US economy thread (2 Viewers)

[McBokonon]

Doesn't the DOL survey about 150,000 businesses to arrive at a jobs number each month? So, they're basically reporting out what businesses are telling them. You're going to get about 150,000 estimates that get rolled into one giant estimate so yeah, I expect revisions to be gigantic.

 

[Chadstroma]

Uh..... unless I am totally off from memory of my Macro Economics classes..... transitory means that the price increases are temporary and that the would revert. They were 100% wrong about that. It wasn't transitory and their failure to act quicker lead to more inflation which most Americans feel in real ways today. Just because that inflation is about within 'target' now doesn't mean it is transitory.

Seems like was kinda temporary. Cause was the pandemic/supply chain/ corporations taking advantage, that's mostly washed out (except for last one although that's maybe starting to adjust)

The argument that corporations are taking advantage and that is why prices have not come down does not line up with what we how economies works. And if true, where is the Justice Department in bringing Anti-Trust lawsuits? If it was truly transitory then we would see deflation with prices coming down. We are not. We have over 2% inflation rate now which is adding to the cumulative rate of around 15% since 2021.

 

[Mitchie]

Uh..... unless I am totally off from memory of my Macro Economics classes..... transitory means that the price increases are temporary and that the would revert. They were 100% wrong about that. It wasn't transitory and their failure to act quicker lead to more inflation which most Americans feel in real ways today. Just because that inflation is about within 'target' now doesn't mean it is transitory.

Seems like was kinda temporary. Cause was the pandemic/supply chain/ corporations taking advantage, that's mostly washed out (except for last one although that's maybe starting to adjust)

The argument that corporations are taking advantage and that is why prices have not come down does not line up with what we how economies works. And if true, where is the Justice Department in bringing Anti-Trust lawsuits? If it was truly transitory then we would see deflation with prices coming down. We are not. We have over 2% inflation rate now which is adding to the cumulative rate of around 15% since 2021.

How does economics work?

 

[Chadstroma]

Uh..... unless I am totally off from memory of my Macro Economics classes..... transitory means that the price increases are temporary and that the would revert. They were 100% wrong about that. It wasn't transitory and their failure to act quicker lead to more inflation which most Americans feel in real ways today. Just because that inflation is about within 'target' now doesn't mean it is transitory.

Seems like was kinda temporary. Cause was the pandemic/supply chain/ corporations taking advantage, that's mostly washed out (except for last one although that's maybe starting to adjust)

The argument that corporations are taking advantage and that is why prices have not come down does not line up with what we how economies works. And if true, where is the Justice Department in bringing Anti-Trust lawsuits? If it was truly transitory then we would see deflation with prices coming down. We are not. We have over 2% inflation rate now which is adding to the cumulative rate of around 15% since 2021.

How does economics work?

Supply and demand.

Transitory would mean that the supply and demand was temporary misaligned and that a return to norms would result in prices returning to previous points or at least near with adjustments for normal inflation.

 

[Psychopav]

Doesn't the DOL survey about 150,000 businesses to arrive at a jobs number each month? So, they're basically reporting out what businesses are telling them. You're going to get about 150,000 estimates that get rolled into one giant estimate so yeah, I expect revisions to be gigantic.

But they haven't been, until now, right?

 

[FreeBaGeL]

Uh..... unless I am totally off from memory of my Macro Economics classes..... transitory means that the price increases are temporary and that the would revert. They were 100% wrong about that. It wasn't transitory and their failure to act quicker lead to more inflation which most Americans feel in real ways today. Just because that inflation is about within 'target' now doesn't mean it is transitory.

Seems like was kinda temporary. Cause was the pandemic/supply chain/ corporations taking advantage, that's mostly washed out (except for last one although that's maybe starting to adjust)

The argument that corporations are taking advantage and that is why prices have not come down does not line up with what we how economies works. And if true, where is the Justice Department in bringing Anti-Trust lawsuits? If it was truly transitory then we would see deflation with prices coming down. We are not. We have over 2% inflation rate now which is adding to the cumulative rate of around 15% since 2021.

Why would there be an anti-trust lawsuit for basic capitalism of companies charging more, seeing that the American consumer is willing to pay it, and continuing to raise prices until they're no longer willing to pay it (which is a line they haven't breached yet)?

We're not talking about water and gas here. We're talking about chicken wings and concert tickets and streaming subscriptions and a thousand other things where companies saw that when forced to raise prices temporarily, the American consumer didn't even budge, so why not make those prices sticky and even continue raising them until they do budge?

This meme is still rampant on facebook even today, in August of 2024.

Yet, those prices were actually from October 2021. They list chicken wings as $175/case. Today I can go to Costco and buy a case for $115, and I'm sure they're getting better prices wherever they buy than I do as a regular consumer. So say, chicken wing supply prices are down roughly 40% since then (probably more in reality). Surely buying some chicken wings at Wingstop would be cheaper than it was in October 2021, right? Yet Wingstop chicken wing prices are UP since then, and by quite a bit.

What's the missing ingredient here? Ah yes, Wingstop stock is up 144% over the last year with net profits up 300% since October 2021 when those prices were first quoted.

There's nothing illegal about charging what the market will bear, and the market continues to bear quite a bit, because we American consumers are spoiled as heck and will pay for anything, and somehow continue to have the money to do so despite complaining on facebook that we don't.

When times actually get tough and people en masse (not just the bottom 20%) are FORCED to stop paying $30 for a cheeseburger delivered to their doorstep so we don't have to pause our $22.99/mo Netflix show to pick it up or make it ourselves, prices may actually come down some. In the meantime, things are pretty great for Wingstop and Chipotle and Five Guys etc. And for the guy ordering the $30 cheeseburger while buying $100 worth of crap he doesn't need on Amazon before heading to Costco to spend $250 on the most random stuff he didn't even know existed a few hours ago.

 

[The Z Machine]

Uh..... unless I am totally off from memory of my Macro Economics classes..... transitory means that the price increases are temporary and that the would revert. They were 100% wrong about that. It wasn't transitory and their failure to act quicker lead to more inflation which most Americans feel in real ways today. Just because that inflation is about within 'target' now doesn't mean it is transitory.

