US Economy thread

[Frenns Liquor Depot]

The sharp red line up at the end is because the government gave people money + spending crashed during the pandemic (which fed the inflation when the spending restarted). In my opinion it’s kind of silly to feel good about this from a political standpoint.

[Skatastrophy]

I don’t know if squealing louder gets the job done, but if I were an incumbent in an election year and two thirds of the electorate thought I was doing a crappy job on the economy that might get my attention. Telling those people how good they have it doesn’t appear to be doing much good anywhere except Scoop.

You can only tell the electorate that if rates get cut that the economy will overheat and inflation will pop so many times. It's not like they (or like half the people on scoop) understand the economy or inflation anyway. The only way to improve the situation for the majority of the electorate is to raise rates, or to wait. The fed is hoping that waiting will do the trick, along with using their words to temper manipulate market expectations.

Not that any of that has to do with the executive branch.

[Lennys Tap]

You can only tell the electorate that if rates get cut that the economy will overheat and inflation will pop so many times. It's not like they (or like half the people on scoop) understand the economy or inflation anyway. The only way to improve the situation for the majority of the electorate is to raise rates, or to wait. The fed is hoping that waiting will do the trick, along with using their words to temper manipulate market expectations.

Not that any of that has to do with the executive branch.

Except that the president (with the consent of the Senate) names the Fed Chairman.

[Skatastrophy]

Except that the president (with the consent of the Senate) names the Fed Chairman.

And JPow has been doing a bang up job for 6 years now.

Edit: Here's a rundown of how unbelievably good the US economy is doing - https://www.federalreserve.gov/econres/notes/feds-notes/why-is-the-u-s-gdp-recovering-faster-than-other-advanced-economies-20240517.html

People in the US are feeling very minor pain in the recovery since covid compared to their peers in other countries. Again, though, the electorate won't care about that stuff.

[jesmu84]

The sharp red line up at the end is because the government gave people money + spending crashed during the pandemic (which fed the inflation when the spending restarted). In my opinion it’s kind of silly to feel good about this from a political standpoint.

Of course, a good amount of the inflation could have been avoided had Congress/the government acted in the best interests of is citizens

[Goose]

As I have mentioned before, we will see how strong the economy is for many Americans in November. If I were Biden, I would not be touting the economy too hard.

[Skatastrophy]

As I have mentioned before, we will see how strong the economy is for many Americans in November. If I were Biden, I would not be touting the economy too hard.

Case in point

[Goose]

Skatastrophy

I thought Lenny made a great point a week or so ago when he acknowledged that our economy was the best compared to the rest of the poor recoveries. My point on the economy has been that I do not understand how people making an average or below average wage are making it. To be honest, I am not sure Trump can fix what I believe to be wrong with the economy. That said, I think Biden is crazy for talking about economic success.

[4everwarriors]

Oh, butt he inherited inflation, aina?

[Goose]

Doc

That makes me laugh. I think any D that is not afraid that economy can very easily be Biden's downfall is either lying or drank the Kool-Aide. I am sure there will be 10 posts showing economic numbers and record stock market, but I think that is all for show. Good news, time will tell how strong the economy really is for a lot of Americans.

[4everwarriors]

Goose, money talks and bullchit walks, hey?

[Spotcheck Billy]

Skatastrophy

I thought Lenny made a great point a week or so ago when he acknowledged that our economy was the best compared to the rest of the poor recoveries. My point on the economy has been that I do not understand how people making an average or below average wage are making it. To be honest, I am not sure Trump can fix what I believe to be wrong with the economy. That said, I think Biden is crazy for talking about economic success.

The bolded likely could be said about every generation in the US, now isn't necessarily any worse.

[Goose]

Spotcheck

You may be correct. That said, I have had more conversations about this topic in the past 1.5 years than any time in my life. There is no doubt that everything is not equal, but I think the % of people struggling to make ends meet is higher than usual. So, do you think it is worse now or not necessarily worse now?

[The Hippie Satan of Hyperbole]

Skatastrophy

I thought Lenny made a great point a week or so ago when he acknowledged that our economy was the best compared to the rest of the poor recoveries. My point on the economy has been that I do not understand how people making an average or below average wage are making it. To be honest, I am not sure Trump can fix what I believe to be wrong with the economy. That said, I think Biden is crazy for talking about economic success.

