COVID Economy

[JWags85]

No, it won't.

Please show your work and math

[The Sultan]

No, it won't.

Of course it would. 

[forgetful]

Please show your work and math

I hope we all know I'm not an Econ expert. But, my first read of that comment was in regards to people having more money, means more spending, which means more inflationary pressure.

That is a fallacy in the current economy. It suggests that demand is driving inflation, or will drive inflation. It is not. The problem is supply right now (from a overly simplified view). So the people having more money will not impact existing inflationary pressures.

Further, those who would be getting paid more, are over leveraged right now. Being paid more wouldn't lead to more spending, it would be more likely to lead to paying off debts.

Now, I didn't immediately read this from the standpoint of paying higher wages, leading to higher expenses, and then higher prices. While that is a possibility, the reality is that there are ways to relieve those industry budgetary constraints separate from price increases, they just don't like to go those routes.

[Goose]

I seldom agree with Fluff, but I know three people that have "retired" in the last six months and all are under 60. None of them are crazy wealthy, but the stock market rise over past 18 months made them feel comfortable to retire. I think they are crazy, but the wealth factor is in full glory at the moment.

[The Sultan]

I hope we all know I'm not an Econ expert. But, my first read of that comment was in regards to people having more money, means more spending, which means more inflationary pressure.

That is a fallacy in the current economy. It suggests that demand is driving inflation, or will drive inflation. It is not. The problem is supply right now (from a overly simplified view). So the people having more money will not impact existing inflationary pressures.

Further, those who would be getting paid more, are over leveraged right now. Being paid more wouldn't lead to more spending, it would be more likely to lead to paying off debts.

Now, I didn't immediately read this from the standpoint of paying higher wages, leading to higher expenses, and then higher prices. While that is a possibility, the reality is that there are ways to relieve those industry budgetary constraints separate from price increases, they just don't like to go those routes.

I didn't say that increasing people's wages are the only reason, or even the main reason for current inflation.  But paying people more is going to increase inflationary pressure.  I don't think there is much dispute about that.

[forgetful]

I didn't say that increasing people's wages are the only reason, or even the main reason for current inflation.  But paying people more is going to increase inflationary pressure.  I don't think there is much dispute about that.

Why aren't things more expensive at Costco, than Walmart? The idea that if you pay people more, it means prices go up, isn't guaranteed, it is a convenient oversimplification of business operations.

[Goose]

forgetful

There is a reason employers want to pay the least amount of possible to employees, it is because it is very hard to lower them. It is virtually impossible to put the Genie back in the bottle and there is nothing positive going to happen from higher wages. I guess replacing people with robots will reverse the wage trend, but that is another discussion.

[The Sultan]

Why aren't things more expensive at Costco, than Walmart? The idea that if you pay people more, it means prices go up, isn't guaranteed, it is a convenient oversimplification of business operations.

Talk about oversimplification.  You think inflation is solely determined by prices at Costco and WalMart?   You also don't seem to understand that supply problems and demand problems are linked.  One of the reasons supply is short is because demand is high.

[Goose]

Inflation has only gotten started.

[jesmu84]

forgetful

There is a reason employers want to pay the least amount of possible to employees, it is because it is very hard to lower them. It is virtually impossible to put the Genie back in the bottle and there is nothing positive going to happen from higher wages. I guess replacing people with robots will reverse the wage trend, but that is another discussion.

Wait...what?

[Goose]

jesmu

The lower paid employees are getting more money, but it is not going to keep pace with inflation. I have zero problem with what someone gets paid as long as intelligent spending. IMO the minimum wage worker will be worse off in a year from now even with higher wages.

[Frenns Liquor Depot]

Tho biggest lesson of the past couple years is that if you give more money to people that aren't wealthy it drives a ton of economic activity. 

Will that ultimately be eaten away by higher prices and be a net negative?  That's still to be determined. 

I personally think that the tilt in power back to the worker isn't necessarily a bad thing.

[jesmu84]

jesmu

The lower paid employees are getting more money, but it is not going to keep pace with inflation. I have zero problem with what someone gets paid as long as intelligent spending. IMO the minimum wage worker will be worse off in a year from now even with higher wages.

Wages for lower employees hasn't kept pace with production or inflation for decades. That's why we're in this mess.

https://time.com/5888024/50-trillion-income-inequality-america/

[forgetful]

forgetful

There is a reason employers want to pay the least amount of possible to employees, it is because it is very hard to lower them. It is virtually impossible to put the Genie back in the bottle and there is nothing positive going to happen from higher wages. I guess replacing people with robots will reverse the wage trend, but that is another discussion.

