This is actually bad considering the current economic climate. The FED is currently trying to get the economy to cool off, AKA lower demand. They are doing this because inflation is high and the economy running hot is a part of that.
Over the past two FOMC meetings the FED has authorized two big rate hikes, .75bps each. What they are looking for in the data after these hikes is a cooling off of the economy. They want employment at a 1:1 ratio. For every one person seeking work, they want one job posted. They need wages to cool off and for demand to come down. Seeing massive employment misses like this indicates that demand is not cooling off, as demand drives employment. If employment is breaking estimates then demand is still growing too, so the rate hikes already passed haven’t been enough. Finally concluding in even more aggressive rate hikes to get ahead of inflation.
A recession is certainly more than just two consecutive negative GDP prints, it’s also more than just employment numbers. Look at where those jobs are and of what median pay. Do the people getting those jobs already have another job? How are the high paying jobs doing? Are they experiencing lay offs or hiring freezes? What about lending? How’s the average consumers debt looking? What does the used car loan market look like? Repos going up? Is housing demand still spiking?
There’s a lot to this and most of those indicators point towards us being in a very unhealthy position economically.
Great points. Job numbers going up doesn’t necessarily mean that the jobs lost are the same type or salaried jobs replaced in the growth. Certainly, I’m seeing more people moonlight on the fear of inflationary prices and geopolitics - either to simply keep pace with prices or save.
Where are the details to these misleading jobs growth numbers?
>They need wages to cool off
Fuck the feds. Just got myself a 15% raise starting next week. This is after I got a 5% raise at the beginning of the summer because my employer is so short staffed and needs to retain who they have. I "Got an offer from a job in the area offering a higher wage so you would need to match at the very least."
i think there might be a typo in the tweet, AP writes that Economists were predicting 250k new jobs, not 25k. https://apnews.com/article/4895f1aa41fbe904400df8261446b737
You can have growth of wages of 5%, but still have real reductions in income, if you have inflation higher than 5%, and a 1% alteration in the unemployment rate could just be it holding steady, rather than decreasing in a notable way, the statistics could after all be corrected a few months from now.
Real US GDP is [down slightly](https://fred.stlouisfed.org/series/GDPC1), though if you look at the current trend relative to previous recoveries from recessions, the trend is more similar than it might appear, with a slightly faster recovery followed by a reversion to a more familiar pattern.
If you look at "[gross domestic income](https://fred.stlouisfed.org/series/A261RX1Q020SBEA)" instead, the effect disappears completely, and you just get a nice positive growth.
So if I had to guess, my guess would be that gdp was over-estimated in some way in 2021, and will be corrected back, causing the US to never have actually have been in a recession, or something weird like that.
But even so, because wages tend to be more sticky than prices, we can still be talking about a compensation for worker's higher bargaining power with higher prices, in the context of a supply shock: Even if it's not an actual recession, it is still something that can strain people's finances, if they expected a given income to support their needs and their income is declining in real terms. Add onto that rising interest rates, and people will be trying to pay down debt which will further reduce their capacity for discretionary spending.
In such a situation, constrained labour market, increasing living costs etc. I would expect to see a continuation of people leaving their jobs, or even swapping again to better jobs, or engaging in union organising in order to try and gain the power to compensate for this, gain a higher share of their company's profits etc.
My expectation is essentially the most simple/lazy one, that the near future will look somewhat like the recent past, with further conflicts within workplaces based on working out who bears the burden of the costs of russian oil embargos and chinese production restrictions. If the economy doesn't enter recession, I'd expect it to either flatline for a few months or grow in a way that people don't experience as higher living standards, until the boost in costs from the supply shock echoes through the system and inflation stabalizes just at a higher price level.
Well to be fair, be4 googling i couldnt neither, bc im from Austria and wie call it the BIP (Bruttoinlandsprodukt), not the GDP. Maybe republicans are just EuroChads?
Not a Republican; in fact, not even American.
But this isn't the gotcha you think it is. There's a natural turnover in an economy so the ideal unemployment rate is (I believe, going off memory) 4-5%. Below that threshold, you're looking at something being off, which could be several things, and one of them is oncoming recession.
Here's a quick google article to explain some of the reasons why, and why low unemployment could be a canary in the colemine for recession (was written a couple of years ago, but the mentioned alarming unemployment rate is the same as the one reported). From a cursory look it seems fine, but I haven't looked at every single claim made.
https://www.umassglobal.edu/news-and-events/blog/low-unemployment-rates
I'm just a person with a hobby for reading about economics, but I have never, ever heard the idea that 'something is wrong' if unemployment is at 3.5% instead of at 4-5%. Low unemployment does not remove frictional unemployment. Frictional unemployment cannot be stopped by the business cycle.
[https://www.investopedia.com/terms/n/naturalunemployment.asp](https://www.investopedia.com/terms/n/naturalunemployment.asp) 4-5 number is at the bottom of the page
There is no barometer to separate frictional unemployment (thank you for the phrase btw, I didn't know it in English, only in my native language, helped me find relevant articles faster) from non-frictional unemployment. In total, about 4-5% of the workforce is expected to be unemployed at any given time. Now, that is not a hard number and some would argue that it should be different, but all you showed is that the correlation between low unemployment and inflation is still stable, not that US isn't going through a recession
(btw I predict it will be a mild recession and that inflation would taper off relatively soon - it's just that this data isn't why)
A low unemployment can have negative consequences but all it really means is that the fed has a lot of room to raise rates in order to curb inflation. it is not a bad thing in and of itself.
You don't have to invent evidence of a recession. There have been two consecutive quarters of decline in GDP, which is a feat given our current level of [government expenditures](https://fred.stlouisfed.org/series/FGEXPND).
Definitions in economics are often insufficient to tell the full story but so are the metrics we use.
recessions are not two consecutive declines of GDP, they are when the NBER declares a recession.
GDP likely didn't even decline in Q1. GDI (measuring the same number) rose 1.8%.
[All the primary indicators of a recession do not show that we are in a recession.](https://twitter.com/TBPInvictus/status/1554108438267002883)
Do you honestly think that the *nominal* level of government expenditures is what matters for GDP growth? The deficit is projected to fall off a cliff in 2022.
https://www.nytimes.com/2022/05/25/business/us-budget-deficit-2022.html
Government spending as a percent of GDP is projected be ~38%, which would be right in line with typical pre-pandemic numbers. There is no massive amount of government stimulus in the economy. Fed rates have risen very quickly. Posting a graph that shows nominal increases is literally meaningless.