Seems like was kinda temporary. Cause was the pandemic/supply chain/ corporations taking advantage, that's mostly washed out (except for last one although that's maybe starting to adjust)

The argument that corporations are taking advantage and that is why prices have not come down does not line up with what we how economies works. And if true, where is the Justice Department in bringing Anti-Trust lawsuits? If it was truly transitory then we would see deflation with prices coming down. We are not. We have over 2% inflation rate now which is adding to the cumulative rate of around 15% since 2021.

How does economics work?

Supply and demand.

Transitory would mean that the supply and demand was temporary misaligned and that a return to norms would result in prices returning to previous points or at least near with adjustments for normal inflation.

Chad, if you were expecting negative inflation (delfation) and price decreases, then I think you misunderstood the transitory portion. It was that there was a period of high-ish inflation, followed by a return to norm of low inflation. Not that inflation would go negative and prices would drop to previous levels.

But I disagree about the transitory thing too. The thinking right when inflation ramped was that it was transitory and interest rates didn't have to change to counter the higher inflation as it was simply roll through and cure itself. That wasn't the case, and central banks had to ratchet up rates quickly to counter the inflation spike. That's quick increase in rates is what's made it "transitory", i.e. actions by the central banks, not laissez faire central banking.

 

[SFBayDuck]

we would see deflation with prices coming down

You don't want that. Unless you like huge recessions or a depression. Don't think that would be too good for your business, or most others.

Prices, across the board, rarely ever come back down. Just the rate at which they increase does...which it has.

 

[McBokonon]

Doesn't the DOL survey about 150,000 businesses to arrive at a jobs number each month? So, they're basically reporting out what businesses are telling them. You're going to get about 150,000 estimates that get rolled into one giant estimate so yeah, I expect revisions to be gigantic.

But they haven't been, until now, right?

This one was the largest since 2009 which, coincidentally or not, also happened after a black swan event. Still, this year's was 0.5%. So, yes, this was bigger. So, what's more likely?

1. The 150,000+ businesses who answered the surveys had a more difficult time getting their estimates correct during difficult conditions
2. The 150,000+ businesses fudged the numbers for some reason
3. The career government employees added the estimates provided to them by the 150,000+ businesses wrong a bunch of times
4. The career government employees conspired to take the responses from the 150,000+ businesses and manipulate them to deceive the public

Maybe I'm naïve, but I think 1 seems the most likely by a long shot.

 

[Chadstroma]

You guys are going to give me a paranoia complex that everyone is out to get me.

 

[SFBayDuck]

The last deflationary period we had in the US was December 2007 to June 2009. How'd that work out for everyone, particularly the housing market?

Before that? 1930-1933. A little before my time, but I've heard it was kind of a bummer.

 

[General Malaise]

You guys are going to give me a paranoia complex that everyone is out to get me.

I've heard marijuana helps with that.

 

[SFBayDuck]

You guys are going to give me a paranoia complex that everyone is out to get me.

They are.

 

[Dr_Zaius]

Just to add some data to the discussion, CPI index for food at home from the Federal Reserve. You can see if you clink the link that while it's leveled off a lot in the last year, it's still up 24% since March '20. To put that in perspective, the same index went up 24% from February '07 - March '20, and before that 24% from August '97 to February '07. So grocery store prices would need to not go up at all for the next 5 years just to get in line with the inflation rate we've averaged over the ~25 years before Covid.

Which is to say that transitory (without even any intervention!) was a wrong call. Of course inflation was going to come back down eventually, that's like predicting everyone is going to die - on a long enough timeframe you're bound to be right. The inflation of the last 5 years was high in aggregate historically. Eyeballing the chart the only 5 years I see clearly higher are the oil shock years of the early '70s.

 

[dgreen]

Just in case you are wondering where the number comes from

 

[McBokonon]

Just in case you are wondering where the number comes from

That’s for unemployment. Jobs data info here: https://www.bls.gov/ces/

 

[Dinsy Ejotuz]

Which is to say that transitory (without even any intervention!) was a wrong call.

I really disagree with this. "Transitory" was fundamentally about inflation coming down without a major recession and killing demand.

The FED tried to create one, and expected to, by raising rates so far so fast, but they failed. And inflation came down naturally as supply chains unkinked, but consumer spending almost entirely shrugged the rate increases off and unemployment has only just now risen very slightly and is still at historically low levels. The one place maybe the rate increases helped was in housing, but that component hasn't even been fully digested into the inflation numbers yet, due to the lag. (All IIRC, feel free to correct me.)

Where "transitory" was wrong was the duration of inflation. It did last longer than anyone on Team T thought it would.

Of course inflation was going to come back down eventually

Not really. In the 70s, when inflation really was entrenched in the way that Larry Summers and the others on Team Not Transitory were arguing it was post-Covid, it took jacking rates to 15%+ and enduring two significant recessions in the early 80s to get it back under control. That was not required this time, and IMO is at the heart of the differences between TT and TNT.

Semi-related, Reagan letting the FED do that during his first term without complaint is something he deserves a lot of credit for IMO.

 

[dgreen]

Just in case you are wondering where the number comes from

That’s for unemployment. Jobs data info here: https://www.bls.gov/ces/

Oh, ha, I thought we were talking unemployment. I was wondering why you were saying it was a survey of businesses when unemployment is a household survey.

 

[Snotbubbles]

Uh..... unless I am totally off from memory of my Macro Economics classes..... transitory means that the price increases are temporary and that the would revert. They were 100% wrong about that. It wasn't transitory and their failure to act quicker lead to more inflation which most Americans feel in real ways today. Just because that inflation is about within 'target' now doesn't mean it is transitory.

Seems like was kinda temporary. Cause was the pandemic/supply chain/ corporations taking advantage, that's mostly washed out (except for last one although that's maybe starting to adjust)

The argument that corporations are taking advantage and that is why prices have not come down does not line up with what we how economies works. And if true, where is the Justice Department in bringing Anti-Trust lawsuits? If it was truly transitory then we would see deflation with prices coming down. We are not. We have over 2% inflation rate now which is adding to the cumulative rate of around 15% since 2021.