Regarding the bolded, a lot of people live pretty simple, low cost lives.  But they are the ones that inflation hurts the most because they don't have the margin for error.

But I wholeheartedly agree with your point that the economy can hurt Biden because of the above. I think the economy is always the biggest issue in any election, (2020 was an outlier here) even though the President only has a marginal impact on it.

[MU82]

Goose:

Of course Trump can't fix it. He helped break it during his first term.

Presidents have a very marginal role in the health of the overall economy. Had any of 17 GOP candidates won the nomination in 2016  and then beat Clinton, that president would have signed the tax cuts into legislation. That was classic conservative policy, the kind the GOP used to be about.

And after Covid struck, any GOP president (and any Dem president) also would have signed the bipartisan stimulus package, which also turned out to have stimulated inflation.

Biden and the Dems then enacted even more stimulus. Combined with the strong recoveries for hundreds and hundreds of corporations, and the relatively low work-force participation that led to wage increases, that goosed inflation.

Inflation still exists. It's now growing at roughly the same annual pace as it did from 1960-2022 (3.5% to 3.8%, depending on which numbers one looks at). Firing Powell won't change that.

Although most GDP, employment, corporate earnings and related statistics suggest the economy is quite strong - and although we all know that Trump and his acolytes would be calling this exact economy The Strongest Economy In The History Of Economies! if he were presiding over it - I do agree with you, Lenny, Sultan and others that the data will not matter if enough Americans lack confidence about their own economic situations. And yes, it could be one of the things - maybe even the main thing - that costs Biden his job.

[The Lens]

Goose:

Of course Trump can't fix it. He helped break it during his first term.

Presidents have a very marginal role in the health of the overall economy. Had any of 17 GOP candidates won the nomination in 2016  and then beat Clinton, that president would have signed the tax cuts into legislation. That was classic conservative policy, the kind the GOP used to be about.

And after Covid struck, any GOP president (and any Dem president) also would have signed the bipartisan stimulus package, which also turned out to have stimulated inflation.

Biden and the Dems then enacted even more stimulus. Combined with the strong recoveries for hundreds and hundreds of corporations, and the relatively low work-force participation that led to wage increases, that goosed inflation.

Inflation still exists. It's now growing at roughly the same annual pace as it did from 1960-2022 (3.5% to 3.8%, depending on which numbers one looks at). Firing Powell won't change that.

Although most GDP, employment, corporate earnings and related statistics suggest the economy is quite strong - and although we all know that Trump and his acolytes would be calling this exact economy The Strongest Economy In The History Of Economies! if he were presiding over it - I do agree with you, Lenny, Sultan and others that the data will not matter if enough Americans lack confidence about their own economic situations. And yes, it could be one of the things - maybe even the main thing - that costs Biden his job.

Ironically a lot of polling is showing a majority of Americans are reporting their own situations are good (or better) but they view the economy as down. There is an incredible amount of misinformation out there, for instance...

New Harris-Guardian poll:

- 56% say US is in recession (reality: 7 straight quarters of positive GDP growth)
- 49% say stocks are down YTD (reality: S&P500 up 12%, the Dow is up 2000 points)
- 49% say unemployment at a 50-year high (reality: U3 has been under 4% longer than any period since the 1960s)

h/t Derek Thompson on X

[Jockey]

Ironically a lot of polling is showing a majority of Americans are reporting their own situations are good (or better) but they view the economy as down. There is an incredible amount of misinformation out there, for instance...

New Harris-Guardian poll:

- 56% say US is in recession (reality: 7 straight quarters of positive GDP growth)
- 49% say stocks are down YTD (reality: S&P500 up 12%, the Dow is up 2000 points)
- 49% say unemployment at a 50-year high (reality: U3 has been under 4% longer than any period since the 1960s)

h/t Derek Thompson on X

To state the obvious - people are stupid.

[4everwarriors]

Damn straight, hey?

[Goose]

The Lens

How much do think people that own homes and have 401k's feel differently about the economy vs people that do not? I have been saying for the past couple of years that a lot of average people think they are smarter and wealthier than they really are based off of home appreciation and increase in 401k. The rapid rise in home prices and stock market has created a false sense of security to some people, imo.