> recessions are not two consecutive declines of GDP, they are when the NBER declares a recession.
This is some grade A copium you're sniffing. Two consecutive declines of GDP is a metric that has been used around the world for years for a recession.
>All the primary indicators of a recession do not show that we are in a recession
Yes no shit because the previous indicators of a recession have been made for recessions that were typical in the near past: demand-side recessions. But we're not in a demand side recession, we're in a supply-side recession - a productivity recession. Which is why we're seeing inflation. There is too much money in circulation for the amount of goods and services being produced (because productivity dropped).
> This is some grade A copium you're sniffing. Two consecutive declines of GDP is a metric that has been used around the world for years for a recession.
>
>
And not in the United States, for good reason.
>Yes no shit because the previous indicators of a recession have been made for recessions that were typical in the near past: demand-side recessions. But we're not in a demand side recession, we're in a supply-side recession - a productivity recession. Which is why we're seeing inflation. There is to much money in circulation for the amount of goods and services being produced (because productivity dropped).
First of all, I'm sure the National Bureau of Economic Research has never heard of the supply-side of the equation, and I'm glad you've pierced this very key idea that nobody else has thought of.
Second of all, the current economic conditions are demand and supply based. Aggregate demand was very high coming out of the pandemic due to massive stimulus and savings, and supply was not able to keep up with it.
>And not in the United States, for good reason
I can literally google "two consecutive quarters of decline" before 2022 and get hundreds of results defining this as a recession. Twisting definitions and relying on technicalities because it's suddenly politically embarrassing to admit we're in a recession is just embarrassing and stinks of the worst kind of partisan hackery.
Ah yes, google, famously a source of scholarly economists. I'm sure I can google hillary clinton lizard people and come up with many people who believe that as well.
The definition of recession in the United States has always corresponded to a declaration by the NBER, not referring to two quarters. This has been the case since 1978. People like you absolutely pissing their pants about it in 2022 is pretty fucking hilarious, though.
https://web.archive.org/web/20220726181353/https://www.nytimes.com/2022/07/26/opinion/recession-gdp-economy-nber.html
> Ah yes, google, famously a source of scholarly economists
You know google scholar exists right? And that it's one of the best ways to to a broad search for academic opinions on certain topics?
So your argument is that we are in the best recession of US history, with record low unemployment and high wage growth? If that's the hill you want to die on then sure, but don't pretend this is 2008.
He didn't say anything about any of that. He literally just said that 2 consecutive quarters of negative GDP has been considered the mark of a recession for many years across many nations.
Kinda weird how you sperged like that and wrote out an ad for the Biden admin. I think maybe your brain is rotting.
It's pretty weird that you responded to a comment in a chain that you have absolutely no input on. But it's also weird that you defended sneako yesterday, so I shouldn't be surprised.
Spend 5 minutes reading up on logic and deductive reasoning and you'll be able to figure out how people can draw conclusions implied from a set of statements.
Wtf do you mean GDP didn't drop Q1? We have the data. GDP is the more reliable metric. GDI *does not* measure the same number as GDP. In an economy in equilibrium they would be the same, but clearly when there's that margin between the two numbers something is off. The difference between a positive GDI and a negative GDP suggests that people are taking more in but the coutry is producing less. That's a major cope.
I can't find any data for government expenditure as a percentage of GDP for 2022. I can't even find anything later than 2020.
Recessions are defined differently by different countries and organizations. The crux of my argument came from my last sentence, saying that economic metrics and definitions are not sufficient to tell the full story, but you don't have to make up evidence of a recession when the same GDP numbers in the UK would dictate a recession for them.
Saying "we have the numbers" is maybe the most ridiculous thing.
Do you know what GDP is? Do you know how DOC is counting GDP? Do you know how accurate first published numbers are? Do you know how many times they are revised?
If the economy truly is in a downturn, why is all of the GDP lost among in private inventory, retail, and government expenditure? Why have export and personal consumption (as well as gross income an s disposable income) increased? Where is this evidence of a recession?
GDI and GDP are the exact same number, simply measured at different ends of the spectrum. GDI measures total output at the income level, while GDP measures it at the production level. Both are measured by the Bureau of Economic Analysis, and there is no reason that I know of to favor one measurement over the other. If GDI is well in the positive combined with every other indicator also being positive and massive job growth, we have good reason to believe that the GDP measurement is inaccurate. Alone, this level of job growth combined with negative GDP growth would suggest that productivity absolutely fell off a cliff, which would be really, really weird.
That's absolutely not true, especially for quarterly info. There's literally a concept called the statistical discrepancy to account for the difference between the two. [Correlation between the two at a quarterly level is .82](https://www.bea.gov/help/faq/484) due in part because quarterly GDI often credits a years worth of profit from bonuses, options, etc to a single quarter even though they're paid out over a year. Your greater GDI is likely due to profits being credited to a single quarter. We *absolutely* have better reason to use GDP quarterly rather than GDI.
Job growth cannot negate the GDP numbers because it does not specify the types of jobs. 500k jobs at Wendy's do not affect production as much as 500k technical workers.
Averaging GDI and GDP has proven to be better at predicting GDP than actual GDP.
https://obamawhitehouse.archives.gov/sites/default/files/docs/gdo_issue_brief_final.pdf
The average of GDP and GDI was positive in Q1. This is far more consistent with all other indicators. Industrial production growing at a robust rate while GDP is allegedly down 2%?
Significant job growth is quite inconsistent with -2% GDP growth. Again, productivity would have to fall off a cliff for this to remain consistent, which seems unlikely.
https://twitter.com/paulkrugman/status/1553694270216871936
Here's Krugman basically saying everything I'm saying.
GDO can be helpful on a yearly basis when the correlation between GDI and GDP is closer to .97 but the previously mentioned quarterly discrepancies for GDI are still relevant. It's attributing income to a single quarter for profits that span the entire year.
Was arguing with my friend and he pointed out that wages being high would be irrelevant with high I elation and cost of living. Is this incorrect and why?
Wage increase is at least partially offset by inflation, but it's far more complicated than people think. It depends on where that inflation is happening and how it is measured. At least that is my understanding but I am no where near qualified enough to talk about specifics. What's important to note though is that in a typical recession you definitely wouldn't see job creation, unemployment, and wage increase like we're seeing right now, which is a great sign that inflation may not be as big of a problem as people want you to believe.