Why would there be an anti-trust lawsuit for basic capitalism of companies charging more, seeing that the American consumer is willing to pay it, and continuing to raise prices until they're no longer willing to pay it (which is a line they haven't breached yet)?

We're not talking about water and gas here. We're talking about chicken wings and concert tickets and streaming subscriptions and a thousand other things where companies saw that when forced to raise prices temporarily, the American consumer didn't even budge, so why not make those prices sticky and even continue raising them until they do budge?

This meme is still rampant on facebook even today, in August of 2024.

Yet, those prices were actually from October 2021. They list chicken wings as $175/case. Today I can go to Costco and buy a case for $115, and I'm sure they're getting better prices wherever they buy than I do as a regular consumer. So say, chicken wing supply prices are down roughly 40% since then (probably more in reality). Surely buying some chicken wings at Wingstop would be cheaper than it was in October 2021, right? Yet Wingstop chicken wing prices are UP since then, and by quite a bit.

What's the missing ingredient here? Ah yes, Wingstop stock is up 144% over the last year with net profits up 300% since October 2021 when those prices were first quoted.

There's nothing illegal about charging what the market will bear, and the market continues to bear quite a bit, because we American consumers are spoiled as heck and will pay for anything, and somehow continue to have the money to do so despite complaining on facebook that we don't.

When times actually get tough and people en masse (not just the bottom 20%) are FORCED to stop paying $30 for a cheeseburger delivered to their doorstep so we don't have to pause our $22.99/mo Netflix show to pick it up or make it ourselves, prices may actually come down some. In the meantime, things are pretty great for Wingstop and Chipotle and Five Guys etc. And for the guy ordering the $30 cheeseburger while buying $100 worth of crap he doesn't need on Amazon before heading to Costco to spend $250 on the most random stuff he didn't even know existed a few hours ago.

Credit card debt is up $111B in the past 12 months.

The personal savings rate is now down to 3.2%. It hasn't been this low since the recession of 2008.

Retirement accounts peaked at $44.3T in 2021, were at $39.9T in the Q12024.

So people are saving less and spending money they don't have. Eventually, the credit card gets maxed out and the savings run out.

 

[Stoneworker]

Jerome Powell in his own words today declaring that elevated inflation was indeed not transitory, and that it required a policy response to bring down

"The good ship Transitory was a crowded one, with most mainstream analysts and advanced-economy central bankers on board."

"The common expectation was that supply conditions would improve reasonably quickly, that the rapid recovery in demand would run its course, and that demand would rotate back from goods to services, bringing inflation down."

"Beginning in October (2021), the data turned hard against the transitory hypothesis"

"[Soon] it became clear that the high inflation was not transitory, and that it would require a strong policy response if inflation expectations were to remain well anchored. We recognized that and pivoted beginning in November(2021)."

Jerome Powell - Jackson Hole, WY Speech - Aug 23, 2024

 

[Dr_Zaius]

"The good ship Transitory was a crowded one, with most mainstream analysts and advanced-economy central bankers on board."

"The common expectation was that supply conditions would improve reasonably quickly, that the rapid recovery in demand would run its course, and that demand would rotate back from goods to services, bringing inflation down."

You beat me to posting Powell's comments, but the quoted part here is kind of what bugs me. While "transitory" was indeed the majority view, it wasn't just cranks who were sounding the alarm in early 2021 already. There was a huge amount of liquidity injected into the market by that point already, so it always seemed naive to me to think it was just going to wash out without any intervention. It seems clear to me that we stimulated too long and were too slow to raise rates. To be fair, though, after waiting too long, once they did start to raise rates they did do it very quickly.

Of course inflation was going to come back down eventually

Not really. In the 70s, when inflation really was entrenched in the way that Larry Summers and the others on Team Not Transitory were arguing it was post-Covid, it took jacking rates to 15%+ and enduring two significant recessions in the early 80s to get it back under control. That was not required this time, and IMO is at the heart of the differences between TT and TNT.

Fair enough, if people like Summers were predicting a repeat of the 70s and 80s level of inflation they were wrong too, and we should all of course be glad that they were wrong.

It was always a tough hand that the Fed was dealt, and I'd say overall they did a pretty good job all things considered. The current discourse that nobody could have predicted inflation and/or minimizing what inflation actually did occur is what bothers me, but I guess it's easy for knucklheads like me to throw tomatoes from the sideline.

 

[Dinsy Ejotuz]

The Fed gets a ton of crap, but they've done a really good job over the last couple decades -- at least given how easy it is to blow things up when you're dealing with the numbers they were dealing with after 2008 and now 2020.

Purely by coincidence, Krugman (Captain, Team Transitory) posted something literally a few minutes ago that does give credit to the Fed for "moderating" demand with the rate increases, helping to push inflation down further/faster than it would have done on its own.

The problem with the arguments around transitory is that people weren't explicit about what they were saying. For the most part the only people who were completely explicit were the ones saying unemployment and recession were needed:

• Transitory meaning "inflation will be short" = wrong.
• Transitory meaning "inflation won't require unemployment and recession to come down" = right.
• Transitory meaning "inflation will come down absent any policy response" = kind of wrong? Inflation probably would have eased once supply chains untangled, but, at a minimum, the Fed probably helped speed things up and, even if that's wrong, the Fed acting credibly to fight inflation probably helped instill confidence that it wouldn't be allowed to become entrenched.
• "Long Transitory" is a good phrase IMO.

 

[Sand]

But in the end they were kinda right, it was mostly transitory

On the timescale of the sun exploding sure, it's transitory. On the timescale of human lives that claim was ludicrous.

 

[Stoneworker]

The problem with the arguments around transitory is that people weren't explicit about what they were saying. For the most part the only people who were completely explicit were the ones saying unemployment and recession were needed:

• 
  
• Transitory meaning "inflation won't require unemployment and recession to come down" = right

IMO the jury is still out regarding whether elevated unemployment and resulting recession will be required to squelch this bout of elevated inflation.

