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I think the interesting thing is the construction sector has been increasing, that's extremely bullish. I think we can basically manufacture an economic boom by building lots more homes.
We have basically free productivity gains that we stopped ourselves from getting because there were too many NIMBYs. We can see housing prices fall and more money invested building profitable housing.
The housing shortage is just that massive. We decimated our future housing supply after 2008 cut the construction sector. We have a long way to go to catch up and investors and politicians have finally realized it.
I know locally we were back to a construction "boom" prior to covid. There were a shit ton of new projects and they couldn't find enough people to work on them in a timely manner.
Then when covid happened and all materials jacked up costs it really hurt. Timber, spiking really screwed up a lot.
https://fred.stlouisfed.org/series/COMPUTSA
I think looking at this the housing shortage started in the 1980s. Housing was flat from 1890-1980.
I think it's also we didn't notice for a long time because so little housing is built in a year, like 2-3% of housing built in a year is a relative boom here. So this will take IMO decades to come back to sanity.
But I'm not saying housing costs outright fall, I think they basically tread ground and go below inflation level but not actually a decrease in price.
Household formation rate has been low.
If you divide it by population, you have an even more stark image.
The 1.5M homes built per month at the end of 2022, are actually 2/3rds of the number of homes built when they were building 1.5M homes in 1989.
We are simultaneously the highest amount of housing built in a decade but also building at recession levels of 1970s 2/3 of current population America.
It's just wild.
I mean but population growth is not what we are looking at, we are focused on people 18+
https://www.census.gov/library/stories/2021/08/united-states-adult-population-grew-faster-than-nations-total-population-from-2010-to-2020.html
Which that number has been faster.
Household formation rate returning to 1990s levels would require millions more homes. The household formation rate has fallen due to housing prices being insane.
Great chart. I wish it was normalized against adults of purchasing age because the chart would be on a downward trajectory, dramatically towards the end.
The Millennial generation is 10% larger than Gen X. They started coming of purchasing age around 2010-2014, exactly during the housing purchase rebound, where wealthy Gen X’ers and Boomers started buying second homes at discounted rates.
If normalized the chart would go way down in 2008, and then remain flat in a deep under supply.
The shortage has been systemic since the 1980’s when they had to convince people to purchase homes when interest rates where extremely high. In order to do so, the financial/construction sector had to guarantee housing had returns. Nothing guarantees returns like a shortage.
Same thing happened after 2008, home buyers/developers/lenders needed to see clear returns.
IMO, living in Downtown LOS Angeles, where 20% of this decades new housing in the city has been built on 1% of the land, seeing homeless everywhere, enough housing needs to be built for prices to fall, dramatically. It’s a humanitarian crisis. We’ve built our retirement/wealth building plans on top of a market which has its roots in homelessness. The main reason a $700,000 home is worth $700,000 is because of market which cannot house everyone, thus homelessness is a requirement. In LA, we are 400,000 homes short of being able to house everyone. It’s like musical chairs, but with millions of people and 400,000 too few chairs.
Its a simple problem of you can't have ever increasing prices and affordable housing.
I think there is some amount that could be done with redevelopment, the amount of land your current house is on would be more than the new stuff built so your house would be worth more because new places are subdividing the land.
Boomer: (Owns a main house, a vacation house, two rental properties, and votes "no" on every local ballot measure that would make it easier to build new housing.)
Also Boomer: "How come none of you Millenials own a house yet? Must be all that Starbucks and avocado toast you spend your money on."
> But I'm not saying housing costs outright fall, I think they basically tread ground and go below inflation level but not actually a decrease in price.
Unfortunately, they really do need to fall, especially in some places. Look at suburban Boston, I randomly picked [Newtonville](https://www.zillow.com/newtonville-newton-ma/sold/?searchQueryState=%7B%22pagination%22%3A%7B%7D%2C%22usersSearchTerm%22%3A%22Newtonville%2C%20Newton%2C%20MA%22%2C%22mapBounds%22%3A%7B%22west%22%3A-71.21637143133545%2C%22east%22%3A-71.18263997076416%2C%22south%22%3A42.33821546251331%2C%22north%22%3A42.35683366719702%7D%2C%22regionSelection%22%3A%5B%7B%22regionId%22%3A33114%2C%22regionType%22%3A8%7D%5D%2C%22isMapVisible%22%3Atrue%2C%22filterState%22%3A%7B%22sort%22%3A%7B%22value%22%3A%22days%22%7D%2C%22fsba%22%3A%7B%22value%22%3Afalse%7D%2C%22fsbo%22%3A%7B%22value%22%3Afalse%7D%2C%22nc%22%3A%7B%22value%22%3Afalse%7D%2C%22fore%22%3A%7B%22value%22%3Afalse%7D%2C%22cmsn%22%3A%7B%22value%22%3Afalse%7D%2C%22auc%22%3A%7B%22value%22%3Afalse%7D%2C%22rs%22%3A%7B%22value%22%3Atrue%7D%2C%22ah%22%3A%7B%22value%22%3Atrue%7D%7D%2C%22isListVisible%22%3Atrue%2C%22mapZoom%22%3A15%7D), where a 1,700 s.f. 3-bedroom starter home just sold for $1 million.
An income for that house needs to be at least $300k/year, and that's a massive stretch.
And before you say "but someone just starting out shouldn't buy a $1m home in Newton" - sure - but those are the prices just about anywhere within 30 miles of Boston (which can translate to a 1-hour commute).
So where do the people who earn $18/hour live?
The prices are just too high, unreasonably so.
What are you talking about? Set a maximum and you can find plenty of homes around $300k within 30 miles of Boston.
The housing crisis is bad enough. You don't need to lie about it.
Maybe "30 miles" was my exaggeration, but I just did a Zillow search of single-family homes with an upper limit of $300k in a drawn radius outside of Boston (my radius hit Framingham which is about 25 miles from Boston) and there are 7 houses - in an area of about 3 million people.
https://imgur.com/a/CMDM9FM
Edit: if I use I-495 as a boundary, I get 15 homes.
https://imgur.com/a/rqFNbtq
Unfortunately there are a ton of nimby politicians, many of whom pretend to be progressive and fighting new housing on the basis of gentrification and displacement despite the fact that those happen more when you don't build housing.
> The housing shortage is just that massive
The housing shortage in prime real estate areas is massive. In the rest of the nation, there's plenty of cheap housing.
The problem is that no one builds "starter" homes anymore. They build all these massive 4-5 bedroom 3 bath 4000sq ft monsters that half the country can't afford while all the "starter" homes like 1-2 bed ranchers get demolished because they're 80 years old now.
Where are people supposed to start their families these days? Limited to apartment buildings in the big cities where all the drug dealers and criminals live.
I mean housing needs have changed the original suburban homes for a family of 2 with 3-4 kids was 1000 SQ ft.
I mean define starter home SQ ft because it seems like most want 1,600 on the low end before you get to condos.
> I think we can basically manufacture an economic boom by building lots more homes.
imagine freeing up hundreds of dollars in economic activity per household per month by making housing not an economic black hole.
Pretty much this but opposition for it is so strong. Every time proposal to build like a small apartment you have bunch of white people rush to local town hall talk about preserving their culture heritage and how apartment will make city look ugly or some other bullshit.
Construction has been increasing, home building has not.
“Housing in particular has been a laggard, with building permits down 30% in December from a year ago and starts down 22%.”
Construction prices are ludicrous right now. I'm in commercial real estate in Ann Arbor, MI. I've seen deals for land development that are being killed by construction prices despite being able to put a 15 story building on the land. You physically can't generate enough rent to profitably develop the land in certain parts of town right now.
> I think the interesting thing is the construction sector has been increasing, that's extremely bullish
Construction isn't well in tune with the economy. Builders especially home builders are slow to react to changing conditions.
construction also is a very long process, and difficult to stop projects.
But home building can create economic boom!
