The last one was in 2007 and it was certainly a bad one, lasting a couple of years, as it was exacerbated by the mortgage crisis and the bursting of the housing bubble, which made it much worse than it should have been. A recession always exposes weaknesses in the economy. I don't think we are anywhere close to being as fragile as we were back then when it comes to mortgages, but certainly there is a housing bubble to be concerned about. Homes are priced too high for most potential buyers. I think one of the benefits of lowering interest rates now is that it can help mitigate what in a recession would likely be a slowing in demand for housing due to the current high market prices. A reduction in interest rates would make houses (actually mortgages) more affordable to potential buyers. A housing price correction at some point may be necessary, but we don't want it to be abrupt and get out of control. That is one of the variables that we want to avoid, if we want the recession to be mild and the economy to have a soft landing.
You guys sure know how to move the goalposts. 3.5 years was the context of the discussion, but as the chart you kindly provided shows, the only other time in the last 20 years that the unemployment trend resembled the current one was in late-2007 to early-2008. So, that's not a good example to argue that this will lead to nothing.
I must have missed whatever context you assume I’m talking about. The other thing too is why is the unemployment number going up? Is it because of layoffs, or is it because more people are looking for jobs? What are first-time job seeker numbers relative to month(s) prior? Are wages increasing so more people finding it worthwhile to hop back into the job market? You are taking a single broad metric and drawing lots of conclusions. Yeah the trend looks bad, but we are coming out of historic lows. There are a lot of trend lines to be extrapolated that don’t result in exponential rise quite yet. When we cross 6% and still see increases of .2%, then maybe it might be time to freak. But now is not that time.
One reason I like listening to Odd Lots is an ongoing theme of it is how so many past predictors don't work anymore
Agreed. Talking about “normal” cycles seems a bit silly to me. What has been “normal” in the economy in the last 20years?
It's like this at work. In the frickin' Space Industry. "We can't do that, it's not how we did things when I came up." Dude, you worked on the Space Shuttle. That was 20 years ago. 25 years ago the first iPhone was invented. Software is different now. Go away.
Who is surprised? A lot of folks, including a lot of folks in the financial sector, think the Trump corporate tax reform ended the incentive to "offshore" profits.For pharma at least, the data is clear: it didn't.2/2https://t.co/z83DJTIzwh— Brad Setser (@Brad_Setser) August 15, 2024
A revision to the jobs number is expected today with some estimating that there were as much as 1 million fewer jobs than reported. Gives Fed something to chew on. https://www.benzinga.com/news/24/08...ent-revises-figures-what-it-means-for-the-fed
https://www.cnn.com/2024/09/09/business/big-lots-chapter-11-bankruptcy/index.html Big Lots is filing for bankruptcy. They’re struggling because buyers are seeking value, not just low prices. The article cites the struggles of dollar stores while Wal Mart and Target are thriving. The article mentions inflation. Just throwing something out there…could folks who got a 7% raise because of inflation have thought, hey, I can shop at Target now instead of Big Lots. So (again, just throwing it out there) could part of voter distress over inflation be because they’re shopping at Target instead of Big Lots?
I'm hardly an economist, but from what I see, "inflation" is commonly being misused or at least rather loosely used to address a general feeling among the population that "things" just cost too much. I've always interpreted "inflation" to mean that the costs of goods and services are actively and consistently rising at a rate that outpaces income growth. We had inflation before Covid, but at roughly 2% annually, it fell into a range that we'd come to consider normal (even though it was historically low). We got sudden "inflation" during Covid, but for highly unusual reasons (global supply chain restrictions, consumers suddenly shifting spending patterns). What we saw were sudden increases in the cost of items that had appeared previously to have had fairly static prices. We also saw unusual shortages of items, even common things like paper towels. That led to price increases, but also just shortages that shoppers found frustrating. Russia invading Ukraine led to prices spiking again. A bird flu outbreak jacked up egg prices. It just seems to me that steady inflation hasn't really been what we're dealing with in the US. We've seen a series of sudden price increases; in some cases those costs have remained "stuck" at those higher level (always the outcome that corporations would prefer), in others they've more or less returned to where they'd been. We've seen an economy that the Fed was worried was over-heating and would lead to "inflation," in response to which interest rates were jacked up. Which, to me, is inflation of another sport. It increases the costs of borrowing, whether that's for a car, mortgage, or any other type of loan. And we've lived in a world where, well before Covid appeared on the scene, costs for basic items - healthcare/meds, housing - were already stressful for a lot of people. All in a nation where many/most people have always spent what they've made, and the average credit card debt is about $9,000. Where only about half of the population has any retirement savings at all, only about a quarter had any real measurable retirement savings, and only about 1 on 10 were on track to actually substantially support themselves into retirement. All of which is dumbed down into the over-worked term "inflation," IMHO. I'm not sure what any of the above really means, only that I keep being told that "inflation" is something voters blame Dems for, and I just don't buy it (no pun intended). Oh, I think some voters blame Dems for... something, but I think it's more the case that they feel The Rent Is Too Damned High. It's about economic stress that is structurally baked into the US system and has been a long time in the making.