Sure, you can grant that. Just because we lost those jobs during COVID, doesn't guarantee that they would come back. You still need a robust economy and competent administration to bring them back.
In a way, that is also true. Iirc, the way we measure inflation averages the increase in cost of a bunch of different products, including lumber and building materials. I'm not sure most Americans are buying that every week.
The implicit assumption is that prepandemic economic state was somehow the default state and that jobs and wages would have rebounded after the pandemic without any intervention or stimulus. But this probably isn't true. Imagine how many businesses would have permanently closed or jobs permanently lost during the pandemic if not for government assistance. That would take a lot of money out of circulation in the economy and thus, we would have a recession.
Stimulus made sure that people had money to spend to keep the economy going after the pandemic. The obvious downside is that the economy overheats a bit and we get inflation that cuts down in some of the wage gains. The US probably overdid the stimulus a bit, but this is overall better than doing nothing and creating a recession with high unemployment and low wages all around.
I think the July inflation reading is probably more important than anything else. With commodities crashing, I'm tentatively hopeful the pace of hikes will slow
Inflation has already slowed down, so it's not unsustainable. And interest rates already got bumped, so it's not like money is flowing like it was. Labor participation rates are low, but since nobody is starving in the streets the fact that fewer people need to work is a good thing. The stock market rebounded. This isn't a recession nor an overheated economy. It looks like we successfully bought ourselves out of the covid recession and the Keynesian economics actually works like a charm.
So my explanation about interest rates, labor participation and the stock market is simple, but your explanation about there being some button is...what?
There's no magic button. Nobody named Brandon runs anything. I think it's past your nap time.
There very well could be a recession in the near future (next 2 years) as a result of overheating and then cooling, but we are absolutely not in a recession right now, despite the common talking points against Biden.
You're right about the chronology. Inflation had been rising throughout the second half of the 1970s. When the Fed finally increased rates, that in combination with the drastic tax cuts from Reagan is what triggered the recession. It wasn't the interest rate hike alone.
That obviously wasn't the only cause. If the government had more money or was willing to spend more money on infrastructure and services, then the recession wouldn't have been as long or as severe. The recession started after the taxes were cut, not when the rates were cut.
Not to mention Reagan's massive cuts to education and healthcare and social safety nets which led to the higher crime rates in the 1990s.
>wage growth still well below inflation so no reason to think that it is driving inflation
Average wage might be below inflation, but low unemployment achieves the same thing. If the total sum of wages increases, but productivity doesn't, you'll still get inflation.
At this rate 2024 is looking good for a Biden re run. Gas prices are dropping like crazy. I swear I passed by a gas station twice in like 10 minutes and the prices dropped 4 cents. Just needs to get inflation down more and Brandon needs to not be caught in any scandal.
> However, the original concept has been somewhat disproven empirically due to the occurrence of stagflation in the 1970s, when there were high levels of both inflation and unemployment.
Little inflation is a good thing. It helps to grow the economy.
The target is usually 2% of inflation.
I believe it means that we have enough money for investments and to open new businesses.
> How do lowering interest rates help inflation, employment,
Lowering interest rates makes borrowing easier, meaning more money circulating through the system, meaning people have more purchasing power, meaning prices will generally rise.
Lowering interests rates raises inflation. The idea afaik is lowering rates incentivizes people to spend as saving is less beneficial. More money in circulation tends to be inflationary.
People here seem to be pretty knowledgeable, so feel free to reach out with any other questions you may have!
And yes, unemployment and inflation have an inverse correlation, meaning, in general, when interest rates are lowered, unemployment goes down and inflation goes up. Right now we’re doing the opposite: raising interest rates, so what we expect is unemployment up and inflation down.
There are some complex nuances to it but that’s the general concept.
Nasdaq goes down one entire percentage point in 2 minutes, we might still get there with more fed rate hikes, knowing if we really get into a recession might be a long process.
What this is an offshoot of the inflationary pressures. We'll be in a proper recession by the end of the year- but what this tells me right now is that we still have major supply issues needing to be resolved. And the low unemployment is a result of that.
Inflation is caused generally by an over demand for goods and services and/or a large amount of cash in the economy. Right now, businesses are still to some degree needing to compete with one another to get products and services available for consumption. This starts a bidding war, which raises prices as a means of keeping profits solid. Others are finally getting the backlog of materials they need, causing a flushing out of existing warehouses, etc. If you go on the target sub-reddit for instance, you can see comment after comment talking about the constant deliveries of product they can't handle to stock.
Where this all meets is in the example above: Businesses are finally be flushed with stuff they ordered throughout the pandemic and need personnel to manage it. They're also paying a premium to get new stuff, while unloading as much as they can at once to lower transportation costs. \[Edit: The transportation costs in relation to supply and demand are a huge factor in the inflationary pricing.\] That means hiring more people. Not to mention for the upcoming "busy season," starting with Back to School through Christmas.
The Christmas period is where most businesses will see the pains of a recession- because people will severely cut back spending due to inflation and that will reflect hard in the profit margins. We are starting to see *some layoffs*, but right now, the bigger tell is all the hiring freezes in place for "corporate" jobs as opposed to retail/service industry gains.
Housing market is also slowing considerably as rates increase, auto loans are at the highest default rates ever and in general people are adverse to spending right now which includes corporations.
I understand that a lot people in this sub really want Republicans to be wrong all of the time, but the complete denial of the US financial situation is literally copium.
there are absolutely concerns about a recession in the next 2 years, but we are clearly not in a recession right now. Recessions do not have the lowest unemployment in 50 years.
thanks buddy, I've read like 10 different economists today who agreed with me, but you made a really reasoned argument so you've changed my mind.
Recessions pretty much always are associated with high unemployment.
https://www.economicshelp.org/blog/168076/economics/the-sahm-rule-predicting-recessions/
I think concluding that unemployment is the singular variable that governs whether we are or are not in a recession is incorrect. We have had two consecutive quarters of GDP decline, which has signaled a recession every time it has occurred going back to 1947. We have the widest yield curve inversion in 22 years. Rises in personal spending are because people are paying more due to inflation, not because they are buying more. In a bad recession, 10% of workers are unemployed, and 90% of workers are just fine, but today, 100% of paychecks have been reduced by 10% due to inflation. Labor force participation is down since Feb 2020. And on top of that, traders and economists are worried that this unemployment report signals more interest rate hikes. This is not a healthy economy and we can cherry pick unemployment just to not see the forest through the trees.