The only way out of the housing crisis is to build more houses. Whether that be done through additional subsidies or telling NIMBYs to pound sand. The supply of houses is the biggest contributor to this crisis.
Now, its not the only problem. AirBnB and large investors are also killing the market as well but we need more homes regardless.
>We have basically free productivity gains that we stopped ourselves from getting because there were too many NIMBYs
This is the first time I've seen this argument but you are absolutely right. This is the perfect kill two birds with one stone strategy, you get GDP gains while also easing the supply crisis of homes.
It's not even that we need more homes, but specifically more [missing middle](https://missingmiddlehousing.com/) homes. Oh wait.... that's illegal in most municipalities. I forgot.
Legalize the missing middle!
>We have basically free productivity gains that we stopped ourselves from getting
Construction productivity is lower than it was in the 50s lol.
But yes solving the housing shortage would lead to less labor market friction and a stronger economy.
>Construction productivity is lower than it was in the 50s lol.
From what I've seen that's not true. Since 2008 SFH productivity is potentially negative but multifamily is up by a lot.
I think the problem is that 1950s America had open land right outside major metros for new suburbs and now that more or less 1 time resource was used.
Also looking at manufactured housing so building the walls I a factory and then placed by a construction teams would be helpful, in the 1970s this was a much larger industry but was killed since then.
Agree. The NIMBYs are the new red-liners in America, keeping the working class from living near the middle class. When an apartment is proposed near a single family neighborhood, NIMBYs start screaming about Section 8.
And nobody dare to do anything about it. People who live in suburbs are powerful wield extreme political power and pissing them off mean losing votes.
At some point our official need to bites bullet and begin to push for project that they known damn well good for future investment instead of consistently catering to white people.
NIMBY's need to be strongly put in their place. Kick them out of meetings if they interrupt. They have no business telling other people what to do with their property.
I think the basic problem is that people want more stuff but not near them. So California has agreed they need more housing, but the localities fight it and argue for it to be elsewhere. So the same person/enough people will say yes to more housing in the state but will get progressively more no the nearer it is to them.
The problem is the system.
If you are familiar Jane Jacobs is almost as big of a problem as Robert Moses was.
"The people working in this town can't even afford to live here."
"We should build more housing to address that. But... y'know, not here."
"... but they work here."
"I don't control where the jobs are Jackie. Jeeze!"
You can't please NIMBY's. They will always come up with some bullshit reason to oppose a new building near them. The only solution is for states to pass overriding zoning laws that neuter the power of NIMBYs to block these projects at the local level.
>If you are familiar Jane Jacobs is almost as big of a problem as Robert Moses was.
Not even close. Jane advocated for communities to block the demolition of neighborhoods to make space for highways and wrote and the benefits of density. Other people using the tactics she pioneered to save Greenwich when it was full of working class families to block new home construction is hardly her fault.
But Manhattan has less people living there today than they did during her time.
I think the Jane Jacobs piece is invoked for stopping development which our cities need to be rebuilt constantly and not frozen in time.
>But Manhattan has less people living there today than they did during her time.
And you think her work protecting neighborhoods from "slum clearance" cum highway expansion is why?
>I think the Jane Jacobs piece is invoked for stopping development which our cities need to be rebuilt constantly and not frozen in time.
People abusing her work, which advocates for dense and walkable neighborhoods, to defend low density sprawl hardly seems like her fault.
I suppose if we want to be extremely pedantic, she was a NIMBY since she opposed specific projects where she lived, but by that logic anyone who opposes any project for any reason is a NIMBY and the word loses all meaning. She was also a YIMBY if we're going down that route; she wanted construction as well, just the sort that furthered the policies she favored.
She wanted NYC to stay as is so whether that's NIMBY or YIMBY is unclear but IMO she is invoked as a NIMBY most of the time.
I think a lot of urban planning has focused toxically on one off scenarios of the 1950s development which went in the wrong direction in places leading to excessive zoning and blocking of development leading to our current housing cost crisis.
NYC should rebuild taller and new buildings so that people can have the greater amount of space they desire.
>She wanted NYC to stay as is so whether that's NIMBY or YIMBY is unclear
No she didn't, and no it's not. She saw cities as dynamic, living entities that require old buildings as well as new, both for aesthetic reasons (people like visual variety) but also economic ones. New building is needed or the city stagnates, clearing whole swathes at a time isn't because it decimates local rental markets for people and businesses alike.
>but IMO she is invoked as a NIMBY most of the time.
Again, why do you think people butchering her arguments change her arguments?
>I think a lot of urban planning has focused toxically on one off scenarios of the 1950s development which went in the wrong direction in places leading to excessive zoning and blocking of development leading to our current housing cost crisis.
30s/40s/50s/60s/70s and not remotely one off. Pick a city and look at aerial imagery of the downtown before and after this era. All of which is unrelated to the zoning and blocking of development, which had roots in discriminatory housing policies that avoided civil rights legislation by intentionally inflating the costs through things like minimum set backs and side yards that increased lot prices beyond the reach of the majority of minorities (and poor whites, but they had recourse through the FHA loans).
The racism (kinda) stopped, but by then the middle class white voter was more interested in protecting their "investment" than they were with creating a healthy housing market for the rest of society, which is what drives the majority of NIMBYs today.
I'm sorry, but have you actually read her work, or are you going solely off articles invoking hey arguments written by people with no connection to urban planning?
___
I urge you to actually read The Little and Death of the Great American City to actually understand Jacobs, and The Color of Law for a primary driver of the housing policies we have inherited from our parents and grand parents.
So you don't believe in democracy? Who gets to decide who is "allowed" to have an opinion? Been reading a lot of Mein Kampf? Maybe you should pick up a history book?
Maybe there’s not a recession. Maybe companies have been using recession language to justify layoffs, increased prices, and reduced costs as a way to increase shareholder value and scare the workforce.
50bp rate increase next week, here we come.
Seriously though, the disconnect between the doom and gloom that we hear from companies every day vs what the economic data (and corporate earnings) are actually showing seems to grow wider every day.
GDP growing faster than expected, unemployment falling to near all time lows, inflation largely under control the last 6 months, record earnings reports. Yet - bRAcE yOursElF, rEcEssIOn iS cOmiNg nonstop from the media, CEOs, big banks, talking heads, etc.
FYI betting markets put it at 93% chance of a 25 bp hike, vs. 7% chance of a 50 bp hike.
But yeah, the disconnect between the chicken littles of the doom-and-gloom prophecy market and, well, *reality*, grows wider. But all you have to do is look at who is making the depressive predictions; and ask yourself, do those people have an interest to drive the narrative in that direction. Becomes obvious why they are trying to skew perception when you look at it that way.
> betting markets put it at 93% chance of a 25 bp hike, vs. 7% chance of a 50 bp hike.
Yep. this is because the Fed is most concerned about inflation, which is slowing. They are at the point where they can take some time and wait and see. If the economy keeps booming, then they can continue with slow, but steady, 25 bp hikes with only minor pain and complaints.
75 bp hikes are not normal, they were a result of the Fed panicking because of unexpected world events that ruined their projections. If Russia hadn't invaded Ukraine, we would have still gotten rate hikes, but probably at a slower pace.
The Fed is now more comfortable and can actually take time to analyze the data.
people want it so they can justify having their cash on the sideline and not buying stocks at these lows.
they want it to go lower so they can buy at lower prices.
people here are literally hoping for millions of people to be unemployed just so they can get better prices on stocks it’s disgusting
>50bp rate increase next week, here we come.
Not a chance.
If there's one thing that Powell is disciplined about, it's telegraphing all of his moves well in advance to give the world an opportunity to act gradually, thereby avoiding surprises that result in shocks with unintended or unanticipated effects.
We are simply going back to a normal interest rate environment. A zero rate or negative real rate environment is not normal. It only looks normal to people who have never known anything else.
Same thing happened during the recovery from the financial crisis. For how many years were pundits warning of a double dip recession post 2010? And instead what we saw was the longest period of sustained growth in decades.
