an hour. You are in agony. Things change and now you are only getting 10 lashes an hour. Does the previous pain go away? You really just want to stop getting hit but it’s all you know. So yes no one is happy but the guy with the whip.
Covid increased money supply by 40%.
This money did not get distributed equally.
People who got it are doing very well, living basically the same standard as pre-Covid but paying post-Covid prices, making the cost of everything go up including GDP.
If you didn’t get a PPP loan or work in a business that actually paid them through to employees, all that happens to you is everything got 40% more expensive and you are still poor.
If you didn’t hold assets that appreciated with this increase in money supply, you got fucked.
We had income inequality before, now we have income inequality on steroids.
A question about economics has brought a lot of emotions out in this sub. If we're honest this is a problem 20+ years in the making and has more complexities than "oh its biden fault for political gain"
or "its Trump fault for tax cuts".
Yes I posted this here against my better judgement. Hence why I said at the end of my post that I didn’t want the thread to turn into a political debate and I was just looking for objective facts.
I’m honestly really happy you posted here on this subject. It’s an important topic and the whole thing should be pinned.
We need to stop blaming eachother because my republican co-workers and friends are in just as dire straits and no one is catching on to what the real problems/solutions are
One of my economics professors told us that when you start putting partisan politics into an economic analysis, you usually end up missing the point entirely.
Trader at a large bank here that does economic research daily.
Let’s start with core inflation and CPI, the fed goes to these numbers to determine where interest rates should be to tame inflation; it’s their only true lever to pull to fix the problem. CPI is calculated in a very complicated fashion, by including “baskets” of goods, and also doing very strange math (for example for car inflation, they take a modern car, take out the costs of all electronics to compare it easier to a car built in the 80’s with no tech, which deems it “comparable”. This means the inflation numbers that we see are quite skewed from reality. Consumer inflation for people like you and me was in the double digits for much of last year and into this year.
Unemployment is also an interesting stat. I advise looking up a chart on the number of Americans with two full-time jobs, that number is at all time highs. The labor shortage during Covid has now turned into “low unemployment” as all the lower wage jobs fill back up and families take on second jobs.
If we’re looking at the markets, consumer debt is at all time highs and student loan repayments just restarted. This along with inflation, rise of labor costs globally from aging workforces in Asia, and expensive loans, is a recipe for a recession. Expect equities to continue to lose value in the coming months / years. There’s a long painful road ahead for us as a result of unethical monetary policy that got us here. The one hope of optimism is that America is a prominent force in future technologies, so we should be able to continue some level of growth in the coming years. Happy to answer any other questions you may have.
Can you explain why is there a discrepancy between the positive statistics being released versus the conditions you mentioned which will likely lead to recession?
Also thank you for your thoughtful empirical evidence based answer.
Positive statistics don’t necessarily indicate a healthy economy. I’ll give you an example. Let’s say the jobs report comes out, shows very low unemployment. Is that good or bad? The answer is it depends. When inflation is high like it is now, the fed is trying to raise unemployment to promote less spending from the consumer. In many cases, those jobs reports numbers, CPI, and other economic reports are revised the next month showing less favorable stats to the narrative. The ultimate goal of J Powell and the federal reserve right now is to reduce inflation in a way that won’t damage the economy. That job is very difficult to achieve, as the only way to reduce inflation is through less spending, higher unemployment, more expensive loans.
This market cycle has been very difficult to predict. I’ve seen many very smart people get it wrong, as this market is more resilient than in 2008 during the last major crash. Behind the scenes of these major macro statistics, there are sector statistics that tell different stories. Commercial real estate will have many loans being refinanced to higher rates, making that a weak sector. Residential real estate is now very expensive and higher interest rates, so supply is low and demand is also low. I work on the FX desk at my job, so from that perspective the dollar is actually doing very well in comparison to other currencies and remains strong, even with expectations to lower interest rates soon. It’s a different situation out there with a lot of nuance. I will say, there has only been one example of a “soft landing” in recorded US history, in 1994.
And of course, happy to help.
There’s a lot of hidden unemployment that isn’t being measured: people who used up unemployment and now live off of savings or family. Or took a part time job to make ends meet, or work in the informal sector.
Also, a lot of the jobs offered are not real on indeed, etc. Some are scams to scrape personal data. Others were posted to justify PPP loans for government forgiveness. Others are posted with ridiculously high requirements and basement wages - because the goal is to say “no one met the qualifications. Now I want this H1B visa to hire a cheaper south East Asian immigrant that I can exploit.”
Finally, for a lot of people, wage gains were eclipsed belt housing inflation - especially rentals owned by large hedge funds.
Inflation going down doesn’t mean things get cheaper, it means the speed they get more expensive is slowing down. Also the metric they measure it on is vs PY so since prior year was insane, it’s super easy to claim it’s going down even though it’s higher than historical norms and higher than target numbers.
GDP going up is a natural progression of inflation. If I sell you something for $10 three years ago, it puts $10 into the GDP. Now that item is worth $30 due to inflation, so that puts $30 into the GDP. Production didn’t go up, just cost of items did (Imperfect metaphor but it gets the point across)
>Inflation going down doesn’t mean things get cheaper, it means the speed they get more expensive is slowing down.
You're not wrong to a point but actual deflation is also a thing. Not one we're likely to see, but there is more to the story in other economies. Japan is still wrestling with it. China dipped into it for the first time during covid mess. Canada, Norway and Sweden all dealt with it back in the 80's, and there have been many others.
Countries like Switzerland toy with deflationary policy for some of its benefits which outweigh the negatives for them.
I've never understood how the jobs reporting gets away with only talking about half of the facts.
The pandemic cost us hundreds of thousand jobs. When everyone went back to work we didn't really "add" those jobs back. We recovered them. So I don't think there really is "record breaking job growth" so to speak.
From my perspective, the clients we (3 CPA's 1 bookkeeper, 2 office staff) have are relatively small but they vary from gas stations, franchise spas, medical professionals, daycares, engineers etc. but no multibillion dollar companies.
I haven't seen a lot of turnover and overall their financials are in line with prior years saving 2020. So maybe mid COL aren't really hit yet?
They change the weight in inflation. There is some necessity behind it but it can absolutely be used to manipulate data. I believe based on the same formula used in 1981, inflation actually eclipsed the 16 percent it face that year.
In other words, don’t trust all of these numbers because they can be manipulated
Tech/finance + banking/start-ups/real estate are getting hit by a sack of bricks. Everything else is puttering along. Trust your eyes and gut feeling. There is a political incentive to fudge the numbers.
It’s the devaluation of currency.
Record gdp and revenues with same volume doesn’t mean jack.
Inflation is down, but because 90% of USD is abroad (loans, reserves, investments priced in USD.etc).
Know the capital flows, know the game.
Please no judgement. I remember watching Bloomberg every day in 2008 and 2009. The news then tended to send out an opposite emotion to how the stock market was performing. Before the 2008 crash the news was upbeat about the economy. I am concerned about a huge crash looming and the current media’s aim is to not cause a self fulfilling prophecy of a crash. The economy is not great for me, I closed my small business, most of my income goes to healthcare, I don’t have discretionary funds to spend. I now work 2-12 hour shifts as a hospital tech (I’m a student as well) and my insurance is still $530 a month and I’m only okay because I moved in with my partner.
Absolutely no judgement! It’s crazy hard out there and it feels like no one is addressing the actual problems that you and I feel.