The following Fed charts show pretty clearly that historically it is not until after the Fed begins their rate cut cycle that unemployment begins to spike and a recession is declared.

For example, in response to the dot-com bubble the Fed cut rates in Dec 2000 but the recession didn't show up until Mar 2001. In 2007, the Fed started cutting rates in August but the recession didn't officially begin until December of that year.

Federal Funds Effective Rate

View data of the Effective Federal Funds Rate, or the interest rate depository institutions charge each other for overnight loans of funds.

fred.stlouisfed.org

Unemployment Rate

View data of the unemployment rate, or the number of people 16 and over actively searching for a job as a percentage of the total labor force.

fred.stlouisfed.org

 

[SFBayDuck]

The problem with the arguments around transitory is that people weren't explicit about what they were saying. For the most part the only people who were completely explicit were the ones saying unemployment and recession were needed:

• 
  
• Transitory meaning "inflation won't require unemployment and recession to come down" = right

IMO the jury is still out regarding whether elevated unemployment and resulting recession will be required to squelch this bout of elevated inflation.

The following Fed charts show pretty clearly that historically it is not until after the Fed begins their rate cut cycle that unemployment begins to spike and a recession is declared.

For example, in response to the dot-com bubble the Fed cut rates in Dec 2000 but the recession didn't show up until Mar 2001. In 2007, the Fed started cutting rates in August but the recession didn't officially begin until December of that year.

Federal Funds Effective Rate

View data of the Effective Federal Funds Rate, or the interest rate depository institutions charge each other for overnight loans of funds.

fred.stlouisfed.org

Unemployment Rate

View data of the unemployment rate, or the number of people 16 and over actively searching for a job as a percentage of the total labor force.

fred.stlouisfed.org

Is that because they are always late in changing course? My understanding is that they don’t rely on projections or forecasts, only backward-looking data that is already out of date by the time they get it.

 

[IvanKaramazov]

I don't have an opinion about the "transitory" thing. I just think the Fed did a pretty good job overall.

 

[Stoneworker]

The problem with the arguments around transitory is that people weren't explicit about what they were saying. For the most part the only people who were completely explicit were the ones saying unemployment and recession were needed:

• 
  
• Transitory meaning "inflation won't require unemployment and recession to come down" = right

IMO the jury is still out regarding whether elevated unemployment and resulting recession will be required to squelch this bout of elevated inflation.

The following Fed charts show pretty clearly that historically it is not until after the Fed begins their rate cut cycle that unemployment begins to spike and a recession is declared.

For example, in response to the dot-com bubble the Fed cut rates in Dec 2000 but the recession didn't show up until Mar 2001. In 2007, the Fed started cutting rates in August but the recession didn't officially begin until December of that year.

Federal Funds Effective Rate

View data of the Effective Federal Funds Rate, or the interest rate depository institutions charge each other for overnight loans of funds.

fred.stlouisfed.org

Unemployment Rate

View data of the unemployment rate, or the number of people 16 and over actively searching for a job as a percentage of the total labor force.

fred.stlouisfed.org

Is that because they are always late in changing course? My understanding is that they don’t rely on projections or forecasts, only backward-looking data that is already out of date by the time they get it.

I believe being "data dependent" is a potential factor, but also there is significant lag time before corrective policy changes take effect (both hikes and cuts).

From what I know of recessions, there is usually an unpredictable "shock" that hits an already vulnerable and weakened economy (oil price, geopolitical, dot-com bubble, Covid, bank failures, etc).

It's impossible for the Fed to plan for those, so maybe they've historically taken a cautious approach that avoids creating panic when there's nothing specific on the horizon to point to.

IMO the magnitude of the September rate cut will be huge in revealing how vulnerable the Fed thinks the economy actually is.

 

[Orange&Blue]

can i have a job meeting at jackson hole?

 

[FreeBaGeL]

can i have a job meeting at jackson hole?

Vail Resorts Jobs: Explore. Grow. Belong.

Receive $20/hr. starting wage and perks/benefits that allow you to discover a passion for the outdoors. With 40+ resorts, you can join for a season or stay for a career.

jobs.vailresortscareers.com

 

[Alex P Keaton]

I don't have an opinion about the "transitory" thing. I just think the Fed did a pretty good job overall.

Curious why you say this. Not disagreeing, just interested in hearing more.

 

[dkp993]

So I guess what we’re saying is injecting 6 Trillion new dollars into the economy in a short period of time is going to have a lasting effect on pricing and not a temporary one. Wow that’s strange.

 

[IvanKaramazov]

I don't have an opinion about the "transitory" thing. I just think the Fed did a pretty good job overall.

Curious why you say this. Not disagreeing, just interested in hearing more.

I don't mean anything special by it. It's just that the pandemic was a very strange event from a purely economic standpoint, and the Fed had to respond to all of that, plus figuring out how to handle all the fiscal stimulus that was dumped into the economy while things were shut down. They managed to stop inflation from getting out of control without causing too much of a slowdown. I don't believe other countries have sprung back from covid as well as we did, and the Fed certainly deserves some credit for that. That's all.

 

[massraider]

The FFA economy Ted Talk

 

[MAC_32]

Uh..... unless I am totally off from memory of my Macro Economics classes..... transitory means that the price increases are temporary and that the would revert. They were 100% wrong about that. It wasn't transitory and their failure to act quicker lead to more inflation which most Americans feel in real ways today. Just because that inflation is about within 'target' now doesn't mean it is transitory.

Seems like was kinda temporary. Cause was the pandemic/supply chain/ corporations taking advantage, that's mostly washed out (except for last one although that's maybe starting to adjust)

The argument that corporations are taking advantage and that is why prices have not come down does not line up with what we how economies works. And if true, where is the Justice Department in bringing Anti-Trust lawsuits? If it was truly transitory then we would see deflation with prices coming down. We are not. We have over 2% inflation rate now which is adding to the cumulative rate of around 15% since 2021.

Why would there be an anti-trust lawsuit for basic capitalism of companies charging more, seeing that the American consumer is willing to pay it, and continuing to raise prices until they're no longer willing to pay it (which is a line they haven't breached yet)?