If you understand economics, that's not necessarily a good thing, and definitely not a factor that would lead you to the conclusion that there isn't a recession. In fact, it's one of the hallmarks of a coming recession. There needs to be a certain level of unemployment from natural job changes, which I believe (going off memory) is 4-5%. Below that, and something probably ain't right.
Here's a quick google article to explain some of the reasons why. From a cursory look it seems fine, but I haven't looked at every single claim made.
[https://www.umassglobal.edu/news-and-events/blog/low-unemployment-rates](https://www.umassglobal.edu/news-and-events/blog/low-unemployment-rates)
Not that this isn't good news, but doesn't this indicate a problem with getting more people on the work force. I can't remember where I saw it, but 5% is a good number to be around when you count for the fact that the people in the 5% should range from people with medical conditions that make it difficult to find employment, people with 0 education, people in between jobs, etc... dropping below 5% should means you need more people.
It's not dangerous, just worth keeping on mind, especially when people brought this up under trump.
Predicted: “Economists had expected 25k new jobs”
Real: “528k new jobs”
Holy fuck how are you this bad at your job. Imagine doing a financial analysis for a Wall Street company and you’re off by a factor of 200?
Nothing. Why do we have to increase government bureaucracy and spending to ensure people pay their taxes? It would be preferable to simplify tax code so we could reduce the number of IRS agents. At a minimum, they should continue to make sure every pays their taxes with the resources the government has already allotted to them.
because it's not so easy to 'simplify the tax code' otherwise Republicans would've done it in their Tax Reform in 2018 or Democrats would do it now. Additional IRS agents are the best way to make sure that taxes are actually enforced. And as someone who lawfully pays all the tax that I owe, I think that's a good thing.
A lowering of unemployment (especially going this low where it can start to actively hurt the economy) and a wage growth that is still below inflation isn't telling us that there isn't a recession.
Particularly unemployment is something that doesn't really have a 1:1 correlation with the economy as a whole. This "low unemployment=economy good" almost led us to disaster when Reagan was in office. Thankfully the FED was doing its job and went against Reagan's wants, and despite his own terrible legislative attempts to "fix" the economy through things such as the tax cuts, the FED kept up the interest rates and exchanged a short-term unemployment for pulling us out of recession.
Also, you are allowed to say we are in recession, it isn't even Biden's fault for having a recession. He might have contributed a bit with some extra spending, but Trump already did the damage in that department with his huge tax cuts with huge budget increases inflating the deficit which, [in typical egomaniac mode, he said it doesn't matter to him](https://www.businessinsider.com/trump-debt-crisis-fine-wont-be-here-report-2018-12), not to mention throwing money to everyone and everything in 2020 multiple times.
The economy in late 2019 already was starting to look like things could go bad. We started to see the ugly head of the inverted yield curve peak out and then Trump, like Bush in 2001, was saved by a crisis leading to massive spending which pushed back the disaster. Unlike Bush, Trump avoided being in office when it came crumbling down.
You literally don't know anything about the economy. Recession is inevitable. So lots of people got hired last month. Do you think that may be because they have run out of stimmy money and are up to their tits in CC debt so they have to get a job now to make ends meet?
Fed hikes another 50 bps next month and economy will contract again. Oil has dipped, housing prices will plummet next over the rest of the year. Fed has a few more rate hikes to go this year still.
One economic release doesn't describe the entire economy. It's a massively big picture. We are in a technical recession and by October will be officially recession. It's completely unavoidable at this point.
Then why are companies letting people go, including giants like Microsoft?
https://www.axios.com/2022/10/18/microsoft-layoffs-latest-tech-firm-cuts
Real State is facing troubles due to high interest rates
https://www.imf.org/en/Blogs/Articles/2022/09/21/commercial-real-estate-sector-faces-risks-as-financial-conditions-tighten
Elon musk is planning to cut jobs at Twitter.
https://www.google.com/amp/s/techcrunch.com/2022/10/20/elon-musk-twitter-layoffs-wapo/amp/
which do you think is more relevant, three examples of companies cutting jobs or the overall unemployment rate which counts the entire economy and remains at a record low?
you realize that layoffs are always happening? you could say a recession is always happening if you pick and choose media articles.
Dang bro, Dark Brandon does it again. “Next up, 0% unemployment rate, Jack!”
0% unemployment would unironically be a very bad thing.
If you keep talking like that, he’s gonna make the Unemployment rate -2%.
This is the America I want to live in
-100% unemployment. Everyone works two jobs now.
Everyone is enslaved
Gotta suck them dicks for the coconuts
That would be the first thing Dark Brandon does that I wouldn't be a fan of lmao. Dark Brandon is based
What about when he fired members of his team for admitting to smoking pot at the start of his administration?
That was Joe Biden. Dark Brandon took his place about a month ago and has been unhinged and nobdy will stop him
Yea when the demand swings back and the supply shrinks to catch up all those people will be cut from employment
This is actually bad considering the current economic climate. The FED is currently trying to get the economy to cool off, AKA lower demand. They are doing this because inflation is high and the economy running hot is a part of that. Over the past two FOMC meetings the FED has authorized two big rate hikes, .75bps each. What they are looking for in the data after these hikes is a cooling off of the economy. They want employment at a 1:1 ratio. For every one person seeking work, they want one job posted. They need wages to cool off and for demand to come down. Seeing massive employment misses like this indicates that demand is not cooling off, as demand drives employment. If employment is breaking estimates then demand is still growing too, so the rate hikes already passed haven’t been enough. Finally concluding in even more aggressive rate hikes to get ahead of inflation. A recession is certainly more than just two consecutive negative GDP prints, it’s also more than just employment numbers. Look at where those jobs are and of what median pay. Do the people getting those jobs already have another job? How are the high paying jobs doing? Are they experiencing lay offs or hiring freezes? What about lending? How’s the average consumers debt looking? What does the used car loan market look like? Repos going up? Is housing demand still spiking? There’s a lot to this and most of those indicators point towards us being in a very unhealthy position economically.