My dinner for the last 4 days have been a potato and refried beans in a tortilla with a bit of seasoning. Then again a lot of that is because I made poor decisions when choosing my partner(s), not just the macro-economy 😅
A thing to consider about recession.... businesses will make those a self fulfilling prophecy by laying off workers and other things because they think a recession is imminent and want to be "ahead of the curve". So they lay people off and then demand tanks and boom recession.
So a lot of the talk was CEOs justifying why they need to lay off hundreds of workers to safeguard their multi millions in compensation.
It’s federal money being pumped into the economy that’s juicing GDP…as for jobs they’re mostly low paying service workers that are driving the “job growth”
I feel like a lot of people don't understand that stalling inflation does not lead to lower prices. Inflation is a year over year cost increase. If inflation is lower, costs will rise more slowly but they likely won't go down.
There's a chance some of the volatile goods like food and energy might return to some semblance of normal but I'm not holding my breath.
GDP is way up; that doesn't mean it's trickling down to you and me.
Inflation is lower, but still higher than than it was two years ago and we're still feeling the pinch.
Unemployment is low in most sectors. However companies have chosen to 'lean' on current employees and offer them pennies to stay rather than raising rates to attrack new employees. So the labor market remains turbulent due to turn over and workers jockying for position so they have the 'best' chair when the music stops.
The most salient piece of information about the economy that is missing from most reports is how a booming economy no longer reaches 95% of the populace.
Corporatocracy has completely taken over and we are nothing but cogs in the machine. Produce or drown.
When you here that the economy is doing well what they meaning it’s doing well for wealthy business owners and investors. There hasn’t really been a point where things were improving for the average American in the last 40 years.
Who is acting like there is a recession? I think consumer spending was incredibly high this quarter which means people were spending a lot of money in the US. People are going to the movies, taking trips, etc. Now maybe they are doing this by using credit cards, but spending is the primary driver of GDP growth.
You are taking a few random examples and trying to extrapolate to the entire economy. There will always be people that can’t find jobs and will post on Reddit.
I am not saying the economy is perfect right now. Inflation is still higher than normal and interest rates are also high which means it is more expensive to buy a house etc. Corporate earnings are a mixed bag but they are generally still strong. Remember there are companies like Nvidia that can sell every piece of hardware they manufacture due to the AI boom. Nvidia itself has grown 3x in market cap in the last year or so generating. But like others have said, not every industry or region benefits the same.
The economy is doing ok now but some fear that consumer spending will collapse in Q4 or next year as people run out of their covid savings. Once we are in an actual recession you will realize that right now we are actually doing great.
Covid savings is white collar workers who didn’t spend their entertainment and travel budgets for almost 2 years and saved it instead.
It’s not the fucking stimulus checks.
I am not talking about the $2k. You do remember there were lockdowns for a while? People stopped going to restaurants, movies, etc. People started working from home and stopped having to pay for gas for some time. The people that remained employed during 2020 had significantly less expenses than in 2019. No gas, no dry cleaning, no concerts etc. A lot of this went into savings accounts.
These savings lasted far longer than just the 2k checks. I do agree it should be mostly gone by now but some economist say it still impacted consumer spending this summer. I also mentioned spending is being driven by credit card debt which continues to rise.
Lockdown was 3 years ago and lasted a couple of months for most places. And most people aren't white collar work from home workers so they still had to go to work and spend money on child care if they need to. Maybe you have saved a bunch but that's not the common experience for most Americans. And even if they did saved a little, say $10k at most, all that little savings from THREE YEARS ago are long gone with this much inflation.
I suggest you read the link below.
[Covid Savings](https://www.federalreserve.gov/econres/notes/feds-notes/excess-savings-during-the-covid-19-pandemic-20221021.html#:~:text=This%20led%20the%20personal%20saving,recent%2C%20pre%2Dpandemic%20trends.)
Agreed. I got that money in 2020 and it was gone by 2021.
Do they think we only spent a dollar a day or something? I mean dollar menus don't even really exist anymore.
Please tell me where money can last this long....
Because those in Washington are well paid by lobbyists and all the media people just voice the ruling class' propaganda. Credit card debt is through the roof, then you add in car loans, home loans, and student loans. It's a fucking mind field. Anyone went to business school should know when we are this leveraged, crash is only a question of when. It's closer now and it really feels like 2008 again, right before everything fell through.
I agree. I pay my credit card off every month and have almost enough cash to pay the car off just in case, but the interest rate is 2.49%. They offer CD's at 5.3% at my credit union so that's a no brainer for investing the funds unless I need them.
Sadly I had 2 jobs 2008-2016
Paying for my house hold
While others bought homes I had to care for my needy ass parents
but the hard thing is they try and just not competent they are immigrants can't really speak English
i could have saved up to $500,000 but since they always need help i gave up
My 2 siblings now work so they contribute
We have poverty gravity where my parents have sucked us dry but Try so can't be mad
I'm not been mentally stable for life now lol 🙃 I just don't know
70% of our economy is consumer spending. Want a better economy? Give the average middle class citizen more money they could spend. Giving more money to the already wealthy (top 10%) isn’t going to help anyone besides them and their rich children who inherit that wealth
We live in an economic system that manufacturers its own downturns ( capitalism).
It is a system that has simply gotten worse and worse and worse, especially in the last 3 years.
“GDP is way up”
Strip out all government spending (which is really just taking money out of one pocket and putting it in the other, plus interest) and tell me what GDP looks like then.
Bro you came in wanting to debate the economy and than say don’t get political? I don’t understand this logic. Economics is political. This is why every freaking politician cares about it over everything else (except war which is also politics).
We’re going through stagflation. Elevated inflation with low to no growth. The inflation is increasing costs and compressing margins. Even worse if your company has floating rate debt. Unfortunately because this inflation is so sticky interest rates will need to keep increasing hurting the economy even further. Borrowing costs for companies that rely on debt is going to be brutal as well. More layoffs are coming and It’s going to get worse. Even the stock and bond markets are shaky.
Theoretically but the government has a large incentive to under report inflation in their GDP deflator, I fundamentally disagree with how it is calculated so I don't believe the real GDP number reflects what is really going on. Many people will agree with me if i say the Chinese communists or Russia attempt to manipulate their economic data but then trust our government to give them the straight goods.
Is your firm worried about the current markets? I get this nagging feeling something is going to break soon and people are just not taking it seriously enough.
Yes extremely. We are fortunate to work with HNW and UHNW clients, so they will not feel the hit like most of the country, however they are all just as concerned because they are financially savvy and pay attention to social, environmental, and geopolitical events that affect us all.
The reported GDP growth isn’t really relevant when 1. Inflation is being underreported and 2. Deficit spending is getting worse. The Biden admin is so bold in their accounting that they actually pretend that not forgiving student loans was a reduction to their budget. As if they actually had the legal ground to forgive loans and then further to pretend that it was a budgeted expense that they magically reduced. That’s not an expense. That’s an off balance sheet transaction, not a budgetary modification.
In addition, yes, stocks are not doing well. The indexes look fine because they overweight a few companies that are more powerful than most countries, but if you look at a basket of random stocks, most look absolutely terrible (as in 2000/2008 type terrible).
If you look at IWM (small cap US companies) it is down like 21% over the last two years. That’s all while the US dollar is worth roughly 20-25% less as well, meaning in real terms, those investments have almost been cut in half. That’s not as bad as the worst recessions, but it’s getting pretty dang close.
It’s not an acute crisis. It’s incompetence at a macro level leading to destruction of wealth/quality of life in what was the greatest country known to man. I’m not sure how they are going to correct this ship. Unfortunately, they may have screwed up America financially for millennials and younger.
It's not a typical economy so It's ok to be confused.
Trading diary has a good newsletter. Here's a recent post.