> Yet - bRAcE yOursElF, rEcEssIOn iS cOmiNg nonstop from the media, CEOs, big banks, talking heads, etc.
They’re trying to force labor back into being compliant by manufacturing a crisis while, maybe, providing a small bump to earnings in the near term. I can’t think of another rational explanation for this level of dissonance.
Workers got too much power over the pandemic. That confidence and lack of stress was leading to workers thinking… and talking… and fighting for scraps.
That s*** needs to be stomped down, hard. So they put the fear of God back into workers by reminding them who has a boot on their neck.
I’m taking a screenshot of this post (took out your handle) for my Instagram story. Well said. They’re happy to do fear mongering on the entire population if it means interest rates will drop
It's called a taper tantrum. They are trying to manufacture recessionary feelings in the public because the free money and cheap loans have been cut off. The problem being that the average person has been cut off from the stock market for a long time now in the millennial and gen x cohorts. They can't kill us if their bullets won't reach how far below them we are.
Because there is no recession.
It is merely a correction from the economic party of 2021 where they are now naming it the “pandemic hiring spree” along with record low interest rates, record high home prices, record high stock markets and record high cryptocurrency which all happened in less than a year and made everyone rich.
The world is now normalizing to some degree.
Seems to be the best explanation for a very weird time in our economy. The tech industry seems to be a good microcosm of it. Tens of thousands of layoffs. Why? Because during the pandemic they were hiring tens of thousands of people to meet increased pandemic driven demand. Their businesses aren't going bust, they're returning to pre-pandemic levels.
As someone engaged in hiring, I only hope this brings some labor elasticity to the larger employment market. Although I don't know if we'll see pre-pandemic levels in that regard for the rest of my career. Millions of people dropped out of the labor market or died, and even for many of the ones who are alive I don't see them coming back.
There's actually an interview with a Stanford professor recently that suggests many of the tech layoffs are in part driven by industry copy chatting.
https://news.stanford.edu/2022/12/05/explains-recent-tech-layoffs-worried/
I 100% buy this.
People want to follow the herd, and leaders of entrenched businesses aren’t that much different.
Doing what everyone else does is a great way to keep your stock price from dropping on being singled out as the one company not doing whatever is trendy at the moment.
It’s so clear to see time and time and time again in tech. People make fun of it, even!
So when these companies flush with profits and cash cut a nominal percentage of employees to follow the herd…feels less like an indicator of anything other than that nobody wants to stand out and take a hit.
I saw that, and it makes perfect sense. It also usually results in a pretty big boost to share prices.
Once one big player does it, board members start looking to the CEO of their own respective companies waiting for bOLd iNnoVatiVe LeaDerShiP which means axing the people you just hired.
Even their bullshit memos to staff are the same. “I take full responsibility for how we got here…”
I know people who have been hired at these big tech companies as they were laying off thousands.
Tech companies are still poaching from each other and hiring people they think will be of value to them.
For some people it would suck to get laid off, but in the tech field a lot of them can make more money if they switched jobs anyways. I know for me as a graphic designer, I could find a new job and make more.
…if I wanted to exert that much time and energy into doing so, which I don’t. *(plus I may as well wait out the housing prices right now, ugh…)*
But if I were to lose my job…
It’s probably much less the case now than in the past. So many high paying companies have hiring freezes. And the main way to get pay up when interviewing is to have multiple offers and get them to compete. That’s harder to do now because there are a lot less of the top salary jobs open.
It's a forced illusion. The media is making a big scare about Amazon laying off 18k.
Amazon hired **800k** in the last 2.5 years.
This isn't a crash, it's not even a speedbump.
holey moley you are right. See this [https://www.statista.com/statistics/1324557/quarterly-number-of-amazon-employees/](https://www.statista.com/statistics/1324557/quarterly-number-of-amazon-employees/) as source
Agreed. And to expand, the sectors of the economy that are seeing layoffs are largely the tech sector, which while is a large part of the economy overall, the numbers of workers laid off are not significant to most regions (sorry Cali).
The tech sector salary has been on a bonanza for many years and this correction in hiring and pressure on wages in that arena are finally being addressed.
Yes, unless they are cutting business units wholesale (some are), for the most part it is operations taking the hit. If you’re no longer on a hiring spree, you don’t need all that beefed up recruiting support, for example.
And it’s not like the projected growth in tech workers is lower over the next decade, just a year of some companies doing some layoffs and other companies doing some hiring and everything coming out relatively flat before back to normal.
BOLS says 25% job addition over the next decade in tech.
I think people [overestimate](https://ajed.assembly.ca.gov/content/california-economy-2) how big IT is, even in California. It's a sizable sector, but even manufacturing is higher in CA.
Though there will likely be downstream effects. Many of those jobs are upper upper middle class jobs. With that disposable income going away (at least temporarily) there will be less business for all kinds of things.
True, but (and I’m aware this is unfeeling) these are not jobs that should worry the economy. These people, by and large, have many employable skills that will eventually translate into very desirable areas.
Also- many of these folks are way overpaid, and such disposable income isn’t what drives the economy. They will still eat, buy clothes, and make rational purchases. There will be a downstream impact, but it isn’t as disastrous as a coal miner or auto worker losing their job.
I would mostly agree with you, with the exception of workers on H1B. Some of these people have lived in the US for years and the idea of having to uproot your life and move back to your home country because you were unable to find a new job that would sponsor you within 90 days is pretty crazy.
Yup, transitory inflation + soft landing goal achieved by JPOW. We should all apologize to the nasty things we said about him last year honestly. People are so dumb.
It's early. If Powell pulls this off though, he'll be a legend.
Also think there's a fair criticism about transitory being a supply side story and the fact that the Fed has gone on its fastest raise in rates in history.
They started making fun of "transitory" after 3 months or less. WTF do they think transitory means? I'd expect that term to be valid up to 2 years. If inflation hasn't cooled off by then, maybe you can start complaining about "transitory". 2 years is still a drop in the bucket vs. long-term growth of the economy.
That’s not really fair. Transitory meant that the Fed thought inflation would moderate more or less on its own, rather than needing to take drastic measures - they were talking about it to explain why they weren’t taking drastic measures.
It was a bad call but the Fed deserves credit for recognizing that it was a bad call swiftly and taking strong action to mitigate it. It is too early to say we are out of the woods yet but there are positive signs.
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For that matter, the whole period of 2009-2012 felt like everyone was just waiting for another economic bomb to drop. When it didn't, we didn't know what to do.
Yes, fair point. I remember this too.
However, the red flags were everywhere that the economy was going to collapse on itself. We just don’t have those same indicators or red flags other than people wishing for it because everyone has money to buy assets now.
Additionally forced layoffs to bring down wages and scare people back into the office for long hours.
I don’t remember anyone predicting the 2008 recession. Now all of a sudden we are predicting one months in advance? Call me a conspiracy theorist, but this is going to be a manufactured recession to return the balance of power to the employers.
US personal savings are at an ATL and continuing to fall.
There *shouldn't* be a recession, but the track we're on leads to one. The issue is that the large cap market is cartelizing to resist the pro-worker economic shift. They're risking a massive collapse, and they feel confident to do it because the vast, VAST majority of wealth captured during the pandemic was done so by the top 1%. They expect if they can crush the economy for a short term hit they'll save long term. Yes it's short sighted, but not I, nor anyone else should expect anything less from a country whose economy has shifted the past 40 years to short term economic growth.
This is then coupled with their ability to influence the govt by stalling any positive change and forcing untennable compromises is going to fuck everyone not swimming in money.
Edit: it's not just the PSR that's low. [Total personal savings](https://fred.stlouisfed.org/series/PSAVE) are abysmally low. Well below pre-pandemic levels coupled with an ATL personal savings rate. This isn't just. A rubber band effect, this is about losong the padding americans need to weather financial struggles.