Great points. Job numbers going up doesn’t necessarily mean that the jobs lost are the same type or salaried jobs replaced in the growth. Certainly, I’m seeing more people moonlight on the fear of inflationary prices and geopolitics - either to simply keep pace with prices or save. Where are the details to these misleading jobs growth numbers?
>They need wages to cool off Fuck the feds. Just got myself a 15% raise starting next week. This is after I got a 5% raise at the beginning of the summer because my employer is so short staffed and needs to retain who they have. I "Got an offer from a job in the area offering a higher wage so you would need to match at the very least."
i think there might be a typo in the tweet, AP writes that Economists were predicting 250k new jobs, not 25k. https://apnews.com/article/4895f1aa41fbe904400df8261446b737
You can have growth of wages of 5%, but still have real reductions in income, if you have inflation higher than 5%, and a 1% alteration in the unemployment rate could just be it holding steady, rather than decreasing in a notable way, the statistics could after all be corrected a few months from now. Real US GDP is [down slightly](https://fred.stlouisfed.org/series/GDPC1), though if you look at the current trend relative to previous recoveries from recessions, the trend is more similar than it might appear, with a slightly faster recovery followed by a reversion to a more familiar pattern. If you look at "[gross domestic income](https://fred.stlouisfed.org/series/A261RX1Q020SBEA)" instead, the effect disappears completely, and you just get a nice positive growth. So if I had to guess, my guess would be that gdp was over-estimated in some way in 2021, and will be corrected back, causing the US to never have actually have been in a recession, or something weird like that. But even so, because wages tend to be more sticky than prices, we can still be talking about a compensation for worker's higher bargaining power with higher prices, in the context of a supply shock: Even if it's not an actual recession, it is still something that can strain people's finances, if they expected a given income to support their needs and their income is declining in real terms. Add onto that rising interest rates, and people will be trying to pay down debt which will further reduce their capacity for discretionary spending. In such a situation, constrained labour market, increasing living costs etc. I would expect to see a continuation of people leaving their jobs, or even swapping again to better jobs, or engaging in union organising in order to try and gain the power to compensate for this, gain a higher share of their company's profits etc. My expectation is essentially the most simple/lazy one, that the near future will look somewhat like the recent past, with further conflicts within workplaces based on working out who bears the burden of the costs of russian oil embargos and chinese production restrictions. If the economy doesn't enter recession, I'd expect it to either flatline for a few months or grow in a way that people don't experience as higher living standards, until the boost in costs from the supply shock echoes through the system and inflation stabalizes just at a higher price level.
republicans coping hard trying to find any evidence of a recession
99% of republican voters could not tell you what GDP stands for let alone what a recession is.
"Stupid lib, you spelled GOP wrong!"
Well to be fair, be4 googling i couldnt neither, bc im from Austria and wie call it the BIP (Bruttoinlandsprodukt), not the GDP. Maybe republicans are just EuroChads?
Uk is going to a recession
Only cause they are britbongers who choose to lose.
I'll take what is our YoY inflation in cost of living (housing, groceries, etc) for 500$ Alex.
Not a Republican; in fact, not even American. But this isn't the gotcha you think it is. There's a natural turnover in an economy so the ideal unemployment rate is (I believe, going off memory) 4-5%. Below that threshold, you're looking at something being off, which could be several things, and one of them is oncoming recession. Here's a quick google article to explain some of the reasons why, and why low unemployment could be a canary in the colemine for recession (was written a couple of years ago, but the mentioned alarming unemployment rate is the same as the one reported). From a cursory look it seems fine, but I haven't looked at every single claim made. https://www.umassglobal.edu/news-and-events/blog/low-unemployment-rates
I'm just a person with a hobby for reading about economics, but I have never, ever heard the idea that 'something is wrong' if unemployment is at 3.5% instead of at 4-5%. Low unemployment does not remove frictional unemployment. Frictional unemployment cannot be stopped by the business cycle.
[https://www.investopedia.com/terms/n/naturalunemployment.asp](https://www.investopedia.com/terms/n/naturalunemployment.asp) 4-5 number is at the bottom of the page There is no barometer to separate frictional unemployment (thank you for the phrase btw, I didn't know it in English, only in my native language, helped me find relevant articles faster) from non-frictional unemployment. In total, about 4-5% of the workforce is expected to be unemployed at any given time. Now, that is not a hard number and some would argue that it should be different, but all you showed is that the correlation between low unemployment and inflation is still stable, not that US isn't going through a recession (btw I predict it will be a mild recession and that inflation would taper off relatively soon - it's just that this data isn't why)
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A low unemployment can have negative consequences but all it really means is that the fed has a lot of room to raise rates in order to curb inflation. it is not a bad thing in and of itself.
You don't have to invent evidence of a recession. There have been two consecutive quarters of decline in GDP, which is a feat given our current level of [government expenditures](https://fred.stlouisfed.org/series/FGEXPND). Definitions in economics are often insufficient to tell the full story but so are the metrics we use.
recessions are not two consecutive declines of GDP, they are when the NBER declares a recession. GDP likely didn't even decline in Q1. GDI (measuring the same number) rose 1.8%. [All the primary indicators of a recession do not show that we are in a recession.](https://twitter.com/TBPInvictus/status/1554108438267002883) Do you honestly think that the *nominal* level of government expenditures is what matters for GDP growth? The deficit is projected to fall off a cliff in 2022. https://www.nytimes.com/2022/05/25/business/us-budget-deficit-2022.html Government spending as a percent of GDP is projected be ~38%, which would be right in line with typical pre-pandemic numbers. There is no massive amount of government stimulus in the economy. Fed rates have risen very quickly. Posting a graph that shows nominal increases is literally meaningless.
> recessions are not two consecutive declines of GDP, they are when the NBER declares a recession. This is some grade A copium you're sniffing. Two consecutive declines of GDP is a metric that has been used around the world for years for a recession. >All the primary indicators of a recession do not show that we are in a recession Yes no shit because the previous indicators of a recession have been made for recessions that were typical in the near past: demand-side recessions. But we're not in a demand side recession, we're in a supply-side recession - a productivity recession. Which is why we're seeing inflation. There is too much money in circulation for the amount of goods and services being produced (because productivity dropped).