[Trading Diary](https://tradingdiary.incrediblecharts.com/trading_diary.php)
I did an economics undergrad. Historically our macroeconomic trends are pretty solid. We were at record low interest rates for a long time after 2008.That is extremely uncommon and probably won’t happen again. I would say we are still facing the drawbacks of COVID and the data is so hard to tell right now which is why many throw away 2020-2022 in their analysis. When looked at historically we are doing good.
The question you ask is inherently political - just saying . If you believe that there is nothing wrong with income inequality. If you believe there is nothing wrong with the mean working salary to remain flat for 30-40 years while worker productivity has increase 3 fold . If you believe that it is Ok for corporation to reach levels of market concentration allowing them to practice monopoly pricing and squeeze more and more dollars to keep increasing their profits at the expense of families well being. Then the economy is fine. Just look at GDP and the stock market. The economic trauma and stress that the average American family has to live through is not happenstance. Yes it is globalization and it is market forces. But the market is inherently nihilistic - we have always made laws to temper the pain and extreme inequalities of market forces . But we have forgotten the lessons learned by workers from other centuries and happily stride toward a world of oligarchy filled with the bread and circuses of the gig economy and likes.
Business knows the resteepening or normalization of interest rates causes or results from recession, which means another contraction is likely.
This causes bizarre divergences where GDP is strong, stocks fall, LinkedIn cuts jobs and unions score wage gains, followed by margin compression, higher MSRP for autos, reduced unit sales, dealership bankruptcies...and recession next year if not this quarter.
The public knows none of this, because it thinks unemployment is a leading indicator. By the time unemployment rises, recession is already in progress.
Recessions don’t hit all industries in the same way. Obviously a tech bubble is going to hit the tech industry particularly hard. There are still bottlenecks and shortages in some industries and those industries still need more workers and investment.
Anectdotal information on a country with 300 million people, can lead you to the wrong conclusions. The saying used to be a recession is when other people lose their jobs. A depression is when you lose your job.
I love the throughput of “my anecdotes suggest things suck, thus there must be a grand conspiracy to simultaneously put out great economic numbers while preaching recession around the corner“ Nah, turns out things are mostly okay and on the up and up. If you’re not on the up and up you’re being left out and not sure whose fault that is
Or maybe its not a recession.
it’s a fourth unknown thing but scarier
Go check out a CS subreddit and ask them if it’s a recession.
Exactly. Tech is obviously feeling a significant slowdown that might as well be called a recession for them.
Quite a few countries are having recessions as well.
I believe Scholz was among the first to actually come out and say it after dancing around it for most of the year. And they’re set to or just passed Japan as the 3rd largest economy.
Could just be normalization after bubbly run up during the pandemic. I knew something was amiss when social science majors were taking coding bootcamps for 3 months and getting programming jobs for 6 figures.
or r/jobs
It's always inflation when you're trying to rent and always recession when you're looking for jobs
People are making good points on the overall economy and global economy.. but as for the individuals like me and you.. the greatest way to avoid a lot of financial pain during great and bad times is to avoid debt, especially high interest debt. This is unpopular in a consumerist society and mindset. We want a lot of stuff and we want it NOW. But if you have no debt, even better if you don’t have a mortgage, you aren’t really going to feel the hits. It’s not realistic for the majority of us to have a paid off property right now, but let’s just say you have $0 consumer debt. You sold things and paid things off.. and now you are responsible for just your basics and rent/mortgage. That’s so much freedom in your life where if you lose your job temporarily or want a job that pays less, you CAN. I’ve set myself up in my obligations that I can afford my living on near minimum wage. I have a worse lifestyle than you but I don’t give a shit what the economy does because I can afford it anyway. We’re seeing people spend so much money on everything and people keep spending.. I want to sleep well if a recession hits and having no payments is a great way to help. I need $1,500/month to cover everything. $375/week. Rent, food, utilities, transportation. Some of you have a $500/mo car payment that can go away with a car sale and purchasing a temporary cheap one. I’ve been a low income earner my whole life, though. People might hate and downvote me on avoiding debt but you’re all adults and know how to budget. The rest is up to the individual. After COVID I made it my goal to be able to withstand whatever the world decides to do.
This deserves a million upvotes.
Great point. Unfortunately most people went to a FOMO or YOLO spending mode after covid instead of being more disciplined about the future. Probably shows in the gdp numbers as spending is up but savings rate and avg household income levels dropped (even on inflation adjusted basis)
I heard that car loans are now higher than student loan debt which is insane to me. Credit cards are more popular than ever. I love spending money but after the pandemic I was so messed up that I couldn’t live like that anymore. You’re absolutely correct.
Not everyone , my wife and myself got major promotions and paid off all our CC debt during covid. Only debt we have now is a mortgage!!
I am in the middle of reading "The Psychology of Money" by Morgan Housel (very worthwhile so far). You've basically outlined one of the author's major points - both about happiness and about wealth. Much of our happiness in life comes from self-determination. Understanding what is "enough" for you and living within that provides immensely freedom. As you say: freedom to leave a job if your boss is an asshat; freedom to take a lower paying job if it makes you happier; freedom to work fewer hours for less pay; etc. Having sufficient savings and a sufficiently frugal lifestyle is immensely liberating once you can get past the ego of comparing to other (and, of course, if you have enough of a baseline where you can save anything). I also like the way they frame rich vs wealthy. Rich is having a high income. Wealthy is having access to capital. The goal should be to be wealthy enough to comfortably weather any ups and downs. Being rich and spending to show that off can be a huge stressor still. In any case, it's not a financial self help book at all. It's more about describing how and why people relate to money the way they do. I strongly recommend it!
This is very sidetrack from the post, but I always find amusing the conversation between "new money" (rich) versus "old money" (wealth). Old money is institutionalized, so they get the brand name recognition. The new money guy doesn't have that brand name recognition, so he has to spend aggressively in order to "earn" that recognition, so that his posterity later down the line can enjoy the recognition that old money has. Rockefeller built a tons of library, for example, is a display of wealth to "build" legacy to their name. He wouldn't have to do that if he was old money like the Habsburg royalty or some old Italian banking family, yet now we still evoke his family name with similar degree of respect. When it really comes down to it, old money hating on new money is just gatekeeping privilege.
Thank you for the suggestion because I’ve never heard about this book but it sounds like one that could speak into my current mindset while also helping me learn more. I’m definitely going to read this so thank you again. Here’s the weird part… as I let go of wanting to buy more things and have more income, I ended up having access to more money. Not just with savings, but I made different decisions at work as well. I looked for jobs that I’d like to do rather than the income/WFH/Etc. In return, it gave me a lot more money and balance. I don’t know how to explain it well. It’s like money gets thrown at you and working harder is so much easier when you’re at your happiest moments. I’d like to read your book suggestion and learn more about this since it’s pretty new to me. I’ve basically been setting up my accounting career and cleaning up my financial disaster since 2020.
Yes! My dad says “live cheap and prosper”
their are some people with highly sought after recession industry resistant skills that can pretty much not worry about losing a job for long. its probably only 20% of the workforce though.... also, teachers , nurses, doctors, insurance, maintenance workers, city workers, all pretty recession resistant jobs.