[MU82]

Ironically a lot of polling is showing a majority of Americans are reporting their own situations are good (or better) but they view the economy as down. There is an incredible amount of misinformation out there, for instance...

New Harris-Guardian poll:

- 56% say US is in recession (reality: 7 straight quarters of positive GDP growth)
- 49% say stocks are down YTD (reality: S&P500 up 12%, the Dow is up 2000 points)
- 49% say unemployment at a 50-year high (reality: U3 has been under 4% longer than any period since the 1960s)

h/t Derek Thompson on X

Yep. When "leaders" constantly scream that the economy is a disaster and that economic doom is imminent, you get those kinds of ill-informed poll results.

In his last speech, the previous president claimed that gas in California "just hit $7.21" (actual price: $5.32), claimed that the federal government's employment numbers are "totally fake" ... but then claimed "credit" for the job recovery under Biden, and so on and so on.

It's like the election lies. Approximately 1/3 of Republicans serving in Congress now spread their cult leader's lies about the 2020 election and/or cast doubt about results of elections that haven't even taken place yet. Christina Bobb, recently indicted for alleged involvement in Arizona's fake-electors fraud, has been named the RNC’s head of “election integrity,” for crissakes.

So yeah ... the stock market is way up, GDP is strong, and unemployment is near a record-low, but many who are easily conned believe the exact opposite is true.

[The Lens]

The Lens

How much do think people that own homes and have 401k's feel differently about the economy vs people that do not? I have been saying for the past couple of years that a lot of average people think they are smarter and wealthier than they really are based off of home appreciation and increase in 401k. The rapid rise in home prices and stock market has created a false sense of security to some people, imo.

I think it factors greatly.  However those that own homes and have 401k's are always going to feel better.  And over a long period of time those two things will always appreciate.

If you want to convince me that we've gutted the middle class and it's harder to live off a basic middle class salary, I would totally agree.  But no politician is offering a solution.

[Skatastrophy]

Skatastrophy

I thought Lenny made a great point a week or so ago when he acknowledged that our economy was the best compared to the rest of the poor recoveries. My point on the economy has been that I do not understand how people making an average or below average wage are making it. To be honest, I am not sure Trump can fix what I believe to be wrong with the economy. That said, I think Biden is crazy for talking about economic success.

Yeah Lenny and I are in agreement. The Economy is doing very well but people in the US are hurting, and they won't care how much less they are hurting when compared with peasants in other countries.

[Goose]

82


I have asked this question to a good number of people and curious on your thoughts. For anyone that has owned their own home for 5+ years, could they afford to buy that same house today based off of their current income? Virtually everyone said there was a good chance they could not. Those that said yes stated that it would definitely make other living expenses much tighter.

My point is that I 100% believe there is a false sense of security for a good number of Americans. IMO, they likely are the ones that firmly believe the economy is strong. In their defense, it is strong for them because they have a lot more paper wealth than five years ago. I fall into that category but do try and look at the big picture. I highly doubt I would feel so good if my 401k dropped by 25% and my home back to 2000 price levels.

[rocky_warrior]

Lol Goosenomics:  If you price in a 25% haircut on all assets the economy doesn't look so good!

[The Lens]

82


I have asked this question to a good number of people and curious on your thoughts. For anyone that has owned their own home for 5+ years, could they afford to buy that same house today based off of their current income? Virtually everyone said there was a good chance they could not. Those that said yes stated that it would definitely make other living expenses much tighter.

My point is that I 100% believe there is a false sense of security for a good number of Americans. IMO, they likely are the ones that firmly believe the economy is strong. In their defense, it is strong for them because they have a lot more paper wealth than five years ago. I fall into that category but do try and look at the big picture. I highly doubt I would feel so good if my 401k dropped by 25% and my home back to 2000 price levels.

I was at the Business Journal Power Breakfast where Baird's Steve Booth spoke. 

He said they are no longer planning for a recession. Their models show 25% chance in 2024 and 15% chance in 2025. If you asked him in 2023 he would have said 75%.

I'm not saying this is gospel but I wonder if you're worrying for nothing? 

Beyond that when have US home values dipped to 25 year lows?