I don't think that their customers moved up, but that dollar stores put themselves out of a niche with too many things offered that are not valuable for people that are pinching pennies. Also, not sure how it factors, but dollar stores are no longer dollar stores, but $1.25 and up, and their merchandise is so crappy and they're usually understaffed (see article below, shitty pay and management), so even if you are kind of saving money, why go through all the aggravation when you can go to Target or Walmart? https://www.cnbc.com/2024/04/14/the...ation has sent more,rare sight in many stores. https://www.currentaffairs.org/news/2024/02/dollar-stores-show-capitalism-at-its-worst
Oh yeah!!! "Who ya gonna call" when your punched card reader needs fixin? Ps...I await with my beeper and my bag phone is in the car.
This is how deregulation costs jobs https://t.co/zu5anDixuw— Michael Eaves (@michaeleaves) September 13, 2024
What prices have returned to where they were (or I guess would have been in a 2% inflation scenario) ?
You want me to run down my personal grocery list, or the things I get at Target? It’s a mixed bag for me, personally. Things like coffee beans, beer, wine, most of the produce I buy, it’s pretty much what I was paying 4+ years ago. Lots of things are, or are close enough that I’d never notice the difference.
I don't see that in my region. Nothing that I notice has gone back to 4 year ago prices. And if some are which I haven't noticed, doesn't change the fact that the total grocery bill (in this example), is still considerably higher than 4 years ago.
Well, I’ve said this before, but for me personally, the effects of inflation just aren’t terribly noticeable. Primarily because by far my (as is the case with most people) biggest expense is housing, and my monthly mortgage payment is actually slightly lower now that it was five years ago. $5 in gas here, $20 in groceries there, etc., just don’t really matter much to me. Or, rather, there’s no identifiable political or policy reasoning behind these changes, no one to blame. Except, I guess Putin, for certain increases.
If inflation held at 2% YOY, you’d be paying about 8%more for your groceries as opposed to 4 years ago.
I want to make an observation on how we talk about inflation. In the 1970s, even as a kid, I remember that inflation wasn’t just prices, it was also wages. Nobody even thinks nowadays that inflation affects their income. They think it affects only their costs. And I think that’s because so much of the workforce in the 1970s were in unions, with union contracts that explicitly tied wages to inflation. The fear was that union contracts with raises of inflation+ would drive a wage-price spiral and create a dangerous level of inflation. IOW, then, it was fears of an unstable economy. Now, it’s about affordability, and I submit that’s because very, very few people nowadays have their incomes directly tied to inflation.
Today is the day? It is time for the fed to cut its rates. At the macro level, lowering interest rates will increase liquidity in the financial markets, stimulating the economy and helping mitigate the slowdown that is coming, hopefully leading to a soft landing. At the micro-level, for working class and middle class people (which is the majority of Americans) it will mean debt release. For those who have variable rate mortgages, private sector student loans, credit card and other variable interest debt, this will be a godsent. On the other hand, it will decrease interest earnings, but that's not a significant source of income for most working class people. The fed will most likely go for a quarter point rate cut. I'm advocating for a half point rate cut. Let's get it done! From CNN: https://www.cnn.com/2024/09/18/economy/interest-rate-cut-decision/index.html