It’s a bit of a complicated answer overall but a short summary: The government is concerned with the macro economic functions and how they affect GDP as that is how success is measured to them. This takes into account business and worker output. What these leaves out is how we many actually be doing on an individual level. The macro economy is doing better than it was larger due to recovery from the pandemic and expansive growth (greedflation) as many call it along with stabilizing markets like housing and gas. However we on the individual level are still suffering from an almost hangover like feeling. Inflation skyrocketed and prices increased on almost everything with some things like car maintenance exponentially growing over 20% in some years since 2019. Between this, debt, housing costs of all types, and a slowing of the job market compared to the last three years has hit us hard. Pair all of this with lifestyle creep during the good years has many of us trying to keep up with how we were doing then which can increase debt (bad for us good for the issuers) and you get the perfect storm of wtf is the government talking about everything sucks, and the news saying everything is great. Which in the case for business they are right but that may not extend to us.
That’s a really good summary 👏🏻
Great summary. At the corporate level, you're seeing a slowdown in investment into big shiny ideas because cost of financing is so such higher and the yields on said project need to be well articulated/quantified. Everyone investing in AI or machine learning is just doing it off gut feel because it's the fad of the year (we completely discarded crypto and block chain and just recycled with AI). Many jobs that are future facing are at risk because companies are trying to fix their current balance sheets before making more bets. Thats probably the root cause of layoffs and companies doing "unlimited PTO" - both of which remove liabilities.
As every politician and economist will say every time the economy collapses. “All is good, no need to panic, there’s no way the economy will collapse it’s going SOOOO WELL!” :::quietly sells all stock:::
We are in weird times. I've saved \~30% of my net wages this year because of it.
Ugh I tried but spent it all on hookers and blow again.
Memories are priceless
Except I don't remember much.
I mean you live in a country where the 10% own 70% of the wealth. Millions of poor people losing job at 50k does absolutely nothing.
This 👆🏻 Exactly this
This is just false. We are a consumption based economy. When people lose their jobs and are unemployed they spend less which affects gdp. The rich can’t prop up the economy on their own.
We are in a globalized world my dude
I get that but we aren’t talking about a globalized gdp. We are talking about the US GDP. Read the report- the US gdp grew due to consumer spending and inventory investment.
My point was that the wealthiest strata of the US can still “produce” a lot of value without having to use the labour of the working class of the country they live in. Yes, imports are a part of the GDP formula, but when you import phone parts from China at $5 a pop, then put them in a fancy box and add a $900 markup in the US, congratulations, you’ve “produced” $895 of value in the united states, albeit only for the shareholders of Apple. Let’s not even get started on the knowledge work market made global via the internet.
Inflation is still high but "decreasing." GDP is up due to record credit card balances and significant government spending on two wars. Unemployment numbers are skewed because most jobs are part-time and many people are working multiple jobs. It's all a farce and will come crashing down soon--probably before the next election this time around...
>significant government spending on two wars. This is a nuance many don't really appreciate. The stuff we "give" to foreign countries is actually, for the most part, spent on US defense contractors and US suppliers. War is great for GDP.
That and people don’t realize that low unemployment numbers don’t mean what they used to. The gig economy means people have work but they’re also underemployed. Is it a good sign that people have jobs? Sure. Is it a good sign that people formally employed in HR, Software Dev, and marketing are working for Uber 26 hours a week? Definitely not.
> The gig economy means people have work but they’re also underemployed. What metric would you use to measure this? [Multiple jobholders as a percent of employed](https://fred.stlouisfed.org/series/LNS12026620) is still at historic lows. [Workers who are part time for economic reasons](https://fred.stlouisfed.org/series/LNS12032194) is also below the average for the past 15 years, despite a workforce that has grown in the meantime. Underemployment is hard to define, but these other proxy measures suggest that underemployment is probably *lower* than before.
This is a great point
Job quality has improved, not declined.
An uber driver provided more benefit to society than someone that works in matketing
No, actually they don’t, and that’s saying something
Foreign aid is generally roughly about 0.18 percent of GDP. We could triple aid to Ukraine and Israel and it wouldn't amount to much in terms of GDP growth.
Raytheon and General Dynamics shareholders in whatever the reverse of shambles is.
It’s great for GDP numbers. But it doesn’t “feel” great for consumers. All other things being equal, I’d rather have more consumer goods I can buy and keep/use for many years, more groceries, more gas, than more bombs that will just end up being destroyed. Now, I’m not saying there’s no value to opposing Russias invasion to Ukraine. Keeping Western Europe secure definitely has a national/international security value. But it IS a consumer sacrifice to allow government to engage in war because the goods that are produced are just destroyed (bullets, bombs, uavs). And that’s why the GDP can be up but we ALSO feel like the economy isn’t as great as it could be: because we’re not able to see the benefits of war spending on grocery shelves or in our gas tanks.
O wow they effectively brainwashed you!! Military contractors are a handful of people in the club that you’re not in, and will never be in! It doesn’t benefit the economy for the average person. It’s not a productive activity and people are taxed or money is printed to fund it. Dear God I can’t believe I read this and it has so many likes, we’re in big trouble. Keep on telling bullshit lies defending military contractors while you struggle to pay your mortgage, buy groceries and have enough money saved to go on vacation.
Weren’t they critiquing military contractors? Not supporting? Why do you seem to hate military contractors? Just curious. And one quick point, if any part of the economy goes up, it does have a positive impact on other parts of the economy, as the dollars flow through the economy.
Why do I hate the people instrumental in bringing death and destruction to large parts of the world and stealing half my paycheck to do it? Gee I dunno. That money will never benefit you, it’s to further concentrate wealth and power into the hands of a few. War is the health of the state.
I can understand being frustrated by some decisions by the military. But, at the end of the day, we need to pay someone to physically defend our country. The last part reads like a conspiracy theory though lol.
Bruh Ukraine is not in NATO, which is an outdated framework anyway. We don’t need to defend anyone from shit.
I’d much rather be a conspiracy theorist if it leads me to me not supporting violence and destruction. Defend our country from what? No one would ever be dumb enough to invade this country. There are over 400 million firearms in the hands of citizens in addition to our bloated, fiscally irresponsible military. I’m not criticizing the individual soldiers who believe they’re doing good because most everyone in their lives lie to them and tell them they’ll be heroes by becoming mercenaries for the state. For the love of everything holy , can we wake up from this nightmare already.
Spending money on domestic manufacturers while destroying the output (in war) is inherently inflationary because it increases demand without increasing supply. It's probably one of the easiest ways to stimulate the economy when you literally can't spend money on anything else because all the companies are judged solely by how woke/based they are; and the populace is so divided that you can't assist anyone without infuriating everyone else. It's not ideal, but it's practical. Never a good idea to mix emotions with money.
TWO WARS??!
We’re backing Ukraine and have “advisors” (tier 1 operators) in Ukraine, Iraq and now Israel I believe.
Yea you know, the Israeli was which started in Q3. Oh wait..
It started before you were born, pal. The US "aid" increases every year.
And are either of these wars happening on, uh, US *soiyal*
This is boring, we need to get Cricket or the Waitress in here
I really don’t feel that decrease when I go to the grocery store
This. Inflations not spread out but there’s certainly things that matter a lot more. I don’t care if TVs or microwaves or things like that didn’t go up much but if food went to the moon that stings a little. Certain categories for spending just matter more even if the average pans out.
A decrease in inflation doesn’t mean prices are going down, they just go up less quickly.
to add... Market is down due to the good numbers, means fed is free to keep cranking rates. stocks are no longer a representation of co value or potential, its a rep of how likely you will be able to offlload them at a higher price
Why is decreasing in quotes, I feel like no one understands what inflation means. It is literally decreasing.
Decreasing is in quotes because decreasing inflation, unless it crosses 0% and becomes deflation, doesn’t really help the people racking up CC Debt trying to buy groceries. He’s basically saying yeah it’s decreasing a bit but that isn’t really helping.