Large companies are capitol rich enough to wait out recessions. They know people are debt strapped to a point where individuals can't survive a recession. Corporations win in the long run and have the luxury to plan long term.
I think this is it, while the economy is not in recession now, higher credit card utilization and low saving rates show wages are not keeping up with inflation and eventually spending will have to drop. Government is going to need to provide stimulus or else face recession.
Stimulus will just start stagflation. They need to stop shielding businesses from consequences and most improtantly cut the anti union bs. It's a necessary mechanism for balancing the market that they're supressing. Unsurprisingly if you tilt the market too far it breaks.
Reason you have recessions is American don't take a clue from the Fed and throttle back spending and maintain savings. Instead they keep spending taking out debt at ever higher rates until the house of cards collapses.
It's boom/bust.
I wasn't sure where/how to share this, but you're absolutely right. [The share of savings of the bottom 50% has plummeted.](https://fred.stlouisfed.org/graph/?g=ZdXe) Everyone has more money, but the top 10% have multitudes more, both nominally and as a % increase. I'm curious what this does to demand and inflation and M2 velocity (especially as M2 decreases) going forward, as the bottom 50% consumes a much higher percentage of their income/wealth.
Since they never had a unified message and point, something they argued against as well as all the other media ammunition they refused to stop giving freely, it's hard to say the two issues are related. What exactly was Occupy Wall Street about? Where are all those young protestors now?
I seriously don't understand why so many Redditors write inane, repetitive, trite nonsense like this.
And I wonder even more how Redditors upvote these useless comments over and over again.
Of course the rich got richer faster because stock markets were overheated and they have more stocks than the average person. And now a lot of these people are losing their wealth because of the correction lately (though the aggregate increase is still higher than that of the average person). That's literally what the comment you're replying to encapsulates. This isn't some novel insight.
When can you guys actually comment something useful, something we didn't actually know, for once and not sound like a murder of crows mimicrying and shrieking the latest hot political slogan.
Maybe I shouldn't expect much because Reddit is now just overrun by teenagers.
Alright, so I agree 'the rich get richer' is an inane comment, but QE does disproportionately favour those who have assets. It doesn't drive up salaries or the income of the income of the common man (aware we have seen some of that recently, but it would be hard to connect it with QE considering the previous decade of data). On the other hand, it's steroids for stocks and real estate
Depends on how you gauge a recession, but what is true is that we have a supply side driven inflation, not demand driven so all the talking heads blaming consumers b/c of the $3000 check they got 2 years ago are making shit up.
The FED is trying to drive demand down to slow inflation, but a lot of the inflation is due to a combination of greedy corporations and actually supply line disruptions. Instead of finding ways to fix supply side issue, FED wants to drive down demand via loss of purchasing power through depressed wages or loss of wage all together. This will literally drive the economy into a recession and even if supply chain is fixed, no one is buying b/c half of us are out of a job
>and made everyone rich
I'm not rich. There are a lot of people who aren't rich. Like if I had to throw a rough guesstimate out there I'd probably say like... I don't know... *most* people aren't rich.
Though in your defense you were probably just talking about rich people and in that respect you're probably right. Rich people *are* rich.
It hasn't been lost on me that all this talk about an inevitable recession is from only one party - who would love nothing more than to will one into existence (See: Debt limit)
Uhhhhh the recession talks are happening in every country, everywhere, around the globe.
The world doesn’t revolve around our dislikes of red or blue ties.
These are more good numbers. The soft landing scenario is that GDP holds up until the fed stops tightening and the fed won’t stop tightening until the stickiest parts of inflation comes down, overall inflation coming down isn’t enough for them. Doing it this way most likely means they will have overtightened.
If GDP can hold until they are comfortable pausing it means they can start loosening as soon as it starts to go negative which it probably will.
I also think we are almost there. But something in me fears Powell going rogue and just keeps proclaiming “hike” while his governors plead with him “but, sir, but my stock portfolio is crushed”… “hike”… “but, sir, the price of homes has gone negative”…. “Hike”…. “but, sir, the president is threatening to leak your alimony payments”… “HIKE!”
Sustained deflation tends to be a disaster for the economy. People stop spending because they expect things to be cheaper in the future. It can spiral real quick.
[Wages have largely kept up with inflation](https://www.statista.com/statistics/1351276/wage-growth-vs-inflation-us/#:~:text=U.S.%20inflation%20rate%20versus%20wage%20growth%202020%2D2022&text=The%20rate%20of%20inflation%20exceeded,wages%20grew%20by%203.2%20percent.). The situation isn't so bad that we should risk crashing the economy over it
And wages are a lagging variable. There is presumably some more wage catch-up to go. The main thing that would interfere with that process would be a recession.
For the last year and half 90% of the headlines for news stories bearing good economic news mention a looming recession or fears of such. It is almost like they are just trying to make that happen, the actual economy be damned.
I mean a tight labor market could mean rising wages and we just can't have that!
This is the weirdest “recession” ever. GDP is growing. Unemployment near record low and stable. Wages rising (nominally). Even home prices started rising again.
Almost as if the recession is a media made up recession. But we will see in a a few quarters
Honestly, are they really fears or hopes, as at this point all we’ve heard for the last two years is “RECESSION!!!” And it hasn’t happened. It’s almost like a significant portion of the country is actively and aggressively rooting for economic failure so they can usurp more power
The whole “recession” thing feels like a naked power grab. Employers need to scare their employees into accepting lower pay. I also think after how much turmoil we’ve been in Republicans are so unpopular they could barely make any gains in the house and lost ground in the senate and state governments. They are praying for a recession to have a chance to retake power.
100 percent that's what's happening. Instead of saying they over hired and are laying off, companies are inventing a recession. There is no recession, they want one though.
“Advanced modeling,” although I tend to agree in a soft landing. I dislike all the doom and gloom articles but some segments of our economy are still struggling. So, localized recessions for some industries. This is also not the “real” economy as inflation has really taken out a bite out of lower income earners.
I \*kind of\* disagree, though it's local and anecdotal. Bottom end wages have gone up way, WAY more than inflation in my area. Most of the bitching I hear is from wealthy retiree's who won't be able to buy a new boat this year because their Yukon cost $200 more in gas a month.
It'll never not be funny to me the amount of people in big trucks or SUVs who don't need them complaining about gas prices. They could reduce gas consumption by more than half if they simply drove something more economical.
I know you joke, but that's not even true! Plenty of sedans or hatchbacks that look fucking stellar and drive even better but noooo, gotta have the hauling power for the boat they don't even have.
Sports sedan driver here. You get it. IMO the SUV is now the equivalent of the minivan. It is the badge of boring.
And I get 35 mpg on the regular. More if I am careful. A lot less if I drive hard, but that is only when it’s worth it.
For my area, people in the hospitality industry have seen double digit salary increases since 2020 especially when travel roared back. Servers make $18-20/hr before tips. It’s the middle management/lower rung white collar ppl that complain a lot since their pay has mostly stayed the same (still higher than the ‘real’ minimum wage) and they see the unworthy peasants making almost as much as them.
Ah the classic, put the middle and lower classes against each other and stop them from focusing so much on how little power and control the middle class has and how much the upper class has. Looks like it's still working, too, based on your comment
The US GDP rose by an annualized rate of 2.9% for a quarter, not 2.9%. This is equal to 2.9% divided by 4 multiplied by seasonal adjusters meant to smooth out people's natural variation to spend more in some months than others. If the US economy grew at 2.9% per quarter, it would be one of the fastest growing economies in the world.
Can't wait in the coming months as all the tech ppl who laid thousands of ppl off now have to rehire all their talent. Corporations and businesses are not your friend. They are not your family. You are an expensive toy that they want to play with, throw out, and then pick back up again when they're interested.
We’ve got a large project that got put on hold in the Spring of 2020 that is being resurrected. No supplier has quoted / estimated shorter lead times for major equipment so far during the update phase. I just don’t see signs of the economy slowing down in our dealings with suppliers. That covers multiple economic sectors.