We're not talking about water and gas here. We're talking about chicken wings and concert tickets and streaming subscriptions and a thousand other things where companies saw that when forced to raise prices temporarily, the American consumer didn't even budge, so why not make those prices sticky and even continue raising them until they do budge?

This meme is still rampant on facebook even today, in August of 2024.

Yet, those prices were actually from October 2021. They list chicken wings as $175/case. Today I can go to Costco and buy a case for $115, and I'm sure they're getting better prices wherever they buy than I do as a regular consumer. So say, chicken wing supply prices are down roughly 40% since then (probably more in reality). Surely buying some chicken wings at Wingstop would be cheaper than it was in October 2021, right? Yet Wingstop chicken wing prices are UP since then, and by quite a bit.

What's the missing ingredient here? Ah yes, Wingstop stock is up 144% over the last year with net profits up 300% since October 2021 when those prices were first quoted.

There's nothing illegal about charging what the market will bear, and the market continues to bear quite a bit, because we American consumers are spoiled as heck and will pay for anything, and somehow continue to have the money to do so despite complaining on facebook that we don't.

When times actually get tough and people en masse (not just the bottom 20%) are FORCED to stop paying $30 for a cheeseburger delivered to their doorstep so we don't have to pause our $22.99/mo Netflix show to pick it up or make it ourselves, prices may actually come down some. In the meantime, things are pretty great for Wingstop and Chipotle and Five Guys etc. And for the guy ordering the $30 cheeseburger while buying $100 worth of crap he doesn't need on Amazon before heading to Costco to spend $250 on the most random stuff he didn't even know existed a few hours ago.

Credit card debt is up $111B in the past 12 months.

The personal savings rate is now down to 3.2%. It hasn't been this low since the recession of 2008.

Retirement accounts peaked at $44.3T in 2021, were at $39.9T in the Q12024.

So people are saving less and spending money they don't have. Eventually, the credit card gets maxed out and the savings run out.

2 of those things are objectively bad indicators. Curious about #3- might that be because of the increase of retirees without the volume of young people to replace them?

 

[Mitchie]

Uh..... unless I am totally off from memory of my Macro Economics classes..... transitory means that the price increases are temporary and that the would revert. They were 100% wrong about that. It wasn't transitory and their failure to act quicker lead to more inflation which most Americans feel in real ways today. Just because that inflation is about within 'target' now doesn't mean it is transitory.

Seems like was kinda temporary. Cause was the pandemic/supply chain/ corporations taking advantage, that's mostly washed out (except for last one although that's maybe starting to adjust)

The argument that corporations are taking advantage and that is why prices have not come down does not line up with what we how economies works. And if true, where is the Justice Department in bringing Anti-Trust lawsuits? If it was truly transitory then we would see deflation with prices coming down. We are not. We have over 2% inflation rate now which is adding to the cumulative rate of around 15% since 2021.

Why would there be an anti-trust lawsuit for basic capitalism of companies charging more, seeing that the American consumer is willing to pay it, and continuing to raise prices until they're no longer willing to pay it (which is a line they haven't breached yet)?

We're not talking about water and gas here. We're talking about chicken wings and concert tickets and streaming subscriptions and a thousand other things where companies saw that when forced to raise prices temporarily, the American consumer didn't even budge, so why not make those prices sticky and even continue raising them until they do budge?

This meme is still rampant on facebook even today, in August of 2024.

Yet, those prices were actually from October 2021. They list chicken wings as $175/case. Today I can go to Costco and buy a case for $115, and I'm sure they're getting better prices wherever they buy than I do as a regular consumer. So say, chicken wing supply prices are down roughly 40% since then (probably more in reality). Surely buying some chicken wings at Wingstop would be cheaper than it was in October 2021, right? Yet Wingstop chicken wing prices are UP since then, and by quite a bit.

What's the missing ingredient here? Ah yes, Wingstop stock is up 144% over the last year with net profits up 300% since October 2021 when those prices were first quoted.

There's nothing illegal about charging what the market will bear, and the market continues to bear quite a bit, because we American consumers are spoiled as heck and will pay for anything, and somehow continue to have the money to do so despite complaining on facebook that we don't.

When times actually get tough and people en masse (not just the bottom 20%) are FORCED to stop paying $30 for a cheeseburger delivered to their doorstep so we don't have to pause our $22.99/mo Netflix show to pick it up or make it ourselves, prices may actually come down some. In the meantime, things are pretty great for Wingstop and Chipotle and Five Guys etc. And for the guy ordering the $30 cheeseburger while buying $100 worth of crap he doesn't need on Amazon before heading to Costco to spend $250 on the most random stuff he didn't even know existed a few hours ago.

Credit card debt is up $111B in the past 12 months.

The personal savings rate is now down to 3.2%. It hasn't been this low since the recession of 2008.

Retirement accounts peaked at $44.3T in 2021, were at $39.9T in the Q12024.

So people are saving less and spending money they don't have. Eventually, the credit card gets maxed out and the savings run out.

2 of those things are objectively bad indicators. Curious about #3- might that be because of the increase of retirees without the volume of young people to replace them?

Looks like did peak sometime in 2021 at $44T but ended the year at 39.7, maybe due to post pandemic spending?, dropped to $34T end 2022 mostly due to market movements it looks like, now back to to $39.9 in Q1, likely also due to mostly market movement.

 

[Stoneworker]

So I guess what we’re saying is injecting 6 Trillion new dollars into the economy in a short period of time is going to have a lasting effect on pricing and not a temporary one. Wow that’s strange.

When the annual deficit as a result of injecting those new dollars goes from $900 billion in 2019 to $1.9 trillion (projected) in 2024, therefore necessitating even more new dollars to be printed annually to finance it, is that a lasting effect on pricing or a temporary one?

 

[dkp993]

So I guess what we’re saying is injecting 6 Trillion new dollars into the economy in a short period of time is going to have a lasting effect on pricing and not a temporary one. Wow that’s strange.

When the annual deficit as a result of injecting those new dollars goes from $900 billion in 2019 to $1.9 trillion (projected) in 2024, therefore necessitating even more new dollars to be printed annually to finance it, is that a lasting effect on pricing or a temporary one?