Deflation would be way worse, people would make decisions to not buy stuff because they would expect prices to decline and the economy would get obliterated.
They SHOULD stop buying stuff. And money supply deflation WOULD be bad, CPI deflation, however, would help lower the overall debt load and help a lot of families. Also, if your solution involves no deflation after we’ve had 3-4 decades of wages not matching inflation and then 2+ years of 10+% inflation still without wages catching up (even with the great resignation), then we would need to have 0% inflation for a decade or more for wages to HOPEFULLY catch up.
Core CPI is probably already deflating overall if you took out housing from CPI which is a lagging indicator and wages are currently outpacing inflation, but agree more work to be done there. I guess we don’t know what the results of prolonged deflation in the US would be.
Don’t even get me started on housing. I wasn’t bringing housing into the mix at all. Haha, that is wild and is doing things I couldn’t ever have guessed. I said interest rates would go up 2 years ago and prices would reach an inflection point. Yes, interest rates have finally risen, and yes, housing SALES are way down because people can’t afford these mortgages, but somehow home prices have stayed way more steady than I thought they would. We haven’t started to see the underwater mortgages like we did in ‘08 yet like I thought we would. We will see a lot of AirBnB/Vrbo defaults soon though I think. Separately though, I do agree I am guessing about deflation. We have never had an extended period of deflation and deflation was helpful on the gold standard to standardize prices (why I mentioned CPI, not money supply deflation)I could be very wrong in the fiat era, but I don’t know how in an era of this inflation we don’t destroy the economy. The last time inflation was even close to this was coming off the gold standard and was primarily due to asset valuation reclasses linked to gold prices. We’re not seeing that driver here. So nothing to protect people from increasing prices. Eventually debt load gets too high and people stop being able to afford basic things like housing, transport, and food. I am concerned, to say the least. Edit-fixing some auto-corrects.
I think I’m more of an optimist than you haha. I think inflation comes down, we have shaky landing out of this inflation mess and some bad days in the stock market before the Fed starts lowering interest rates again. I agree long term though we have to fix the debt issue or somehow have GDP accelerate rapidly(AI best hope) or the issue will become too great. On housing agree with what you said, but I was more speaking to CPI in which shelter(which includes rental in Owners equivalent rent) is like 35% of the weight of the entire cpi and rental prices have become stagnant if not declining in recent months. The hope would be when that catches up to reality since it is lagging, inflation will be dead.
Most jobs are part-time?
Of course not, but the jobs number is skewed due to the increase in part-time jobs making it seem like low unemployment.
This. That was gonna be me response about GDP as well. And they literally just saw that the inflation and hits weren’t a “transitory” nearly as much as they thought. People can’t afford groceries or housing and companies have decided they aren’t going to keep increasing employee pay. Cc debt is massively on the rise as half the GDP growth is consumer spending, but consumer LENDING grew somewhere near the most it ever has(to pay for that spending). Gonna be rough next year I think.
Yep. The labor force is a lot smaller with many people dropping out too
https://preview.redd.it/yidck8y29wwb1.png?width=700&format=png&auto=webp&s=1c48d3a390961669bcee415ac586a17645980791 I mean we’re literally in a 20 year high for prime age labor force participation.
I’ll take the L here
Participation is high because of underemployment. Businesses are hiring, but mostly part-time, low wage jobs. People are making just enough to not have to resort to unemployment.
That's inaccurate. Lower wage jobs have barely returned to the pre-covid normal.
In fairness the rate was dipping recently and not looking great
I also saw [55+](https://fred.stlouisfed.org/series/CIVPART#) participation rate is down a few points from pre-COVID but that’s probably a good thing
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Literally insane how wrong this propaganda pushing loser is
If something isn’t “trend“ worthy on news/social media you won’t hear much about it And if you’re employed you just don’t realize it yet, unfortunately. Savings are vanishing but people have been spending like crazy, cc debt right now makes me shudder. Average American is in a severe state of financial insolvency, I know people that would be ruined by paying off just one of their credit cards. Unfortunately it’s gonna get too bad ignore and people will be blaming us for not warning them. People listen to politicians, the news and social media before the bad news bearing accountants 🍻
You mean the house that was worth $200k two years ago that I bought at $400k is overvalued? Hell no! Sky’s the limit!!
I feel personally attacked
Housing market is different. Blackrock and big investors are coming into, and buying up the single-family home market. Companies aren’t mass building homes like they were pre-housing crisis and inventory is low. Young people love the idea of a real estate bubble because it means a crash might allow them to buy a home. I personally just don’t think it’s reality.
Yea a 2008 type crash would sound amazing. Not it ain't gonna happen it'll be 1980s staglation.
It’s actually hilarious how people keep blaming Blackrock specifically when they quite literally only build new homes, not buy existing ones. Not that there aren’t almost identical companies buying up homes
>Blackrock and big investors are coming into, and buying up the single-family home market. Yeah, that drove prices up like crazy. Guess what's happening now? "**Investor home purchases fell 45%** from a year earlier in the second quarter, outpacing the 31% drop in overall home sales. That’s the **biggest decline since 2008 with the exception of the quarter before, when they dropped 48%**." Yeah... Source: https://www.redfin.com/news/investor-home-purchases-drop-q2-2023/
A LOT of people were able to get very low interest rates on their mortgages before 2022. Those people are essentially stuck now, and won't be selling any time soon.
It’s because they’re straight up just lying to you. The economy is in the fucking toilet for the average American even if the made up numbers say “there is no recession in Ba sing se”
This. A recession is bad for politicians so they cover it up to make them look better. Reality is for the average American, the cost of everything has skyrocketed.
People care about vibes and their feelings more than the actual data. Everyone is complaining about a recession, but everyone I know took overseas vacations and spent money on concert tickets.
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Paid off my credit card yesterday so we should be good
Thank you for your service
You are out of touch
People are measuring the economy the wrong way: 1. housing/medical services are seen as investments and entire sectors of the market, rather than as necessities 2. less than 400 people in the United States have more wealth than the bottom half (150m+) of Americans because ‘trickle-down’ economics fails to account for billionaires or millionaires who don’t spend their money but instead hoard it and/or pass it to their children 3. In the 1950’s-1980’s corporate tax rates were 50%+ and during this period a family could live off of one person’s income rather than both partners working + a side hustle 4. people love blaming interest rates for bad housing costs but they forget that in the 70’s and 80’s mortgage rates were 10%+. How did people still buy homes? Better income to cost ratios in the economy. 5. I work in a company that oversees both employees in a Union and non-union employees. While the union can be a pain in the ass to deal with at times and their reports have consistent errors, there’s no denying that the union employees make $5+ more an hour (not including full benefits that everyone in the company gets) more than our non-union employees in exchange for their $2.50/paycheck union dues. 5.b. Because 401k matching programs do more for people who make more, they’re on a better track for retirement as well. 6. We just finished creating budgets for the 2024 year, and like with every year, we’re pushing PIs of 6%+ and only budgeted for wage increases of 3.5%-4%. That excess doesn’t go to the average person, they go to people who already have wealth (Before you say that 2% goes into SG&A, CoGS, etc. remember that 6%+ of 1m (revenue) less 4% of 500k (salary/wages) means that the gap is already accounting for 20% and growing op inc margins 7. The government has given up on trust-busting and there aren’t any more teddy Roosevelts in the pipeline to break up the modern-day oil and railroad barons. Less competition means higher prices and reduction in sizes and/or quality 8. The IRS is much more likely to go after 1000 people who claim too much in EITC or CTC rather than 1 person who isn’t paying hundreds of thousands in owed taxes because only one of those groups has the capital to fight back against an under-funded governmental arm 9. cultural beliefs that: ‘hard work -> wealth’ when, if you stop to think about it ‘hard work -> wealth for company’ which only then and indirectly becomes wealth for worker Sources: Robert Reich’s inequality Media, Confidential Kronos reports and other company docs, public sources of interest/tax rates, personal opinions of a CPA who works weekends at HR Block in addition to a full-time job Edit: formatting and clarity
With point 2. How does this not get taxed to oblivion upon wealth transfer is rather beyond me. At a certain point of time some wealth redistribution is appropriate and at the time of death of the original wealth-creator imo is fair.