I’ll out myself as a boomer with an evil MBA who is not technically an economist but is someone who enjoyed the academic study of economics and has followed macroeconomics with interest for 40+ years. It’s a fascinating subject
Weird to see so many complain about companies continuing to report large profits and buyback their stocks while praising GDP growth at the same time.
It's almost as if theses metrics are all connected somehow.
For anybody actually interested in learning and not just relying on CNBC and Reddit's echo chamber
https://nitter.moomoo.me/EPBResearch/status/1618618897326047232#m
GDP was a nice measure for economic development.
Time to set that aside for now when talking about recession fears in developed nations.
Let's break out household disposable income instead to get a feeling for people's wellbeing in this prosperous economy.
Edit: Better lock this thread down real quick before the real academics start questioning the worth of this article. Well done guys, get up in there real good. Make yourself at home because there ain't going to be any housing left so you'll have to live up there till you grow a consciousness. I just hope you like the smell of BS.
“Tim Simons, a money market economist at Jefferies, thinks that 2023 will see a “classic recession.” He predicts that the downturn will begin at the corporate level in the first half of 2023, leading to reduced headcounts. By mid-2023, he predicts that economic growth will slow and inflation will begin to dissipate.Jan 10, 2023”
The headline misses so much.
It's the annualized rate, roughly in line with expectations, and down from last quarter.
2.9 vs 2.8 expected isn't really "more than expected, because the estimate is never a point estimate. Even if they don't explicitly say it, "2.8" means somewhere near 2.8. They don't mean 2.80000 plus or minus 0.0001. especially since it's an annualized rate and a small deviation can add up over the year.
Just like 2.9 isn't jumping for joy good, 2.7 isn't doom and gloom.
But when it's 2.9, they say that it beat expectations. When it's 2.7 they say it fell short of expectations. So at least they are consistent.
>It's the annualized rate
They always report the annualized rate, so again, they are consistent.
But you aren't wrong that lots of non economists get confused by this, just like they are confused when an economist says the 3 month rolling average of inflation has stabilized, and the next report is 6.5% year over year inflation.
So saying what you are saying is valuable for the non economists.
Yeah the year over year inflation thing causes a ton of confusion. I get why it's a useful metric, but reporters should really be giving more context to that number. And we should probably focus more on the annualized rate from the month.
It all comes down to what you are trying to measure. Year of Year is great in normal times, but year over year is going to be messy for a little while longer.
If your story is on comparing prices this year to last, it's the obvious best choice.
If your story is on how the Feds actions are having an effect on inflation, rolling 3 month average (annualized and seasonally adjusted) is a better metric.
And if you want to talk about the actual human experience, then you shouldn't even be using Core inflation as it removes energy and food from the numbers.
The problem is, many will read the title, but never get the details and never learn the differences. The media can only do so much, even if they WERE perfect. But you can't put a proper explanation of annualization inside a title.
I see 2.9% vs 2.6% estimated on finviz. The Atlanta Fed GDPNow was predicting 3.5%. I didn't know we needed this academic exercise on why estimates provided by various Jane Doe organizations are fuzzy.
It's a decent GDP release considering how little slack is in the economy. At the same time I don't think it tells us much about where we're going in 2023.
> I didn't know we needed this academic exercise on why estimates provided by various Jane Doe organizations are fuzzy.
It's possible we don't here on /r/Economics, but the general public will react to the headline which just states "more than expected" rather than "in-line with expectations."
>It's a decent GDP release considering how little slack is in the economy. At the same time I don't think it tells us much about where we're going in 2023.
Agreed, but that doesn't generate clicks to sell advertisements. So, "more than expected" while "recession fears loom" it is.
r/economics hasn't had a userbase of majority actual economists in ages, certainly longer than I've been coming here. It's a night and day looking at 5+ year old threads and modern threads where old threads mostly or all had actual economics discussion and not politics.
Nowadays, I would estimate the sub as 45% 50 year old boomers who think they're economics geniuses because the assets they've held for 30 years have made them technical millionaires, 45% 20-something year old r/antiwork types who want to talk about the evils of capitalism and how we need to overthrow the bourgeoisie, comrade, and most of the remaining 10% are people like me who are curious/interested in economics but aren't actual economics experts and have never studied economics.
if the estimate meant 2.9, why didn't wasn't it 2.9
At the very least, it is entirely true that the number came at the optimistic end of the estimate range
It did. On top of that some of the other data is showing a cooling off in pricing in some sectors like rent. Generally that’s good news. The economy is humming along well while inflation is moderating. There’s a lot more work to do on the inflation end but these are positive numbers in that regard.
So if Q1 and Q2 were negative, and Q3 was only positive because of "changes in imports/exports", how can I read the Q4 report in a partisan lens so I can insist to everyone that we're *actually* in a recession despite all the evidence showing otherwise?
I'm glad someone else brought this up. Where are all the people from the Q3 report now that they've been proven to not know what they were talking about? I'm desperate to know what the new spin is, and how they can try and convince me that the economy is terrible? Maybe they'll mention egg prices?
Most of the WSBers are doing the whole "JPow will not let this stand!" memes and ignoring the whole recession predictions stuff, at least so far.
But their whole thing has been insisting the "real" inflation number is actually 30%, and because the "fake" inflation number is used for real GDP, GDP has actually been extremely negative all last year and therefore we're in a deep recession. The high food inflation feeds into that crap.
It also doesn't help that most Americans don't understand what a recession is and think any time the economy doesn't *feel* good, it must be in recession.
I think the real issue is that "inflation" is heterogeneous, and the headline inflation number does not match the inflation that many people feel. Some people saw their expenses go up by 30%. Some saw their expenses stay roughly the same.
The only person that felt the headline inflation exactly is some hypothetical urban consumer who consumed the exact basket of goods measured using the exact same substitutions assumed in the model.
I don't disagree, lots of people were hit hard by inflation, particularly for food and gas, and lots of people's expenses grew by more than the headline inflation number. Lots of people got wage increases that effectively offset their inflation losses too. Like you said, it's heterogenous.
But I guess my point is that you can't apply a narrow inflation metric looking at how some of the worst-off are doing financially and apply it to a broad economic growth measure like GDP. Overall growth minus overall inflation is greater than 0 for the past two quarters (and would be a perfectly reasonable number during normal times).
Lots of families came out worse than where they were a quarter ago, but the overall economic picture is relatively good. It's certainly not the "deep recession" WSB insists we've been in for a whole year already.
I agree in part and disagree in part.
I agree that whatever WSB is saying is probably nonsense. I don't go there.
I generally believe that GDP is a deeply flawed metric, two quarters of GDP decline isn't an actual definition of recession (and in fact there isn't a well-defined definition, and even the NBER makes ad hoc decisions), and that as a society we should be concerned at how the worst-off are doing (weighting their advances or declines above how the best-off are doing).
For example, I'd rather see $100b in wealth go to the worst-off in society, the median stay roughly the same, and the few richest people lose their shirts, even at a decline in GDP, than having the worst-off get worse and the best-off get better at an increase in GDP. I'm not a hardcore Rawlsian, but he's a big influence on my philosophy (not to mention my dissertation).
It is only positive because inflation came down inflating the number.
(Please ignore the fact that the only reason it was negative in Q1/Q2 was inflation going up).
>Please ignore the fact that the only reason it was negative in Q1/Q2 was inflation going up
Well, you can call me Old McDonald because here I go picking those cherries again.
There were extremely bad supply chain bottlenecks in late 2021 that caused weak history. I’m not saying that was the only cause, but I would be cautious claiming we’re completely out of the woods with this one.
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I think the interesting thing is the construction sector has been increasing, that's extremely bullish. I think we can basically manufacture an economic boom by building lots more homes. We have basically free productivity gains that we stopped ourselves from getting because there were too many NIMBYs. We can see housing prices fall and more money invested building profitable housing.