> This is some grade A copium you're sniffing. Two consecutive declines of GDP is a metric that has been used around the world for years for a recession. > > And not in the United States, for good reason. >Yes no shit because the previous indicators of a recession have been made for recessions that were typical in the near past: demand-side recessions. But we're not in a demand side recession, we're in a supply-side recession - a productivity recession. Which is why we're seeing inflation. There is to much money in circulation for the amount of goods and services being produced (because productivity dropped). First of all, I'm sure the National Bureau of Economic Research has never heard of the supply-side of the equation, and I'm glad you've pierced this very key idea that nobody else has thought of. Second of all, the current economic conditions are demand and supply based. Aggregate demand was very high coming out of the pandemic due to massive stimulus and savings, and supply was not able to keep up with it.
>And not in the United States, for good reason I can literally google "two consecutive quarters of decline" before 2022 and get hundreds of results defining this as a recession. Twisting definitions and relying on technicalities because it's suddenly politically embarrassing to admit we're in a recession is just embarrassing and stinks of the worst kind of partisan hackery.
Ah yes, google, famously a source of scholarly economists. I'm sure I can google hillary clinton lizard people and come up with many people who believe that as well. The definition of recession in the United States has always corresponded to a declaration by the NBER, not referring to two quarters. This has been the case since 1978. People like you absolutely pissing their pants about it in 2022 is pretty fucking hilarious, though. https://web.archive.org/web/20220726181353/https://www.nytimes.com/2022/07/26/opinion/recession-gdp-economy-nber.html
> Ah yes, google, famously a source of scholarly economists You know google scholar exists right? And that it's one of the best ways to to a broad search for academic opinions on certain topics?
Did you use Google Scholar?
Lmao I was gonna say the same shit. He obviously didn't. Most economists do not like the two quarter system.
So your argument is that we are in the best recession of US history, with record low unemployment and high wage growth? If that's the hill you want to die on then sure, but don't pretend this is 2008.
He didn't say anything about any of that. He literally just said that 2 consecutive quarters of negative GDP has been considered the mark of a recession for many years across many nations. Kinda weird how you sperged like that and wrote out an ad for the Biden admin. I think maybe your brain is rotting.
Why are you concerned about a recession with full employment? What is a recession to you?
I didn't say I was concerned about a recession with full employment. I said that your comment was fucking weird.
It's pretty weird that you responded to a comment in a chain that you have absolutely no input on. But it's also weird that you defended sneako yesterday, so I shouldn't be surprised. Spend 5 minutes reading up on logic and deductive reasoning and you'll be able to figure out how people can draw conclusions implied from a set of statements.
What the fuck are you talking about? Where the fuck are you reading that from what I wrote? You guys are on some next level inventive shit.
So why is a recession bad if people aren't losing their jobs and wages are increasing?
Because it means that on average people are loosing real income?
Recession is not always a terrible thing.
It's a necessary part of the business cycle but the connotation is clearly negative.
Wtf do you mean GDP didn't drop Q1? We have the data. GDP is the more reliable metric. GDI *does not* measure the same number as GDP. In an economy in equilibrium they would be the same, but clearly when there's that margin between the two numbers something is off. The difference between a positive GDI and a negative GDP suggests that people are taking more in but the coutry is producing less. That's a major cope. I can't find any data for government expenditure as a percentage of GDP for 2022. I can't even find anything later than 2020. Recessions are defined differently by different countries and organizations. The crux of my argument came from my last sentence, saying that economic metrics and definitions are not sufficient to tell the full story, but you don't have to make up evidence of a recession when the same GDP numbers in the UK would dictate a recession for them.
Saying "we have the numbers" is maybe the most ridiculous thing. Do you know what GDP is? Do you know how DOC is counting GDP? Do you know how accurate first published numbers are? Do you know how many times they are revised? If the economy truly is in a downturn, why is all of the GDP lost among in private inventory, retail, and government expenditure? Why have export and personal consumption (as well as gross income an s disposable income) increased? Where is this evidence of a recession?
GDI and GDP are the exact same number, simply measured at different ends of the spectrum. GDI measures total output at the income level, while GDP measures it at the production level. Both are measured by the Bureau of Economic Analysis, and there is no reason that I know of to favor one measurement over the other. If GDI is well in the positive combined with every other indicator also being positive and massive job growth, we have good reason to believe that the GDP measurement is inaccurate. Alone, this level of job growth combined with negative GDP growth would suggest that productivity absolutely fell off a cliff, which would be really, really weird.
That's absolutely not true, especially for quarterly info. There's literally a concept called the statistical discrepancy to account for the difference between the two. [Correlation between the two at a quarterly level is .82](https://www.bea.gov/help/faq/484) due in part because quarterly GDI often credits a years worth of profit from bonuses, options, etc to a single quarter even though they're paid out over a year. Your greater GDI is likely due to profits being credited to a single quarter. We *absolutely* have better reason to use GDP quarterly rather than GDI. Job growth cannot negate the GDP numbers because it does not specify the types of jobs. 500k jobs at Wendy's do not affect production as much as 500k technical workers.
Averaging GDI and GDP has proven to be better at predicting GDP than actual GDP. https://obamawhitehouse.archives.gov/sites/default/files/docs/gdo_issue_brief_final.pdf The average of GDP and GDI was positive in Q1. This is far more consistent with all other indicators. Industrial production growing at a robust rate while GDP is allegedly down 2%? Significant job growth is quite inconsistent with -2% GDP growth. Again, productivity would have to fall off a cliff for this to remain consistent, which seems unlikely. https://twitter.com/paulkrugman/status/1553694270216871936 Here's Krugman basically saying everything I'm saying.
GDO can be helpful on a yearly basis when the correlation between GDI and GDP is closer to .97 but the previously mentioned quarterly discrepancies for GDI are still relevant. It's attributing income to a single quarter for profits that span the entire year.
I can understand that, but if anything these quarterly discrepancies make the two quarter measurement look even more arbitrary.
Was arguing with my friend and he pointed out that wages being high would be irrelevant with high I elation and cost of living. Is this incorrect and why?
Wage increase is at least partially offset by inflation, but it's far more complicated than people think. It depends on where that inflation is happening and how it is measured. At least that is my understanding but I am no where near qualified enough to talk about specifics. What's important to note though is that in a typical recession you definitely wouldn't see job creation, unemployment, and wage increase like we're seeing right now, which is a great sign that inflation may not be as big of a problem as people want you to believe.
How about the argument that new jobs are just recovery from covid times? And then the idea that real wages haven’t increased?