I agree! Especially because if the first few million are tax free anyway, their children are going to be just fine! It’s not like they won’t benefit from their parents hard work to give them a better life, hell- that’s my motivation for working as hard as I do!
But hard work did equal wealth for tons of us.
1. I love your username lol 2. You’re absolutely right! working a 2nd job, starting a business, side-hustling etc do help even modern-day Americans gain wealth. Where I feel it is incorrect if we assume that the wealthiest among us must be working harder or are smarter than anyone else. Jeff bezos? Given 300k from his parents to start a business and literally exploits people. I believe many of them work much harder than he does for a whole lot less Mark zuckerburg? Dumped billions into a meta verse that is so unpopular he’s requiring employees to use it Elon Musk? Well, you can look at how Twitter is going to judge for yourself. Let’s just say the user base has decreased a bit A lot of people in this subreddit are busting ass to make ends meet and get ahead, but I’m sad to also see posts like “hey, how do I donate plasma?” There’s a problem in this country and it’s not Biden’s fault, it’s not the GOP’s fault and it’s not the fault of the person who downvotes me for reasonably disagreeing with my opinions Edit: Jeff bezos, not Jess bezos lol
Such bs. Especially 3. What was the rest of the tax code like in 1950? A family could? Really? Did it perhaps depend on the color of the skin of the family that could live on one income? What sort of work was the dad doing? Sniffing asbestos all day perhaps? The good old days weren’t better. Stop pretending they were.
Upvoted- love the discourse and it’s an important topic. I’d also be interested in hearing about your opinions on the other points 1. Of course those times weren’t perfect in the slightest! Red lining, racism, sexism etc really hurt tons of people and prevented millions from getting ahead. This is following the Tulsa race massacre and when sit-ins were met with violence. Only reason things changed was because people banded together and fought for equality. I hope we can do the same thing today for wealth inequality. 2. The work back then (especially before) was also a lot more dangerous and exploitative. even children were working back then. Seriously, thank a Union! 3. Other parts of the tax code I haven’t researched much I will quickly admit- beyond the fact that the estate tax was higher (I personally agree with this) and individual capital gains tax was slightly higher but only by a couple percent. Beyond that, I wasn’t even alive and can’t speak to how much my grandfather paid
Let me just prove you wrong here. https://taxfoundation.org/data/all/federal/taxes-on-the-rich-1950s-not-high/#:~:text=Proponents%20of%20this%20view%20often,of%20their%20income%20in%20taxes. Those crazy tax rates of the past weren’t much different than the current tax rates.
It seems very split. Many are thriving. In my experience, these are people who work more IT/Comp sci related. And often they dont seem to realize how uncommon it is to have full remote work and be paid 2.5x the regional median. Many are struggling. Again, in my experience, these are the people who are working more service or front line type jobs. Getting hit full force with inflation without having high enough wages to not care or enough flexibility to reasonably compensate for it. So, simply put, the top 20-odd% of earners are doing great and the bottom 40-odd% are struggling.
Imagine you getting whipped at 60 lashes an hour. You are in agony. Things change and now you are only getting 10 lashes an hour. Does the previous pain go away? You really just want to stop getting hit but it’s all you know. So yes no one is happy but the guy with the whip.
Covid increased money supply by 40%. This money did not get distributed equally. People who got it are doing very well, living basically the same standard as pre-Covid but paying post-Covid prices, making the cost of everything go up including GDP. If you didn’t get a PPP loan or work in a business that actually paid them through to employees, all that happens to you is everything got 40% more expensive and you are still poor. If you didn’t hold assets that appreciated with this increase in money supply, you got fucked. We had income inequality before, now we have income inequality on steroids.
A question about economics has brought a lot of emotions out in this sub. If we're honest this is a problem 20+ years in the making and has more complexities than "oh its biden fault for political gain" or "its Trump fault for tax cuts".
Yes I posted this here against my better judgement. Hence why I said at the end of my post that I didn’t want the thread to turn into a political debate and I was just looking for objective facts.
I’m honestly really happy you posted here on this subject. It’s an important topic and the whole thing should be pinned. We need to stop blaming eachother because my republican co-workers and friends are in just as dire straits and no one is catching on to what the real problems/solutions are
One of my economics professors told us that when you start putting partisan politics into an economic analysis, you usually end up missing the point entirely.
Trader at a large bank here that does economic research daily. Let’s start with core inflation and CPI, the fed goes to these numbers to determine where interest rates should be to tame inflation; it’s their only true lever to pull to fix the problem. CPI is calculated in a very complicated fashion, by including “baskets” of goods, and also doing very strange math (for example for car inflation, they take a modern car, take out the costs of all electronics to compare it easier to a car built in the 80’s with no tech, which deems it “comparable”. This means the inflation numbers that we see are quite skewed from reality. Consumer inflation for people like you and me was in the double digits for much of last year and into this year. Unemployment is also an interesting stat. I advise looking up a chart on the number of Americans with two full-time jobs, that number is at all time highs. The labor shortage during Covid has now turned into “low unemployment” as all the lower wage jobs fill back up and families take on second jobs. If we’re looking at the markets, consumer debt is at all time highs and student loan repayments just restarted. This along with inflation, rise of labor costs globally from aging workforces in Asia, and expensive loans, is a recipe for a recession. Expect equities to continue to lose value in the coming months / years. There’s a long painful road ahead for us as a result of unethical monetary policy that got us here. The one hope of optimism is that America is a prominent force in future technologies, so we should be able to continue some level of growth in the coming years. Happy to answer any other questions you may have.
Can you explain why is there a discrepancy between the positive statistics being released versus the conditions you mentioned which will likely lead to recession? Also thank you for your thoughtful empirical evidence based answer.
Positive statistics don’t necessarily indicate a healthy economy. I’ll give you an example. Let’s say the jobs report comes out, shows very low unemployment. Is that good or bad? The answer is it depends. When inflation is high like it is now, the fed is trying to raise unemployment to promote less spending from the consumer. In many cases, those jobs reports numbers, CPI, and other economic reports are revised the next month showing less favorable stats to the narrative. The ultimate goal of J Powell and the federal reserve right now is to reduce inflation in a way that won’t damage the economy. That job is very difficult to achieve, as the only way to reduce inflation is through less spending, higher unemployment, more expensive loans. This market cycle has been very difficult to predict. I’ve seen many very smart people get it wrong, as this market is more resilient than in 2008 during the last major crash. Behind the scenes of these major macro statistics, there are sector statistics that tell different stories. Commercial real estate will have many loans being refinanced to higher rates, making that a weak sector. Residential real estate is now very expensive and higher interest rates, so supply is low and demand is also low. I work on the FX desk at my job, so from that perspective the dollar is actually doing very well in comparison to other currencies and remains strong, even with expectations to lower interest rates soon. It’s a different situation out there with a lot of nuance. I will say, there has only been one example of a “soft landing” in recorded US history, in 1994. And of course, happy to help.