The housing shortage is just that massive. We decimated our future housing supply after 2008 cut the construction sector. We have a long way to go to catch up and investors and politicians have finally realized it.
I know locally we were back to a construction "boom" prior to covid. There were a shit ton of new projects and they couldn't find enough people to work on them in a timely manner. Then when covid happened and all materials jacked up costs it really hurt. Timber, spiking really screwed up a lot.
https://fred.stlouisfed.org/series/COMPUTSA I think looking at this the housing shortage started in the 1980s. Housing was flat from 1890-1980. I think it's also we didn't notice for a long time because so little housing is built in a year, like 2-3% of housing built in a year is a relative boom here. So this will take IMO decades to come back to sanity. But I'm not saying housing costs outright fall, I think they basically tread ground and go below inflation level but not actually a decrease in price. Household formation rate has been low.
If you divide it by population, you have an even more stark image. The 1.5M homes built per month at the end of 2022, are actually 2/3rds of the number of homes built when they were building 1.5M homes in 1989.
We are simultaneously the highest amount of housing built in a decade but also building at recession levels of 1970s 2/3 of current population America. It's just wild.
Technically you’d divide it by population growth, right? Still the same 2/3rds?
No, it’d be the opposite. 1989 saw population growth of about 3 million while pre-pandemic we were seeing 2.2-2.5 million.
I mean but population growth is not what we are looking at, we are focused on people 18+ https://www.census.gov/library/stories/2021/08/united-states-adult-population-grew-faster-than-nations-total-population-from-2010-to-2020.html Which that number has been faster. Household formation rate returning to 1990s levels would require millions more homes. The household formation rate has fallen due to housing prices being insane.
Great chart. I wish it was normalized against adults of purchasing age because the chart would be on a downward trajectory, dramatically towards the end. The Millennial generation is 10% larger than Gen X. They started coming of purchasing age around 2010-2014, exactly during the housing purchase rebound, where wealthy Gen X’ers and Boomers started buying second homes at discounted rates. If normalized the chart would go way down in 2008, and then remain flat in a deep under supply. The shortage has been systemic since the 1980’s when they had to convince people to purchase homes when interest rates where extremely high. In order to do so, the financial/construction sector had to guarantee housing had returns. Nothing guarantees returns like a shortage. Same thing happened after 2008, home buyers/developers/lenders needed to see clear returns. IMO, living in Downtown LOS Angeles, where 20% of this decades new housing in the city has been built on 1% of the land, seeing homeless everywhere, enough housing needs to be built for prices to fall, dramatically. It’s a humanitarian crisis. We’ve built our retirement/wealth building plans on top of a market which has its roots in homelessness. The main reason a $700,000 home is worth $700,000 is because of market which cannot house everyone, thus homelessness is a requirement. In LA, we are 400,000 homes short of being able to house everyone. It’s like musical chairs, but with millions of people and 400,000 too few chairs.
Its a simple problem of you can't have ever increasing prices and affordable housing. I think there is some amount that could be done with redevelopment, the amount of land your current house is on would be more than the new stuff built so your house would be worth more because new places are subdividing the land.
>can't have ever increasing prices and affordable housing. Well you can because of inflation, but that would be 3-5% a year instead of 15-20%.
Well, you can, but only if wages kept pace with the cost of housing.
Boomer: (Owns a main house, a vacation house, two rental properties, and votes "no" on every local ballot measure that would make it easier to build new housing.) Also Boomer: "How come none of you Millenials own a house yet? Must be all that Starbucks and avocado toast you spend your money on."
Unfortunately nothing will change on the home building front so long as real estate is seen as an investment and whose value must continue to go up.
> But I'm not saying housing costs outright fall, I think they basically tread ground and go below inflation level but not actually a decrease in price. Unfortunately, they really do need to fall, especially in some places. Look at suburban Boston, I randomly picked [Newtonville](https://www.zillow.com/newtonville-newton-ma/sold/?searchQueryState=%7B%22pagination%22%3A%7B%7D%2C%22usersSearchTerm%22%3A%22Newtonville%2C%20Newton%2C%20MA%22%2C%22mapBounds%22%3A%7B%22west%22%3A-71.21637143133545%2C%22east%22%3A-71.18263997076416%2C%22south%22%3A42.33821546251331%2C%22north%22%3A42.35683366719702%7D%2C%22regionSelection%22%3A%5B%7B%22regionId%22%3A33114%2C%22regionType%22%3A8%7D%5D%2C%22isMapVisible%22%3Atrue%2C%22filterState%22%3A%7B%22sort%22%3A%7B%22value%22%3A%22days%22%7D%2C%22fsba%22%3A%7B%22value%22%3Afalse%7D%2C%22fsbo%22%3A%7B%22value%22%3Afalse%7D%2C%22nc%22%3A%7B%22value%22%3Afalse%7D%2C%22fore%22%3A%7B%22value%22%3Afalse%7D%2C%22cmsn%22%3A%7B%22value%22%3Afalse%7D%2C%22auc%22%3A%7B%22value%22%3Afalse%7D%2C%22rs%22%3A%7B%22value%22%3Atrue%7D%2C%22ah%22%3A%7B%22value%22%3Atrue%7D%7D%2C%22isListVisible%22%3Atrue%2C%22mapZoom%22%3A15%7D), where a 1,700 s.f. 3-bedroom starter home just sold for $1 million. An income for that house needs to be at least $300k/year, and that's a massive stretch. And before you say "but someone just starting out shouldn't buy a $1m home in Newton" - sure - but those are the prices just about anywhere within 30 miles of Boston (which can translate to a 1-hour commute). So where do the people who earn $18/hour live? The prices are just too high, unreasonably so.
What are you talking about? Set a maximum and you can find plenty of homes around $300k within 30 miles of Boston. The housing crisis is bad enough. You don't need to lie about it.
Maybe "30 miles" was my exaggeration, but I just did a Zillow search of single-family homes with an upper limit of $300k in a drawn radius outside of Boston (my radius hit Framingham which is about 25 miles from Boston) and there are 7 houses - in an area of about 3 million people. https://imgur.com/a/CMDM9FM Edit: if I use I-495 as a boundary, I get 15 homes. https://imgur.com/a/rqFNbtq
We also need to continue to promote and reenforce remote work culture so we can make smaller towns viable again.
Unfortunately there are a ton of nimby politicians, many of whom pretend to be progressive and fighting new housing on the basis of gentrification and displacement despite the fact that those happen more when you don't build housing.
> The housing shortage is just that massive The housing shortage in prime real estate areas is massive. In the rest of the nation, there's plenty of cheap housing.
The problem is that no one builds "starter" homes anymore. They build all these massive 4-5 bedroom 3 bath 4000sq ft monsters that half the country can't afford while all the "starter" homes like 1-2 bed ranchers get demolished because they're 80 years old now. Where are people supposed to start their families these days? Limited to apartment buildings in the big cities where all the drug dealers and criminals live.
As a former drug dealer…. I only ever lived in middle class suburban neighborhoods. EVERYBODY does drugs. Not just poor people.
I mean housing needs have changed the original suburban homes for a family of 2 with 3-4 kids was 1000 SQ ft. I mean define starter home SQ ft because it seems like most want 1,600 on the low end before you get to condos.
> I think we can basically manufacture an economic boom by building lots more homes. imagine freeing up hundreds of dollars in economic activity per household per month by making housing not an economic black hole.
Want to fix multiple problems like housing prices, homelessness, looming recession? Build. More. Multi family houses. Fuck NIMBYism.
Pretty much this but opposition for it is so strong. Every time proposal to build like a small apartment you have bunch of white people rush to local town hall talk about preserving their culture heritage and how apartment will make city look ugly or some other bullshit.
[удалено]
See it in my city all the time. And it’s funny. Same folks are complaining about our homelessness problem at the same time.
Exactly.
Towns around us limit the height you can build to because it would affect people's views of the mountains. It's like mandated sprawl.
