US Economy thread

[Jockey]

Because of inflation?

That's part of it. But then inflation is always occurring at different rates. Since 1960, the inflation rate rose every year except 2009 (Bush's banking crisis).

[The Hippie Satan of Hyperbole]

Because of inflation?

Inflation decreasing just means prices are rising at slower rates. Not that they are reversing - that's deflation and that's bad.

[WellsstreetWanderer]

Again, I trust economic data and not your personal anecdotes.

     I should believe you and not my lyin' eyes    Been a lot of suspicious data thrown out these last few years I'll trust what I am experiencing over "data" 

[The Hippie Satan of Hyperbole]

     I should believe you and not my lyin' eyes    Been a lot of suspicious data thrown out these last few years I'll trust what I am experiencing over "data" 

LOL. All about your feelings and not reality. Says a lot about you actually.

[MU82]

One thing for sure: Incredibly ugly gold sneakers are REALLY effen expensive.

[WellsstreetWanderer]

I am relaying my experiences that is the very definition of reality .  I spent a career interpreting data and know how even good numbers  can be manipulated so I don't let my "feelings' interfere with my search for truth.  That's my only goal

[21Jumpstreet]

Inflation decreasing just means prices are rising at slower rates. Not that they are reversing - that's deflation and that's bad.

Is deflation always bad? Or just when it’s prolonged or goes too far? If prices start falling, of course, it can be a negative sign, but could it also signal a strengthening dollar?

[Skatastrophy]

Is deflation always bad? Or just when it’s prolonged or goes too far? If prices start falling, of course, it can be a negative sign, but could it also signal a strengthening dollar?

Deflation can cause people to postpone spending because lower prices are coming which can cause the economy to lock up. The emotional decisions that people make becuase of the thing is worse than the actual thing.

[tower912]

Is deflation always bad? Or just when it’s prolonged or goes too far? If prices start falling, of course, it can be a negative sign, but could it also signal a strengthening dollar?

Deflation is starting to be a thing in China.  It is a sign of crashing demand.

Greedflation is a significant factor in overall inflation.   Big business saw an opportunity to jack profits and took it.    There is absolutely no reason for some of the things referenced earlier in the thread to be the retail price they are other than the corporations discovered customers would pay it and they can make increased profits off of every unit sold.

[21Jumpstreet]

Deflation is starting to be a thing in China.  It is a sign of crashing demand.

Greedflation is a significant factor in overall inflation.   Big business saw an opportunity to jack profits and took it.    There is absolutely no reason for some of the things referenced earlier in the thread to be the retail price they are other than the corporations discovered customers would pay it and they can make increased profits off of every unit sold.

Do you think companies had to? If a handful of companies control the market, for example, and needed to raise profits and keep the engine running, wouldn’t it be smart to artificially inflate the dollar? Make it seem like the market is stronger? I realize this is only one part of the economy, but it is significant.

I understand the reports (well, I don’t understand them, they are filled with economic speak) say inflation is steadying, but is it really? And, do those reports matter if the dollar is already so highly inflated?

I’m not saying the economy isn’t seemingly cruising, but is it artificial…well, more artificial than normal?

[Jockey]

I’m not saying the economy isn’t seemingly cruising, but is it artificial…well, more artificial than normal?

We went off the gold standard a long time ago. So, normal is kinda artificial.

[Spotcheck Billy]

So Cal prices;  Bread up to $7 a loaf, Coke last was 3.99  12 pack now $7.99, miks $2.99 to $4.69, Juilan Apple Pie went from $16.99 to $26 all in the last year and a half.  But they're still adding potato chips to the bags of air so it's all good

You can always eat cereal for dinner

[The Hippie Satan of Hyperbole]

I am relaying my experiences that is the very definition of reality .  I spent a career interpreting data and know how even good numbers  can be manipulated so I don't let my "feelings' interfere with my search for truth.  That's my only goal

Your posting history suggests that's incredibly doubtful.

[Dr. Blackheart]

Economy softened in January.  Sales, Production and Consumer were down, Employment neutral. Still sideways.

https://www.chicagofed.org/research/data/cfnai/current-data

[21Jumpstreet]

We went off the gold standard a long time ago. So, normal is kinda artificial.

Funny you say that. That’s how I was taught by my late father in law, the idea that since the gold standard, our money is worthless, gold is the indicator of inflation, less dollars in the system equals more buying power, inflation is a control mechanism, end the FED, that kind of stuff. He used to send me stuff like the Cato Letter, Imprimus, writings by Rothbard, von Mises Institute stuff. I credit him for challenging me and for presenting things in a way that was non confrontational. We had some great conversations.

I don’t subscribe to it as a general belief, but sometimes some of the ideas creep into my thought process. It is difficult for me to ignore money supply as it relates to inflation, just as it is difficult to ignore the idea of greedflation and why besides pure corporate profiteering. It’s difficult not to consider that unless we reset, we are a runaway freight train to implosion (very Ayn Rand, I know, my father in law told me about her, too).

So many indicators point to a strong economy, could we be in a “if it seems too good to be true, it is” situation?

[Frenns Liquor Depot]

Funny you say that. That’s how I was taught by my late father in law, the idea that since the gold standard, our money is worthless, gold is the indicator of inflation, less dollars in the system equals more buying power, inflation is a control mechanism, end the FED, that kind of stuff. He used to send me stuff like the Cato Letter, Imprimus, writings by Rothbard, von Mises Institute stuff. I credit him for challenging me and for presenting things in a way that was non confrontational. We had some great conversations.