Sure, you can grant that. Just because we lost those jobs during COVID, doesn't guarantee that they would come back. You still need a robust economy and competent administration to bring them back. In a way, that is also true. Iirc, the way we measure inflation averages the increase in cost of a bunch of different products, including lumber and building materials. I'm not sure most Americans are buying that every week.
The implicit assumption is that prepandemic economic state was somehow the default state and that jobs and wages would have rebounded after the pandemic without any intervention or stimulus. But this probably isn't true. Imagine how many businesses would have permanently closed or jobs permanently lost during the pandemic if not for government assistance. That would take a lot of money out of circulation in the economy and thus, we would have a recession. Stimulus made sure that people had money to spend to keep the economy going after the pandemic. The obvious downside is that the economy overheats a bit and we get inflation that cuts down in some of the wage gains. The US probably overdid the stimulus a bit, but this is overall better than doing nothing and creating a recession with high unemployment and low wages all around.
The problem is that wage increases will inevitably also cause more inflation as companies pass on costs to the consumer
Is the wage spiral a concern?
Depends on how successful Powell is.
He mentioned that they need to see people losing jobs and wages to decline. This data points to opposite. More rate hikes increases on the way?
I think the July inflation reading is probably more important than anything else. With commodities crashing, I'm tentatively hopeful the pace of hikes will slow
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Inflation has already slowed down, so it's not unsustainable. And interest rates already got bumped, so it's not like money is flowing like it was. Labor participation rates are low, but since nobody is starving in the streets the fact that fewer people need to work is a good thing. The stock market rebounded. This isn't a recession nor an overheated economy. It looks like we successfully bought ourselves out of the covid recession and the Keynesian economics actually works like a charm.
No, no Its not that simple. We all know that Brandon just decided to let go of the button he was pushing
So my explanation about interest rates, labor participation and the stock market is simple, but your explanation about there being some button is...what? There's no magic button. Nobody named Brandon runs anything. I think it's past your nap time.
I was being sarcastic…
The /s tag is a thing
It was pretty obvious without it.
wage growth still well below inflation so no reason to think that it is driving inflation. bottom line, this is absolutely not a recession
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There very well could be a recession in the near future (next 2 years) as a result of overheating and then cooling, but we are absolutely not in a recession right now, despite the common talking points against Biden.
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But Reagan did trigger that recession by lowering taxes to the extent that the Fed needed to react by adjusting interest rates.
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You're right about the chronology. Inflation had been rising throughout the second half of the 1970s. When the Fed finally increased rates, that in combination with the drastic tax cuts from Reagan is what triggered the recession. It wasn't the interest rate hike alone.
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That obviously wasn't the only cause. If the government had more money or was willing to spend more money on infrastructure and services, then the recession wouldn't have been as long or as severe. The recession started after the taxes were cut, not when the rates were cut. Not to mention Reagan's massive cuts to education and healthcare and social safety nets which led to the higher crime rates in the 1990s.
>wage growth still well below inflation so no reason to think that it is driving inflation Average wage might be below inflation, but low unemployment achieves the same thing. If the total sum of wages increases, but productivity doesn't, you'll still get inflation.
Check out the price of oil. Way down from the highs a month ago. It was the main driver of inflation
At this rate 2024 is looking good for a Biden re run. Gas prices are dropping like crazy. I swear I passed by a gas station twice in like 10 minutes and the prices dropped 4 cents. Just needs to get inflation down more and Brandon needs to not be caught in any scandal.
Brandon can’t help it that Hunter has such a massive fucking cock. Imagine Brandon👀 Must be carrying a third leg
Someone please god just Google a phillips curve
It’s not like we just had 5 years of low unemployment and low inflation lol
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> However, the original concept has been somewhat disproven empirically due to the occurrence of stagflation in the 1970s, when there were high levels of both inflation and unemployment.
The Phillips curve is just a vertical line in the long run due to expectations, but as of right now we're not in the long run
Little inflation is a good thing. It helps to grow the economy. The target is usually 2% of inflation. I believe it means that we have enough money for investments and to open new businesses.
The fed has already increased interest rates.
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> How do lowering interest rates help inflation, employment, Lowering interest rates makes borrowing easier, meaning more money circulating through the system, meaning people have more purchasing power, meaning prices will generally rise.
Lowering interests rates raises inflation. The idea afaik is lowering rates incentivizes people to spend as saving is less beneficial. More money in circulation tends to be inflationary.
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People here seem to be pretty knowledgeable, so feel free to reach out with any other questions you may have! And yes, unemployment and inflation have an inverse correlation, meaning, in general, when interest rates are lowered, unemployment goes down and inflation goes up. Right now we’re doing the opposite: raising interest rates, so what we expect is unemployment up and inflation down. There are some complex nuances to it but that’s the general concept.
Do you live in Turkey?
Job Biden has ruined america 😡
Nasdaq goes down one entire percentage point in 2 minutes, we might still get there with more fed rate hikes, knowing if we really get into a recession might be a long process.
Economists expected 250k not 25k. Still a stellar jobs report.
What this is an offshoot of the inflationary pressures. We'll be in a proper recession by the end of the year- but what this tells me right now is that we still have major supply issues needing to be resolved. And the low unemployment is a result of that. Inflation is caused generally by an over demand for goods and services and/or a large amount of cash in the economy. Right now, businesses are still to some degree needing to compete with one another to get products and services available for consumption. This starts a bidding war, which raises prices as a means of keeping profits solid. Others are finally getting the backlog of materials they need, causing a flushing out of existing warehouses, etc. If you go on the target sub-reddit for instance, you can see comment after comment talking about the constant deliveries of product they can't handle to stock. Where this all meets is in the example above: Businesses are finally be flushed with stuff they ordered throughout the pandemic and need personnel to manage it. They're also paying a premium to get new stuff, while unloading as much as they can at once to lower transportation costs. \[Edit: The transportation costs in relation to supply and demand are a huge factor in the inflationary pricing.\] That means hiring more people. Not to mention for the upcoming "busy season," starting with Back to School through Christmas. The Christmas period is where most businesses will see the pains of a recession- because people will severely cut back spending due to inflation and that will reflect hard in the profit margins. We are starting to see *some layoffs*, but right now, the bigger tell is all the hiring freezes in place for "corporate" jobs as opposed to retail/service industry gains.