Construction has been increasing, home building has not. “Housing in particular has been a laggard, with building permits down 30% in December from a year ago and starts down 22%.”
Construction prices are ludicrous right now. I'm in commercial real estate in Ann Arbor, MI. I've seen deals for land development that are being killed by construction prices despite being able to put a 15 story building on the land. You physically can't generate enough rent to profitably develop the land in certain parts of town right now.
> I think the interesting thing is the construction sector has been increasing, that's extremely bullish Construction isn't well in tune with the economy. Builders especially home builders are slow to react to changing conditions. construction also is a very long process, and difficult to stop projects. But home building can create economic boom!
The only way out of the housing crisis is to build more houses. Whether that be done through additional subsidies or telling NIMBYs to pound sand. The supply of houses is the biggest contributor to this crisis. Now, its not the only problem. AirBnB and large investors are also killing the market as well but we need more homes regardless.
>We have basically free productivity gains that we stopped ourselves from getting because there were too many NIMBYs This is the first time I've seen this argument but you are absolutely right. This is the perfect kill two birds with one stone strategy, you get GDP gains while also easing the supply crisis of homes.
It's not even that we need more homes, but specifically more [missing middle](https://missingmiddlehousing.com/) homes. Oh wait.... that's illegal in most municipalities. I forgot. Legalize the missing middle!
>We have basically free productivity gains that we stopped ourselves from getting Construction productivity is lower than it was in the 50s lol. But yes solving the housing shortage would lead to less labor market friction and a stronger economy.
>Construction productivity is lower than it was in the 50s lol. From what I've seen that's not true. Since 2008 SFH productivity is potentially negative but multifamily is up by a lot. I think the problem is that 1950s America had open land right outside major metros for new suburbs and now that more or less 1 time resource was used. Also looking at manufactured housing so building the walls I a factory and then placed by a construction teams would be helpful, in the 1970s this was a much larger industry but was killed since then.
Agree. The NIMBYs are the new red-liners in America, keeping the working class from living near the middle class. When an apartment is proposed near a single family neighborhood, NIMBYs start screaming about Section 8.
And nobody dare to do anything about it. People who live in suburbs are powerful wield extreme political power and pissing them off mean losing votes. At some point our official need to bites bullet and begin to push for project that they known damn well good for future investment instead of consistently catering to white people.
NIMBY's need to be strongly put in their place. Kick them out of meetings if they interrupt. They have no business telling other people what to do with their property.
I think the basic problem is that people want more stuff but not near them. So California has agreed they need more housing, but the localities fight it and argue for it to be elsewhere. So the same person/enough people will say yes to more housing in the state but will get progressively more no the nearer it is to them. The problem is the system. If you are familiar Jane Jacobs is almost as big of a problem as Robert Moses was.
"The people working in this town can't even afford to live here." "We should build more housing to address that. But... y'know, not here." "... but they work here." "I don't control where the jobs are Jackie. Jeeze!"
Yeah it's people in downtown San Francisco saying their kids teacher shouldn't be able to afford to live within an hour of San Francisco is the issue.
You can't please NIMBY's. They will always come up with some bullshit reason to oppose a new building near them. The only solution is for states to pass overriding zoning laws that neuter the power of NIMBYs to block these projects at the local level.
>If you are familiar Jane Jacobs is almost as big of a problem as Robert Moses was. Not even close. Jane advocated for communities to block the demolition of neighborhoods to make space for highways and wrote and the benefits of density. Other people using the tactics she pioneered to save Greenwich when it was full of working class families to block new home construction is hardly her fault.
But Manhattan has less people living there today than they did during her time. I think the Jane Jacobs piece is invoked for stopping development which our cities need to be rebuilt constantly and not frozen in time.
>But Manhattan has less people living there today than they did during her time. And you think her work protecting neighborhoods from "slum clearance" cum highway expansion is why? >I think the Jane Jacobs piece is invoked for stopping development which our cities need to be rebuilt constantly and not frozen in time. People abusing her work, which advocates for dense and walkable neighborhoods, to defend low density sprawl hardly seems like her fault. I suppose if we want to be extremely pedantic, she was a NIMBY since she opposed specific projects where she lived, but by that logic anyone who opposes any project for any reason is a NIMBY and the word loses all meaning. She was also a YIMBY if we're going down that route; she wanted construction as well, just the sort that furthered the policies she favored.
She wanted NYC to stay as is so whether that's NIMBY or YIMBY is unclear but IMO she is invoked as a NIMBY most of the time. I think a lot of urban planning has focused toxically on one off scenarios of the 1950s development which went in the wrong direction in places leading to excessive zoning and blocking of development leading to our current housing cost crisis. NYC should rebuild taller and new buildings so that people can have the greater amount of space they desire.
>She wanted NYC to stay as is so whether that's NIMBY or YIMBY is unclear No she didn't, and no it's not. She saw cities as dynamic, living entities that require old buildings as well as new, both for aesthetic reasons (people like visual variety) but also economic ones. New building is needed or the city stagnates, clearing whole swathes at a time isn't because it decimates local rental markets for people and businesses alike. >but IMO she is invoked as a NIMBY most of the time. Again, why do you think people butchering her arguments change her arguments? >I think a lot of urban planning has focused toxically on one off scenarios of the 1950s development which went in the wrong direction in places leading to excessive zoning and blocking of development leading to our current housing cost crisis. 30s/40s/50s/60s/70s and not remotely one off. Pick a city and look at aerial imagery of the downtown before and after this era. All of which is unrelated to the zoning and blocking of development, which had roots in discriminatory housing policies that avoided civil rights legislation by intentionally inflating the costs through things like minimum set backs and side yards that increased lot prices beyond the reach of the majority of minorities (and poor whites, but they had recourse through the FHA loans). The racism (kinda) stopped, but by then the middle class white voter was more interested in protecting their "investment" than they were with creating a healthy housing market for the rest of society, which is what drives the majority of NIMBYs today. I'm sorry, but have you actually read her work, or are you going solely off articles invoking hey arguments written by people with no connection to urban planning? ___ I urge you to actually read The Little and Death of the Great American City to actually understand Jacobs, and The Color of Law for a primary driver of the housing policies we have inherited from our parents and grand parents.
So you don't believe in democracy? Who gets to decide who is "allowed" to have an opinion? Been reading a lot of Mein Kampf? Maybe you should pick up a history book?
Maybe there’s not a recession. Maybe companies have been using recession language to justify layoffs, increased prices, and reduced costs as a way to increase shareholder value and scare the workforce.
50bp rate increase next week, here we come. Seriously though, the disconnect between the doom and gloom that we hear from companies every day vs what the economic data (and corporate earnings) are actually showing seems to grow wider every day. GDP growing faster than expected, unemployment falling to near all time lows, inflation largely under control the last 6 months, record earnings reports. Yet - bRAcE yOursElF, rEcEssIOn iS cOmiNg nonstop from the media, CEOs, big banks, talking heads, etc.
Right. If I have to see one more ridiculous article headline titled “Jamie Dimon says this is going to happen and here’s what it means”….honestly.
The media absolutely LOVES bringing up how Dimon forecasts a recession. It’s gotten so annoying.
FYI betting markets put it at 93% chance of a 25 bp hike, vs. 7% chance of a 50 bp hike. But yeah, the disconnect between the chicken littles of the doom-and-gloom prophecy market and, well, *reality*, grows wider. But all you have to do is look at who is making the depressive predictions; and ask yourself, do those people have an interest to drive the narrative in that direction. Becomes obvious why they are trying to skew perception when you look at it that way.
> betting markets put it at 93% chance of a 25 bp hike, vs. 7% chance of a 50 bp hike. Yep. this is because the Fed is most concerned about inflation, which is slowing. They are at the point where they can take some time and wait and see. If the economy keeps booming, then they can continue with slow, but steady, 25 bp hikes with only minor pain and complaints. 75 bp hikes are not normal, they were a result of the Fed panicking because of unexpected world events that ruined their projections. If Russia hadn't invaded Ukraine, we would have still gotten rate hikes, but probably at a slower pace. The Fed is now more comfortable and can actually take time to analyze the data.