I don’t subscribe to it as a general belief, but sometimes some of the ideas creep into my thought process. It is difficult for me to ignore money supply as it relates to inflation, just as it is difficult to ignore the idea of greedflation and why besides pure corporate profiteering. It’s difficult not to consider that unless we reset, we are a runaway freight train to implosion (very Ayn Rand, I know, my father in law told me about her, too).

So many indicators point to a strong economy, could we be in a “if it seems too good to be true, it is” situation?

An arbitrary reset is needed because - why?  We're already in a significant reset where hot pandemic categories/durable goods are unwinding closer to pre-pandemic volumes.  Money is flowing to services and categories that were depressed during that time.  Rates have gone up dramatically without impact to the labor market since that market has been constrained.  At some point the underlying growth needs to be felt across the economy - but right now its growing in aggregate and consumers are spending in aggregate.  Hopefully that means the interest rate tightening cycle is over....

This has been a different than traditional end to an unatural boom-bust business cycle caused by a pandemic (and the response to the pandemic).  I guess its not surprising that 'this time is different'.

This was an interesting journal article today -- Goldman also saw this coming as setup to 23/24.  Will be curious how the next step evolves.

https://www.wsj.com/economy/central-banking/the-fed-contrarian-who-saw-the-soft-landing-coming-9a4f1b9f

[TSmith34, Inc.]

Economy softened in January.  Sales, Production and Consumer were down, Employment neutral. Still sideways.

https://www.chicagofed.org/research/data/cfnai/current-data

Bring on the rate cuts!

[MU82]

From the Washington Post's "The Color of Money" newsletter:

A surge in the stock market has thrust more retirement investors into the millionaires club.

Data released Tuesday by Fidelity Investments found that the number of employees with 401(k) balances over $1 million rose 41 percent in the fourth quarter of 2023 compared with the same period a year earlier.

Fidelity Investments, one of the largest administrators of workplace plans, said it had 422,000 401(k) millionaires at the end of 2023, a nearly 21 percent increase from the third quarter.

The number of IRA millionaires hit a record 391,562 in the fourth quarter, about 40 percent higher than a year earlier.

It’s been a rocky road for this group of investors. The number of IRA and 401(k) millionaires started to drop in 2022 because of market conditions.

The average age of the 401(k) millionaires is 59, but their wealth accumulation isn’t just a function of time — it also stems from good investing practices. The number of people in Fidelity’s millionaires club remains relatively small — 1.8 percent of 401(k) participants and 2.61 percent of IRA holders — but they demonstrate a lot of positive behaviors that other investors should follow, such as not panicking when there’s a market downturn.

“They’re a great example of people who have really stuck with it and taken a long-term approach to their retirement savings,” said Mike Shamrell, Fidelity’s vice president for workplace thought leadership.

The median balance among the millionaires is $1.34 million.

[Dr. Blackheart]

Bring on the rate cuts!

One would think soon. Let's see what happens in DC and then wait for the March CPI release. Powell wants the long-term deficit addressed.

[jesmu84]

https://www.visualcapitalist.com/median-house-prices-vs-income-us/

Median house prices 6x median income

[Jockey]

https://www.visualcapitalist.com/median-house-prices-vs-income-us/

Median house prices 6x median income

Corporate takeover of housing market.

[The Hippie Satan of Hyperbole]

Corporate takeover of housing market.

Eh. Mostly due to lack of new construction supply.

[Jockey]

Eh. Mostly due to lack of new construction supply.

Definitely. But in a tight market. corporate ownership of about 4% of single family homes in the US is huge.

[GOO]

The good news is that China’s construction is about to implode even more. So construction goods will be cheaper, that is already happening. If we’d recruit and let some of their foreign construction workers in we could create some housing supply in the USA again. We won’t do either, of course. But at least hard input costs will go down. So lack of construction labor will still be a supply constraint. Probably larger margins and profits for housing corps as hard costs go down but lack of supply due to labor shortage, so  they won’t have to lower prices. So buy housing sticks if your a that type of  chasing investor. Higher profit set up.

Now that could also be bad news as China’s economy contracts. Second largest economy and not buying our debt could be an issue for our 10 year bond rates if we want them down. Could see inflation lower but more stubborn bond prices.  And if China gets really bad, we may slow more than projected.

[Hards Alumni]

The good news is that China’s construction is about to implode even more. So construction goods will be cheaper, that is already happening. If we’d recruit and let some of their foreign construction workers in we could create some housing supply in the USA again. We won’t do either, of course. But at least hard input costs will go down. So lack of construction labor will still be a supply constraint. Probably larger margins and profits for housing corps as hard costs go down but lack of supply due to labor shortage, so  they won’t have to lower prices. So buy housing sticks if your a that type of  chasing investor. Higher profit set up.

Now that could also be bad news as China’s economy contracts. Second largest economy and not buying our debt could be an issue for our 10 year bond rates if we want them down. Could see inflation lower but more stubborn bond prices.  And if China gets really bad, we may slow more than projected.

China has bought less US debt over the last ten years, and that has been made up for by the UK and Ireland... as well as more domestic debt.

Either way, China in a recession is terrible news for the world.  The economy is global and a downturn there will impact everyone.