I think you missed my sarcasm

 

[Chadstroma]

The last deflationary period we had in the US was December 2007 to June 2009. How'd that work out for everyone, particularly the housing market?

Before that? 1930-1933. A little before my time, but I've heard it was kind of a bummer.

I never said it was a good thing, I just simply said if it was truly transitory, prices would come down as that..... unless someone wants to show me a definition of transitory that says otherwise..... from my memory is what transitory means.

 

[HomerSimpson]

818k adjustment? Oops.

The phrase "house of cards" comes to mind.

1/3 of the jobs they said were created were not..... that seems more political than an honest error to me. I mean, are they really that incompetant? Even more so since we have constantly have had adjustments after dropping the job counts. It seems like they are like "if we give them a good report then we can always come back and readjust it later and people will not freak"

It's not political. They've done significant revisions in the past, and it just comes with the territory.

There's a very simple non-political story here. We had a pandemic that shut down the economy. We helicoptered money to people to keep things from collapsing. Pretty much everyone supported that at the time. We had several stimulus packages, and if ever there was a time when stimulus was warranted, this was it -- a short-term, transitory act of God that we just needed to muddle through. The pandemic came to an end in or around early 2022, and we probably did one stimulus too many around that time. Understandable error. We then experienced a brief spike of historically moderate inflation, and the Fed raised interest rates pretty dramatically to get that under control. They succeeded, and we're now seeing the exact kind of labor market slow-down that higher interest rates tend to cause, by design. That job market report revision is a artifact of that slowing labor market.

That's all it is. It's not a conspiracy. I know that some "conspiracy theories" have recently ended up being true, but this is not one of them. I really encourage people like me not to go down this particular road.

You know.... I would be more agreeable if it were not such a huge margin of error. 1 in 3 is not a rounding error. It is absolute incompetence or by design. Take your pick.

Actually, having worked with a couple former national economics council chairs and some of the people who have been staffed on these committees...it's neither. It's brilliant people trying to do something really hard. Sometimes there's a lot of uncertainty and things we've never encountered and people doing their best aren't perfect.

While 1/3 is quite large, I had read a fairly convincing explanation that downward revisions are quite common in a softening economy. On the flip side, a fast growing economy often has a series of upward revisions. It made cursory sense to me, although I didn't really dive down a rabbit hole or anything.

I actually think Ivan is too magnanimous on the last stimulus though - the signs were all there for significant inflation at the time, and lots of people pointed it out as the bill was being debated. The whole "transitory" narrative seemed like wishcasting at the time, and was proven to be so in short order.

But in the end they were kinda right, it was mostly transitory

Uh..... unless I am totally off from memory of my Macro Economics classes..... transitory means that the price increases are temporary and that the would revert. They were 100% wrong about that. It wasn't transitory and their failure to act quicker lead to more inflation which most Americans feel in real ways today. Just because that inflation is about within 'target' now doesn't mean it is transitory.

I think they were right in that many of the necessary price increases were temporary due to pandemic related supply chain issues. What they were wrong about is not foreseeing that the American consumer would roll over like chumps and happily pay higher prices (even for non-essential things) allowing corporations/companies to make those price increases sticky (and even continue raising them) even when the temporary supply cost increase abated.

Everybody complains about the prices of things but everywhere I go the places are packed. (shrugs)

 

[Jayrod]

818k adjustment? Oops.

The phrase "house of cards" comes to mind.

1/3 of the jobs they said were created were not..... that seems more political than an honest error to me. I mean, are they really that incompetant? Even more so since we have constantly have had adjustments after dropping the job counts. It seems like they are like "if we give them a good report then we can always come back and readjust it later and people will not freak"

It's not political. They've done significant revisions in the past, and it just comes with the territory.

There's a very simple non-political story here. We had a pandemic that shut down the economy. We helicoptered money to people to keep things from collapsing. Pretty much everyone supported that at the time. We had several stimulus packages, and if ever there was a time when stimulus was warranted, this was it -- a short-term, transitory act of God that we just needed to muddle through. The pandemic came to an end in or around early 2022, and we probably did one stimulus too many around that time. Understandable error. We then experienced a brief spike of historically moderate inflation, and the Fed raised interest rates pretty dramatically to get that under control. They succeeded, and we're now seeing the exact kind of labor market slow-down that higher interest rates tend to cause, by design. That job market report revision is a artifact of that slowing labor market.

That's all it is. It's not a conspiracy. I know that some "conspiracy theories" have recently ended up being true, but this is not one of them. I really encourage people like me not to go down this particular road.

You know.... I would be more agreeable if it were not such a huge margin of error. 1 in 3 is not a rounding error. It is absolute incompetence or by design. Take your pick.

Actually, having worked with a couple former national economics council chairs and some of the people who have been staffed on these committees...it's neither. It's brilliant people trying to do something really hard. Sometimes there's a lot of uncertainty and things we've never encountered and people doing their best aren't perfect.

While 1/3 is quite large, I had read a fairly convincing explanation that downward revisions are quite common in a softening economy. On the flip side, a fast growing economy often has a series of upward revisions. It made cursory sense to me, although I didn't really dive down a rabbit hole or anything.

I actually think Ivan is too magnanimous on the last stimulus though - the signs were all there for significant inflation at the time, and lots of people pointed it out as the bill was being debated. The whole "transitory" narrative seemed like wishcasting at the time, and was proven to be so in short order.

But in the end they were kinda right, it was mostly transitory

Uh..... unless I am totally off from memory of my Macro Economics classes..... transitory means that the price increases are temporary and that the would revert. They were 100% wrong about that. It wasn't transitory and their failure to act quicker lead to more inflation which most Americans feel in real ways today. Just because that inflation is about within 'target' now doesn't mean it is transitory.

I think they were right in that many of the necessary price increases were temporary due to pandemic related supply chain issues. What they were wrong about is not foreseeing that the American consumer would roll over like chumps and happily pay higher prices (even for non-essential things) allowing corporations/companies to make those price increases sticky (and even continue raising them) even when the temporary supply cost increase abated.