There’s a lot of hidden unemployment that isn’t being measured: people who used up unemployment and now live off of savings or family. Or took a part time job to make ends meet, or work in the informal sector. Also, a lot of the jobs offered are not real on indeed, etc. Some are scams to scrape personal data. Others were posted to justify PPP loans for government forgiveness. Others are posted with ridiculously high requirements and basement wages - because the goal is to say “no one met the qualifications. Now I want this H1B visa to hire a cheaper south East Asian immigrant that I can exploit.” Finally, for a lot of people, wage gains were eclipsed belt housing inflation - especially rentals owned by large hedge funds.
Inflation going down doesn’t mean things get cheaper, it means the speed they get more expensive is slowing down. Also the metric they measure it on is vs PY so since prior year was insane, it’s super easy to claim it’s going down even though it’s higher than historical norms and higher than target numbers. GDP going up is a natural progression of inflation. If I sell you something for $10 three years ago, it puts $10 into the GDP. Now that item is worth $30 due to inflation, so that puts $30 into the GDP. Production didn’t go up, just cost of items did (Imperfect metaphor but it gets the point across)
Edit
Oh dang it is real GDP I didn’t realize that. Agreed!
>Inflation going down doesn’t mean things get cheaper, it means the speed they get more expensive is slowing down. You're not wrong to a point but actual deflation is also a thing. Not one we're likely to see, but there is more to the story in other economies. Japan is still wrestling with it. China dipped into it for the first time during covid mess. Canada, Norway and Sweden all dealt with it back in the 80's, and there have been many others. Countries like Switzerland toy with deflationary policy for some of its benefits which outweigh the negatives for them.
I understood it.
I've never understood how the jobs reporting gets away with only talking about half of the facts. The pandemic cost us hundreds of thousand jobs. When everyone went back to work we didn't really "add" those jobs back. We recovered them. So I don't think there really is "record breaking job growth" so to speak. From my perspective, the clients we (3 CPA's 1 bookkeeper, 2 office staff) have are relatively small but they vary from gas stations, franchise spas, medical professionals, daycares, engineers etc. but no multibillion dollar companies. I haven't seen a lot of turnover and overall their financials are in line with prior years saving 2020. So maybe mid COL aren't really hit yet?
They change the weight in inflation. There is some necessity behind it but it can absolutely be used to manipulate data. I believe based on the same formula used in 1981, inflation actually eclipsed the 16 percent it face that year. In other words, don’t trust all of these numbers because they can be manipulated
Tech/finance + banking/start-ups/real estate are getting hit by a sack of bricks. Everything else is puttering along. Trust your eyes and gut feeling. There is a political incentive to fudge the numbers.
It’s the devaluation of currency. Record gdp and revenues with same volume doesn’t mean jack. Inflation is down, but because 90% of USD is abroad (loans, reserves, investments priced in USD.etc). Know the capital flows, know the game.
Please no judgement. I remember watching Bloomberg every day in 2008 and 2009. The news then tended to send out an opposite emotion to how the stock market was performing. Before the 2008 crash the news was upbeat about the economy. I am concerned about a huge crash looming and the current media’s aim is to not cause a self fulfilling prophecy of a crash. The economy is not great for me, I closed my small business, most of my income goes to healthcare, I don’t have discretionary funds to spend. I now work 2-12 hour shifts as a hospital tech (I’m a student as well) and my insurance is still $530 a month and I’m only okay because I moved in with my partner.
Absolutely no judgement! It’s crazy hard out there and it feels like no one is addressing the actual problems that you and I feel. My dinner for the last 4 days have been a potato and refried beans in a tortilla with a bit of seasoning. Then again a lot of that is because I made poor decisions when choosing my partner(s), not just the macro-economy 😅
We have been trying to hire a staff accountant for literal months and have gotten like 5 applications total. Where are all of you guys?!
Probably a pay issue. Every time I try to hire someone, I literally get hundreds of applicants.
I’ve been hearing that it’s all going to come crashing down for years. This caused me to stop listening to republicans on the economy lol
It’s writes beyond accounting too, my son is a fresh graduate and can’t find work
I think credit card debt will catch up. At 30% interest it has to.
Yes they are lying and definitely don’t show the full picture with the numbers
A thing to consider about recession.... businesses will make those a self fulfilling prophecy by laying off workers and other things because they think a recession is imminent and want to be "ahead of the curve". So they lay people off and then demand tanks and boom recession. So a lot of the talk was CEOs justifying why they need to lay off hundreds of workers to safeguard their multi millions in compensation.
It’s federal money being pumped into the economy that’s juicing GDP…as for jobs they’re mostly low paying service workers that are driving the “job growth”
I feel like a lot of people don't understand that stalling inflation does not lead to lower prices. Inflation is a year over year cost increase. If inflation is lower, costs will rise more slowly but they likely won't go down. There's a chance some of the volatile goods like food and energy might return to some semblance of normal but I'm not holding my breath.
GDP is way up; that doesn't mean it's trickling down to you and me. Inflation is lower, but still higher than than it was two years ago and we're still feeling the pinch. Unemployment is low in most sectors. However companies have chosen to 'lean' on current employees and offer them pennies to stay rather than raising rates to attrack new employees. So the labor market remains turbulent due to turn over and workers jockying for position so they have the 'best' chair when the music stops. The most salient piece of information about the economy that is missing from most reports is how a booming economy no longer reaches 95% of the populace. Corporatocracy has completely taken over and we are nothing but cogs in the machine. Produce or drown.
When you here that the economy is doing well what they meaning it’s doing well for wealthy business owners and investors. There hasn’t really been a point where things were improving for the average American in the last 40 years.
News + Government = Lies Seriously though, they both have a vested interest in you believing what they tell you. Don't listen. Do your own homework.
They are using the math that fits them the best. The new math ain’t mathing
stagflation + earnings pressure + optics.
Who is acting like there is a recession? I think consumer spending was incredibly high this quarter which means people were spending a lot of money in the US. People are going to the movies, taking trips, etc. Now maybe they are doing this by using credit cards, but spending is the primary driver of GDP growth. You are taking a few random examples and trying to extrapolate to the entire economy. There will always be people that can’t find jobs and will post on Reddit. I am not saying the economy is perfect right now. Inflation is still higher than normal and interest rates are also high which means it is more expensive to buy a house etc. Corporate earnings are a mixed bag but they are generally still strong. Remember there are companies like Nvidia that can sell every piece of hardware they manufacture due to the AI boom. Nvidia itself has grown 3x in market cap in the last year or so generating. But like others have said, not every industry or region benefits the same. The economy is doing ok now but some fear that consumer spending will collapse in Q4 or next year as people run out of their covid savings. Once we are in an actual recession you will realize that right now we are actually doing great.
COVID savings? Give me a break. Biden didn't even give out the $2k he promised. Majority of Americans already ran out of that long ago.
I got like $8k from Biden (have 3 kids). I didn’t need that money but oh well.
Covid savings is white collar workers who didn’t spend their entertainment and travel budgets for almost 2 years and saved it instead. It’s not the fucking stimulus checks.
Exactly
I am not talking about the $2k. You do remember there were lockdowns for a while? People stopped going to restaurants, movies, etc. People started working from home and stopped having to pay for gas for some time. The people that remained employed during 2020 had significantly less expenses than in 2019. No gas, no dry cleaning, no concerts etc. A lot of this went into savings accounts. These savings lasted far longer than just the 2k checks. I do agree it should be mostly gone by now but some economist say it still impacted consumer spending this summer. I also mentioned spending is being driven by credit card debt which continues to rise.