I agree it is in the short term virtually impossible to put the Genie back in the bottle, but like Jesmu, would point out that for run-of-the-mill employees wages have not kept up with increases in productivity, which has led to the wage gap we have to day, and much of the related problems. I think reversing this wage gap would be a boon for the economy and the nation.

I agree on the bolded also. It is what we should be seeing and mass scale automation would recreate modern society...but that is also why we aren't seeing it, and why it is for another discussion.

And disclaimer again. These are nothing but the random musings of a message board dude with 1-semester of economics, and the internet, so I am most definitely not saying "I'm right" just saying my thoughts. I may briefly play devils advocate to learn more from people like you and Jwags (and others in the business world).

[Hards Alumni]

I seldom agree with Fluff, but I know three people that have "retired" in the last six months and all are under 60. None of them are crazy wealthy, but the stock market rise over past 18 months made them feel comfortable to retire. I think they are crazy, but the wealth factor is in full glory at the moment.

I wonder what will happen when the market finally pulls back.

[The Sultan]

Yeah reentering the workforce at the same level is tough if you find out you don't have enough to live 30+ years. 

[Skatastrophy]

Yeah reentering the workforce at the same level is tough if you find out you don't have enough to live 30+ years. 

No joke this is why some people in my grandma's retirement living community are fine with the pandemic. They're ready to go. Same with rural folks, it's wild.

[Pakuni]

I didn't say that increasing people's wages are the only reason, or even the main reason for current inflation.  But paying people more is going to increase inflationary pressure.  I don't think there is much dispute about that.

It would be more accurate to say that rising wages CAN increase inflationary pressure. But it's by no means the case that one always follows the other.

[jesmu84]

https://www.cnn.com/2021/12/18/business/labor-shortage-boomers-millennials-nightcap/index.html

[MU82]

https://www.cnn.com/2021/12/18/business/labor-shortage-boomers-millennials-nightcap/index.html

Yes, this has become the accepted explanation among economists, and the facts show why.

Many of my fellow Boomers don't want to admit it because it's much easier to shake a fist at Those Damn Millennials getting fat on government handouts.

[MU82]

The latest Covid-related economic developments (from the NYT) ...

The World Economic Forum said this morning that it was postponing its annual meeting in Davos, Switzerland, from next month to "early summer," citing the spread of the Omicron variant. The move suggests new uncertainties for business travel, yet another headache for C.E.O.s amid rising case counts and new questions about government efforts to contain the coronavirus. Meanwhile, U.S. stock futures are down sharply, following European and Asian markets.

Many businesses are becoming increasingly cautious. The World Economic Forum, after consulting with experts and the Swiss government, said it will instead hold virtual sessions next month. (Travel, business and otherwise, faces new pressures: Israel added the U.S. to its no-fly list, while the N.H.L. called off games involving cross-border travel until after Christmas.) In other developments:

"Saturday Night Live" sent home its audience and most of its cast and crew at the last minute, while Radio City canceled the rest of the Rockettes' performances for the year. CNN barred all nonessential employees from its U.S. offices.

JPMorgan Chase told American workers who don't work in bank branches that each team should determine who needs to come into the office over the next few weeks.

Not even top executives are unaffected: Rich Handler, the C.E.O. of the investment bank Jefferies, said he has been quarantining after testing positive for the coronavirus.

[Hards Alumni]

Yes, this has become the accepted explanation among economists, and the facts show why.

Many of my fellow Boomers don't want to admit it because it's much easier to shake a fist at Those Damn Millennials getting fat on government handouts.

As I mentioned earlier, our city of Madison and Dane County government cohorts are both retiring.  They're in their early 60's and are sick of the grind.  And I don't blame them one bit.

[MUBurrow]

What is the marketimpact of the boomer retirement surge?  Presumably it is largely due to the run ups in the market, which gives these semi-early retirees confidence that they have enough.  But does that mean they'll be backing off their equities?  If so, when does the market feel that pullback?  Where do the retirees go with their money with the bond market mostly still in the tank?

[Skatastrophy]

What is the marketimpact of the boomer retirement surge?  Presumably it is largely due to the run ups in the market, which gives these semi-early retirees confidence that they have enough.  But does that mean they'll be backing off their equities?  If so, when does the market feel that pullback?  Where do the retirees go with their money with the bond market mostly still in the tank?

In an inflationary environment nobody will hold cash. Either they'll go overweight equities chasing return, double-down on TIPS, or just keep holding bonds like the rest of us. Nothing gives you a low-risk consistent return rate like bonds do, and they still have a place in a modern portfolio, especially if you're retirement age.

I think the larger market impact will be further driving up wages for younger workers due to increased demand for warm bodies in the workforce.

[4everwarriors]

Pocahonist and Crazy Corey got da chit. Must knotof bin careful 'nough, hey?