Everybody complains about the prices of things but everywhere I go the places are packed. (shrugs)

Well, sounds like some irrefutable evidence that everyone is totally OK.

 

[HomerSimpson]

818k adjustment? Oops.

The phrase "house of cards" comes to mind.

1/3 of the jobs they said were created were not..... that seems more political than an honest error to me. I mean, are they really that incompetant? Even more so since we have constantly have had adjustments after dropping the job counts. It seems like they are like "if we give them a good report then we can always come back and readjust it later and people will not freak"

It's not political. They've done significant revisions in the past, and it just comes with the territory.

There's a very simple non-political story here. We had a pandemic that shut down the economy. We helicoptered money to people to keep things from collapsing. Pretty much everyone supported that at the time. We had several stimulus packages, and if ever there was a time when stimulus was warranted, this was it -- a short-term, transitory act of God that we just needed to muddle through. The pandemic came to an end in or around early 2022, and we probably did one stimulus too many around that time. Understandable error. We then experienced a brief spike of historically moderate inflation, and the Fed raised interest rates pretty dramatically to get that under control. They succeeded, and we're now seeing the exact kind of labor market slow-down that higher interest rates tend to cause, by design. That job market report revision is a artifact of that slowing labor market.

That's all it is. It's not a conspiracy. I know that some "conspiracy theories" have recently ended up being true, but this is not one of them. I really encourage people like me not to go down this particular road.

You know.... I would be more agreeable if it were not such a huge margin of error. 1 in 3 is not a rounding error. It is absolute incompetence or by design. Take your pick.

Actually, having worked with a couple former national economics council chairs and some of the people who have been staffed on these committees...it's neither. It's brilliant people trying to do something really hard. Sometimes there's a lot of uncertainty and things we've never encountered and people doing their best aren't perfect.

While 1/3 is quite large, I had read a fairly convincing explanation that downward revisions are quite common in a softening economy. On the flip side, a fast growing economy often has a series of upward revisions. It made cursory sense to me, although I didn't really dive down a rabbit hole or anything.

I actually think Ivan is too magnanimous on the last stimulus though - the signs were all there for significant inflation at the time, and lots of people pointed it out as the bill was being debated. The whole "transitory" narrative seemed like wishcasting at the time, and was proven to be so in short order.

But in the end they were kinda right, it was mostly transitory

Uh..... unless I am totally off from memory of my Macro Economics classes..... transitory means that the price increases are temporary and that the would revert. They were 100% wrong about that. It wasn't transitory and their failure to act quicker lead to more inflation which most Americans feel in real ways today. Just because that inflation is about within 'target' now doesn't mean it is transitory.

I think they were right in that many of the necessary price increases were temporary due to pandemic related supply chain issues. What they were wrong about is not foreseeing that the American consumer would roll over like chumps and happily pay higher prices (even for non-essential things) allowing corporations/companies to make those price increases sticky (and even continue raising them) even when the temporary supply cost increase abated.

Everybody complains about the prices of things but everywhere I go the places are packed. (shrugs)

Well, sounds like some irrefutable evidence that everyone is totally OK.

If they are not doing OK, maybe they should look down for their bootstraps and figure it out. That's life.

 

[urbanhack]

Kroger Egg Pricing Turns Merger Trial Into Inflation Fight

(Bloomberg) -- Kroger Co. hiked prices on milk and eggs more than needed to account for inflation, the company’s top pricing executive testified during a court hearing on the US government’s bid to block the grocery chain’s purchase of rival Albertsons Cos.Most Read from BloombergNazi Bunker’s...

finance.yahoo.com

 

[The Z Machine]

Kroger Egg Pricing Turns Merger Trial Into Inflation Fight

(Bloomberg) -- Kroger Co. hiked prices on milk and eggs more than needed to account for inflation, the company’s top pricing executive testified during a court hearing on the US government’s bid to block the grocery chain’s purchase of rival Albertsons Cos.Most Read from BloombergNazi Bunker’s...

finance.yahoo.com

Wait, you're telling me retailers took the inflationary spike to fatten their margins??? Get out!

 

[FreeBaGeL]

Not saying I agree necessarily as I haven't picked it apart, but today I stumbled across an interesting article from Realtor.com that asserts, with the figures to back it up, that the cost of mortgage payments relative to income are pretty middle of the road historically, and not really expensive in context.

The relevant chart

Essentially, everyone likes to quote median home price vs median income but neglects that the times where home price was significantly cheaper often overlap with mortgage rates being significantly more expensive, which balances out the mortgage payment against median income to be pretty flat.

The exceptions are coming out of the 2008 crisis (mortgage payments were extremely cheap) and the early 1980's (mortgage payments were extremely expensive), but outside of those we are pretty much right on historical averages right now with regards to mortgage payments as a percentage of income.

The entire article

 

[Navin Johnson]

Not saying I agree necessarily as I haven't picked it apart, but today I stumbled across an interesting article from Realtor.com that asserts, with the figures to back it up, that the cost of mortgage payments relative to income are pretty middle of the road historically, and not really expensive in context.

The relevant chart

Essentially, everyone likes to quote median home price vs median income but neglects that the times where home price was significantly cheaper often overlap with mortgage rates being significantly more expensive, which balances out the mortgage payment against median income to be pretty flat.

The exceptions are coming out of the 2008 crisis (mortgage payments were extremely cheap) and the early 1980's (mortgage payments were extremely expensive), but outside of those we are pretty much right on historical averages right now with regards to mortgage payments as a percentage of income.

The entire article

Not seeing any supporting data there.

 

[Harry Frogfish]

Did someone change the thread title?

 

[culdeus]

Not saying I agree necessarily as I haven't picked it apart, but today I stumbled across an interesting article from Realtor.com that asserts, with the figures to back it up, that the cost of mortgage payments relative to income are pretty middle of the road historically, and not really expensive in context.

The relevant chart

Essentially, everyone likes to quote median home price vs median income but neglects that the times where home price was significantly cheaper often overlap with mortgage rates being significantly more expensive, which balances out the mortgage payment against median income to be pretty flat.