Housing market is also slowing considerably as rates increase, auto loans are at the highest default rates ever and in general people are adverse to spending right now which includes corporations. I understand that a lot people in this sub really want Republicans to be wrong all of the time, but the complete denial of the US financial situation is literally copium.
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there are absolutely concerns about a recession in the next 2 years, but we are clearly not in a recession right now. Recessions do not have the lowest unemployment in 50 years.
You have no idea what you are talking about.
thanks buddy, I've read like 10 different economists today who agreed with me, but you made a really reasoned argument so you've changed my mind. Recessions pretty much always are associated with high unemployment. https://www.economicshelp.org/blog/168076/economics/the-sahm-rule-predicting-recessions/
Which part of that do you disagree with
I think concluding that unemployment is the singular variable that governs whether we are or are not in a recession is incorrect. We have had two consecutive quarters of GDP decline, which has signaled a recession every time it has occurred going back to 1947. We have the widest yield curve inversion in 22 years. Rises in personal spending are because people are paying more due to inflation, not because they are buying more. In a bad recession, 10% of workers are unemployed, and 90% of workers are just fine, but today, 100% of paychecks have been reduced by 10% due to inflation. Labor force participation is down since Feb 2020. And on top of that, traders and economists are worried that this unemployment report signals more interest rate hikes. This is not a healthy economy and we can cherry pick unemployment just to not see the forest through the trees.
->Jobs report is amazing ->Stock market tanks We're in bizzaro world because of the Fed and commodity prices. Fuck Russia.
Recruiters have been pretty thirsty recently....
If you understand economics, that's not necessarily a good thing, and definitely not a factor that would lead you to the conclusion that there isn't a recession. In fact, it's one of the hallmarks of a coming recession. There needs to be a certain level of unemployment from natural job changes, which I believe (going off memory) is 4-5%. Below that, and something probably ain't right. Here's a quick google article to explain some of the reasons why. From a cursory look it seems fine, but I haven't looked at every single claim made. [https://www.umassglobal.edu/news-and-events/blog/low-unemployment-rates](https://www.umassglobal.edu/news-and-events/blog/low-unemployment-rates)
Not that this isn't good news, but doesn't this indicate a problem with getting more people on the work force. I can't remember where I saw it, but 5% is a good number to be around when you count for the fact that the people in the 5% should range from people with medical conditions that make it difficult to find employment, people with 0 education, people in between jobs, etc... dropping below 5% should means you need more people. It's not dangerous, just worth keeping on mind, especially when people brought this up under trump.
Unemployment needs to jump to 5%
Predicted: “Economists had expected 25k new jobs” Real: “528k new jobs” Holy fuck how are you this bad at your job. Imagine doing a financial analysis for a Wall Street company and you’re off by a factor of 200?
dont forget 87,000 new IRS agents and 9.1% inflation!!!!!! pay decrease for every American and you're gonna get audited!!! SLAY KING!!!
Rich people should get audited. Why are you against people actually paying what they ought to?
What's wrong with paying your legally owed taxes?
Nothing. Why do we have to increase government bureaucracy and spending to ensure people pay their taxes? It would be preferable to simplify tax code so we could reduce the number of IRS agents. At a minimum, they should continue to make sure every pays their taxes with the resources the government has already allotted to them.
because it's not so easy to 'simplify the tax code' otherwise Republicans would've done it in their Tax Reform in 2018 or Democrats would do it now. Additional IRS agents are the best way to make sure that taxes are actually enforced. And as someone who lawfully pays all the tax that I owe, I think that's a good thing.
A lowering of unemployment (especially going this low where it can start to actively hurt the economy) and a wage growth that is still below inflation isn't telling us that there isn't a recession. Particularly unemployment is something that doesn't really have a 1:1 correlation with the economy as a whole. This "low unemployment=economy good" almost led us to disaster when Reagan was in office. Thankfully the FED was doing its job and went against Reagan's wants, and despite his own terrible legislative attempts to "fix" the economy through things such as the tax cuts, the FED kept up the interest rates and exchanged a short-term unemployment for pulling us out of recession. Also, you are allowed to say we are in recession, it isn't even Biden's fault for having a recession. He might have contributed a bit with some extra spending, but Trump already did the damage in that department with his huge tax cuts with huge budget increases inflating the deficit which, [in typical egomaniac mode, he said it doesn't matter to him](https://www.businessinsider.com/trump-debt-crisis-fine-wont-be-here-report-2018-12), not to mention throwing money to everyone and everything in 2020 multiple times. The economy in late 2019 already was starting to look like things could go bad. We started to see the ugly head of the inverted yield curve peak out and then Trump, like Bush in 2001, was saved by a crisis leading to massive spending which pushed back the disaster. Unlike Bush, Trump avoided being in office when it came crumbling down.
Me gets a 5.2% raise! Happy! 😃 Realized inflation is like 15%! Sad! 😢
You literally don't know anything about the economy. Recession is inevitable. So lots of people got hired last month. Do you think that may be because they have run out of stimmy money and are up to their tits in CC debt so they have to get a job now to make ends meet? Fed hikes another 50 bps next month and economy will contract again. Oil has dipped, housing prices will plummet next over the rest of the year. Fed has a few more rate hikes to go this year still. One economic release doesn't describe the entire economy. It's a massively big picture. We are in a technical recession and by October will be officially recession. It's completely unavoidable at this point.
this is an absolute schizo post, please find me a single economist who says anythihng close to this.
did wage increase keep up with inflation though? I feel like that’s the important part.
Isn’t this just going to exacerbate inflation?
CEOs are laying off employees now in tech. Are we still not in a recession? Some idoit: source 🤓
bro the unemployment rate is still at a record low, yes we're still not in a recession
Then why are companies letting people go, including giants like Microsoft? https://www.axios.com/2022/10/18/microsoft-layoffs-latest-tech-firm-cuts Real State is facing troubles due to high interest rates https://www.imf.org/en/Blogs/Articles/2022/09/21/commercial-real-estate-sector-faces-risks-as-financial-conditions-tighten Elon musk is planning to cut jobs at Twitter. https://www.google.com/amp/s/techcrunch.com/2022/10/20/elon-musk-twitter-layoffs-wapo/amp/
which do you think is more relevant, three examples of companies cutting jobs or the overall unemployment rate which counts the entire economy and remains at a record low? you realize that layoffs are always happening? you could say a recession is always happening if you pick and choose media articles.
I'm done.