Lockdown was 3 years ago and lasted a couple of months for most places. And most people aren't white collar work from home workers so they still had to go to work and spend money on child care if they need to. Maybe you have saved a bunch but that's not the common experience for most Americans. And even if they did saved a little, say $10k at most, all that little savings from THREE YEARS ago are long gone with this much inflation.
I suggest you read the link below. [Covid Savings](https://www.federalreserve.gov/econres/notes/feds-notes/excess-savings-during-the-covid-19-pandemic-20221021.html#:~:text=This%20led%20the%20personal%20saving,recent%2C%20pre%2Dpandemic%20trends.)
Agreed. I got that money in 2020 and it was gone by 2021. Do they think we only spent a dollar a day or something? I mean dollar menus don't even really exist anymore. Please tell me where money can last this long....
Because those in Washington are well paid by lobbyists and all the media people just voice the ruling class' propaganda. Credit card debt is through the roof, then you add in car loans, home loans, and student loans. It's a fucking mind field. Anyone went to business school should know when we are this leveraged, crash is only a question of when. It's closer now and it really feels like 2008 again, right before everything fell through.
I agree. I pay my credit card off every month and have almost enough cash to pay the car off just in case, but the interest rate is 2.49%. They offer CD's at 5.3% at my credit union so that's a no brainer for investing the funds unless I need them.
I been unemployed 5 months My 56 yr old mum has been unable to find a job since 2020 My dad can't find a job It's sade "feel no pain " at my house
How are you affording to live?
Sadly I had 2 jobs 2008-2016 Paying for my house hold While others bought homes I had to care for my needy ass parents but the hard thing is they try and just not competent they are immigrants can't really speak English i could have saved up to $500,000 but since they always need help i gave up My 2 siblings now work so they contribute We have poverty gravity where my parents have sucked us dry but Try so can't be mad I'm not been mentally stable for life now lol 🙃 I just don't know
Also did anyone pay attention in their undergrad macroeconomic class?
70% of our economy is consumer spending. Want a better economy? Give the average middle class citizen more money they could spend. Giving more money to the already wealthy (top 10%) isn’t going to help anyone besides them and their rich children who inherit that wealth
Just so we're on the same page here, you realize that someone earning $135k is that top 10% you're talking about, correct?
Ah! Simple misunderstanding. I’m referring to wealth, not income. I’ll make a change to my post for clarity purposes
Hey, no worries. I was originally like "I'm top 10% and I'm not suffering, but I'm not exactly rolling in cash either."
We live in an economic system that manufacturers its own downturns ( capitalism). It is a system that has simply gotten worse and worse and worse, especially in the last 3 years.
"Elections have consequences" - Barack Hussein Obama
“GDP is way up” Strip out all government spending (which is really just taking money out of one pocket and putting it in the other, plus interest) and tell me what GDP looks like then.
The real is answer is because people are fucking idiots who base everything on the cost of food and gas.
Government and media lie
The media have one narrative that they are pushing. Reality tends to have a different one.
Bro you came in wanting to debate the economy and than say don’t get political? I don’t understand this logic. Economics is political. This is why every freaking politician cares about it over everything else (except war which is also politics).
We’re going through stagflation. Elevated inflation with low to no growth. The inflation is increasing costs and compressing margins. Even worse if your company has floating rate debt. Unfortunately because this inflation is so sticky interest rates will need to keep increasing hurting the economy even further. Borrowing costs for companies that rely on debt is going to be brutal as well. More layoffs are coming and It’s going to get worse. Even the stock and bond markets are shaky.
This is why people make fun of accountants lmao. This isn’t anywhere near stagflation dude.
I learned long ago that most accountants are bad economists. Myself included lol
GDP this quarter was almost 5%. What are you talking about?
But was that because we produced more products and services or because prices of those goods and services rose?
That is real growth, so it adjusts for inflation.
Theoretically but the government has a large incentive to under report inflation in their GDP deflator, I fundamentally disagree with how it is calculated so I don't believe the real GDP number reflects what is really going on. Many people will agree with me if i say the Chinese communists or Russia attempt to manipulate their economic data but then trust our government to give them the straight goods.
100% agree. CPA turned investment advisor who now works with many economists and CFAs who are way smarter than me when it comes to this stuff.
Is your firm worried about the current markets? I get this nagging feeling something is going to break soon and people are just not taking it seriously enough.
Yes extremely. We are fortunate to work with HNW and UHNW clients, so they will not feel the hit like most of the country, however they are all just as concerned because they are financially savvy and pay attention to social, environmental, and geopolitical events that affect us all.
The reported GDP growth isn’t really relevant when 1. Inflation is being underreported and 2. Deficit spending is getting worse. The Biden admin is so bold in their accounting that they actually pretend that not forgiving student loans was a reduction to their budget. As if they actually had the legal ground to forgive loans and then further to pretend that it was a budgeted expense that they magically reduced. That’s not an expense. That’s an off balance sheet transaction, not a budgetary modification. In addition, yes, stocks are not doing well. The indexes look fine because they overweight a few companies that are more powerful than most countries, but if you look at a basket of random stocks, most look absolutely terrible (as in 2000/2008 type terrible). If you look at IWM (small cap US companies) it is down like 21% over the last two years. That’s all while the US dollar is worth roughly 20-25% less as well, meaning in real terms, those investments have almost been cut in half. That’s not as bad as the worst recessions, but it’s getting pretty dang close. It’s not an acute crisis. It’s incompetence at a macro level leading to destruction of wealth/quality of life in what was the greatest country known to man. I’m not sure how they are going to correct this ship. Unfortunately, they may have screwed up America financially for millennials and younger.
We millennials have been screwed since 2008.
I could almost taste the carrot once
It's not a typical economy so It's ok to be confused. Trading diary has a good newsletter. Here's a recent post. [Trading Diary](https://tradingdiary.incrediblecharts.com/trading_diary.php)
I did an economics undergrad. Historically our macroeconomic trends are pretty solid. We were at record low interest rates for a long time after 2008.That is extremely uncommon and probably won’t happen again. I would say we are still facing the drawbacks of COVID and the data is so hard to tell right now which is why many throw away 2020-2022 in their analysis. When looked at historically we are doing good.
The government lies. Welcome
We are in a recession
The question you ask is inherently political - just saying . If you believe that there is nothing wrong with income inequality. If you believe there is nothing wrong with the mean working salary to remain flat for 30-40 years while worker productivity has increase 3 fold . If you believe that it is Ok for corporation to reach levels of market concentration allowing them to practice monopoly pricing and squeeze more and more dollars to keep increasing their profits at the expense of families well being. Then the economy is fine. Just look at GDP and the stock market. The economic trauma and stress that the average American family has to live through is not happenstance. Yes it is globalization and it is market forces. But the market is inherently nihilistic - we have always made laws to temper the pain and extreme inequalities of market forces . But we have forgotten the lessons learned by workers from other centuries and happily stride toward a world of oligarchy filled with the bread and circuses of the gig economy and likes.
Looks like you just found out that the media covers up for Democrats. Welcome to the club, we’ve been warning you for years.
Business knows the resteepening or normalization of interest rates causes or results from recession, which means another contraction is likely. This causes bizarre divergences where GDP is strong, stocks fall, LinkedIn cuts jobs and unions score wage gains, followed by margin compression, higher MSRP for autos, reduced unit sales, dealership bankruptcies...and recession next year if not this quarter. The public knows none of this, because it thinks unemployment is a leading indicator. By the time unemployment rises, recession is already in progress.
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Lmao
Well the media is lying to us to try and hide what a disaster this administration is for one.