The exceptions are coming out of the 2008 crisis (mortgage payments were extremely cheap) and the early 1980's (mortgage payments were extremely expensive), but outside of those we are pretty much right on historical averages right now with regards to mortgage payments as a percentage of income.

The entire article

Not seeing any supporting data there.

Was that chart in unicorns or percentage of income spent on mortgage payments?

It's whatever they define as "typical share" this probably is adjusting for things like cable TV phone Internet type bills, along with adjustments for cost of education loans.

My guess is they are normalizing the **** out of health care and education costs to make 1980 look worse

 

[FreeBaGeL]

Not saying I agree necessarily as I haven't picked it apart, but today I stumbled across an interesting article from Realtor.com that asserts, with the figures to back it up, that the cost of mortgage payments relative to income are pretty middle of the road historically, and not really expensive in context.

The relevant chart

Essentially, everyone likes to quote median home price vs median income but neglects that the times where home price was significantly cheaper often overlap with mortgage rates being significantly more expensive, which balances out the mortgage payment against median income to be pretty flat.

The exceptions are coming out of the 2008 crisis (mortgage payments were extremely cheap) and the early 1980's (mortgage payments were extremely expensive), but outside of those we are pretty much right on historical averages right now with regards to mortgage payments as a percentage of income.

The entire article

Not seeing any supporting data there.

Was that chart in unicorns or percentage of income spent on mortgage payments?

It's whatever they define as "typical share" this probably is adjusting for things like cable TV phone Internet type bills, along with adjustments for cost of education loans.

My guess is they are normalizing the **** out of health care and education costs to make 1980 look worse

I don't think they're projecting what the other percentage of income was spent on. They're just taking the median home price, calculating the actual monthly mortgage payment of that based on rates at the time, multiplying it by 12, and comparing it to the median income. Health care or education costs don't have anything to do with it, nor are they projecting those things at all from what I can tell.

The chart says a typical share as a percentage of INCOME, not as a percentage of SPENDING.

 

[Max Power]

Interesting article.

Boomers are subsidizing Gen Z and millennial spending habits, ‘Oracle of Wall Street’ says

"They have and continue to benefit from a different type of subsidy: their parents."

finance.yahoo.com

Baby boomer parents are handing over money to their Gen Z and millennial children, allowing them to fuel strong consumer spending, according to Meredith Whitney, the onetime "Oracle of Wall Street" who predicted the Great Financial Crisis.

Despite the end of COVID-related stimulus and warnings from discount retailers like Dollar Tree and Dollar General on weak demand, other data show more robust spending patterns elsewhere in the economy.


In a Financial Times op-ed last Sunday, the CEO of Meredith Whitney Advisory Group noted that American Express data shows Gen Z and millennials are spending at a rate that's five times more than the rate for boomers.

"They have the wherewithal to spend on things like French-press coffee, Instagrammable leisure experiences, online gaming and sports betting as well as yes, avocado toast," she wrote.

Whitney noted that households earning over $100,000 a year saw virtually no change in their after-tax income between 2019 and 2022.

Meanwhile, households earning more than $150,000 have kept their spending relatively constant over the last year even as it shifted from discretionary items to essentials.

"The generation aged between 24 and 38 represents 20% of the US population and has the most discretionary spending power of any other age cohort," Whitney added. "They have and continue to benefit from a different type of subsidy: their parents."

Those younger generations are living with their parents at record levels, she said, adding that they enjoy parent-subsidized expenses like cell phone plans.

And given that nearly 20% of men and almost 12% of women aged 24-35 are living at home with their parents, they are also not spending their money on housing-related expenses like insurance, property taxes and utilities, Whitney pointed out.

"As long as these trends continue, this age cohort will remain the key driver of discretionary spending in the US," she predicted. "It’s no wonder why there is so much debate over the real state of the US economy."

Whitney's analysis came days before the Commerce Department's monthly retail sales report showed a surprise uptick, suggesting consumers are still able and willing to spend more despite years high inflation and borrowing costs.

She also echoed what "Bond King" Bill Gross said last month, when he posted a similar take on X, though without supporting data.

"Hard to measure but I suspect upper middle class and wealthy boomers are funding millennials and younger generational spending by transferring assets/cash and paying bills, and in the process pumping retail sales and the economy," he wrote. "In essence they are liquidating balance sheets to pay for spending. This is likely to continue as long as stocks/housing prices

 

[culdeus]

Not saying I agree necessarily as I haven't picked it apart, but today I stumbled across an interesting article from Realtor.com that asserts, with the figures to back it up, that the cost of mortgage payments relative to income are pretty middle of the road historically, and not really expensive in context.

The relevant chart

Essentially, everyone likes to quote median home price vs median income but neglects that the times where home price was significantly cheaper often overlap with mortgage rates being significantly more expensive, which balances out the mortgage payment against median income to be pretty flat.

The exceptions are coming out of the 2008 crisis (mortgage payments were extremely cheap) and the early 1980's (mortgage payments were extremely expensive), but outside of those we are pretty much right on historical averages right now with regards to mortgage payments as a percentage of income.

The entire article

Not seeing any supporting data there.

Was that chart in unicorns or percentage of income spent on mortgage payments?

It's whatever they define as "typical share" this probably is adjusting for things like cable TV phone Internet type bills, along with adjustments for cost of education loans.

My guess is they are normalizing the **** out of health care and education costs to make 1980 look worse

I don't think they're projecting what the other percentage of income was spent on. They're just taking the median home price, calculating the actual monthly mortgage payment of that based on rates at the time, multiplying it by 12, and comparing it to the median income. Health care or education costs don't have anything to do with it, nor are they projecting those things at all from what I can tell.

The chart says a typical share as a percentage of INCOME, not as a percentage of SPENDING.

Yeah, but they don't explain their methods literally at all. Typical means wildly different things to different people. You don't know how they adjust to single vs. dual income earning households, is this W2 or 1040 income (cap gains) or what? Are they factoring tax rates on the income, or just top line. What about SALT benefit changes over time?

Taking this type of thing vs straight top line income is going to give a very pessimistic view for the early 80s where tax rates were higher and cap gains were lower.