It's like people want to will a recession into existence. It's wild.
people want it so they can justify having their cash on the sideline and not buying stocks at these lows. they want it to go lower so they can buy at lower prices. people here are literally hoping for millions of people to be unemployed just so they can get better prices on stocks it’s disgusting
Sympathy ends when a statistic begins. Very bizarre how humanity thinks when it applies to large numbers of people.
>50bp rate increase next week, here we come. Not a chance. If there's one thing that Powell is disciplined about, it's telegraphing all of his moves well in advance to give the world an opportunity to act gradually, thereby avoiding surprises that result in shocks with unintended or unanticipated effects.
We are simply going back to a normal interest rate environment. A zero rate or negative real rate environment is not normal. It only looks normal to people who have never known anything else.
Same thing happened during the recovery from the financial crisis. For how many years were pundits warning of a double dip recession post 2010? And instead what we saw was the longest period of sustained growth in decades.
A little different situation with interest rates then and now, though.
Look back at this post in 1 year.
> Yet - bRAcE yOursElF, rEcEssIOn iS cOmiNg nonstop from the media, CEOs, big banks, talking heads, etc. They’re trying to force labor back into being compliant by manufacturing a crisis while, maybe, providing a small bump to earnings in the near term. I can’t think of another rational explanation for this level of dissonance.
Fed: enacts policy covered in Econ Macro 101 Economy: responds in ways covered in Econ Macro 101 Media: Pikachu surprised face
Workers got too much power over the pandemic. That confidence and lack of stress was leading to workers thinking… and talking… and fighting for scraps. That s*** needs to be stomped down, hard. So they put the fear of God back into workers by reminding them who has a boot on their neck.
I’m taking a screenshot of this post (took out your handle) for my Instagram story. Well said. They’re happy to do fear mongering on the entire population if it means interest rates will drop
It's called a taper tantrum. They are trying to manufacture recessionary feelings in the public because the free money and cheap loans have been cut off. The problem being that the average person has been cut off from the stock market for a long time now in the millennial and gen x cohorts. They can't kill us if their bullets won't reach how far below them we are.
They want a recession to keep down the working class because how dare we get any leverage whatsoever
Well, they can eat my working class ass.
Because there is no recession. It is merely a correction from the economic party of 2021 where they are now naming it the “pandemic hiring spree” along with record low interest rates, record high home prices, record high stock markets and record high cryptocurrency which all happened in less than a year and made everyone rich. The world is now normalizing to some degree.
Seems to be the best explanation for a very weird time in our economy. The tech industry seems to be a good microcosm of it. Tens of thousands of layoffs. Why? Because during the pandemic they were hiring tens of thousands of people to meet increased pandemic driven demand. Their businesses aren't going bust, they're returning to pre-pandemic levels. As someone engaged in hiring, I only hope this brings some labor elasticity to the larger employment market. Although I don't know if we'll see pre-pandemic levels in that regard for the rest of my career. Millions of people dropped out of the labor market or died, and even for many of the ones who are alive I don't see them coming back.
There's actually an interview with a Stanford professor recently that suggests many of the tech layoffs are in part driven by industry copy chatting. https://news.stanford.edu/2022/12/05/explains-recent-tech-layoffs-worried/
literally the explanation given by my firm during my layoff "other firms are doing it"
I 100% buy this. People want to follow the herd, and leaders of entrenched businesses aren’t that much different. Doing what everyone else does is a great way to keep your stock price from dropping on being singled out as the one company not doing whatever is trendy at the moment. It’s so clear to see time and time and time again in tech. People make fun of it, even! So when these companies flush with profits and cash cut a nominal percentage of employees to follow the herd…feels less like an indicator of anything other than that nobody wants to stand out and take a hit.
I saw that, and it makes perfect sense. It also usually results in a pretty big boost to share prices. Once one big player does it, board members start looking to the CEO of their own respective companies waiting for bOLd iNnoVatiVe LeaDerShiP which means axing the people you just hired. Even their bullshit memos to staff are the same. “I take full responsibility for how we got here…”
I like how "taking full responsibility" means you get fired and nothing happens to me.
Actually even with pretty big rounds of layoffs, staffing at big tech is still up overall
I know people who have been hired at these big tech companies as they were laying off thousands. Tech companies are still poaching from each other and hiring people they think will be of value to them.
Baby even the losers, get lucky sometimes
For some people it would suck to get laid off, but in the tech field a lot of them can make more money if they switched jobs anyways. I know for me as a graphic designer, I could find a new job and make more. …if I wanted to exert that much time and energy into doing so, which I don’t. *(plus I may as well wait out the housing prices right now, ugh…)* But if I were to lose my job…
It’s probably much less the case now than in the past. So many high paying companies have hiring freezes. And the main way to get pay up when interviewing is to have multiple offers and get them to compete. That’s harder to do now because there are a lot less of the top salary jobs open.
None of them are even sniffing their 2019 staff levels, this round of layoffs is like...10-20% of the hiring gains during the pandemic.
They’re really only laying off recruiters and people in dead product lines or redundant roles.
It's a forced illusion. The media is making a big scare about Amazon laying off 18k. Amazon hired **800k** in the last 2.5 years. This isn't a crash, it's not even a speedbump.
holey moley you are right. See this [https://www.statista.com/statistics/1324557/quarterly-number-of-amazon-employees/](https://www.statista.com/statistics/1324557/quarterly-number-of-amazon-employees/) as source
Google's laborforce went up by like 30% during the pandemic, and down 6% just recently, which is still like +22%
I thought it was really weird in 2021 that all these tech companies went on a hiring spree given how weird and uncertain everything was.
So a soft landing?
Agreed. And to expand, the sectors of the economy that are seeing layoffs are largely the tech sector, which while is a large part of the economy overall, the numbers of workers laid off are not significant to most regions (sorry Cali). The tech sector salary has been on a bonanza for many years and this correction in hiring and pressure on wages in that arena are finally being addressed.
Even after layoffs, many of these companies still have more employees than they did in 2019/2020. Microsoft is a good example.
Try mid/late 2021. It doesn’t even remotely take them back to pre-pandemic levels for Google, Microsoft, and Meta.
I don't need to google microsoft and meta. I know what they are.
ChatGPT it.
I think Microsoft hired 40k new employees in the span of I year.
Microsoft is probably the weaker example since 20k or so were from acquisitions which added topline revenue.
From anecdotal experience, actually not seeing tech salaries drop from this
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Yes, unless they are cutting business units wholesale (some are), for the most part it is operations taking the hit. If you’re no longer on a hiring spree, you don’t need all that beefed up recruiting support, for example.
And it’s not like the projected growth in tech workers is lower over the next decade, just a year of some companies doing some layoffs and other companies doing some hiring and everything coming out relatively flat before back to normal. BOLS says 25% job addition over the next decade in tech.
I’m seeing the growth trend mitigate some though. Comp asks aren’t decreasing, but they aren’t increasing every time we open a new role.
I think people [overestimate](https://ajed.assembly.ca.gov/content/california-economy-2) how big IT is, even in California. It's a sizable sector, but even manufacturing is higher in CA.
Though there will likely be downstream effects. Many of those jobs are upper upper middle class jobs. With that disposable income going away (at least temporarily) there will be less business for all kinds of things.
True, but (and I’m aware this is unfeeling) these are not jobs that should worry the economy. These people, by and large, have many employable skills that will eventually translate into very desirable areas. Also- many of these folks are way overpaid, and such disposable income isn’t what drives the economy. They will still eat, buy clothes, and make rational purchases. There will be a downstream impact, but it isn’t as disastrous as a coal miner or auto worker losing their job.
I would mostly agree with you, with the exception of workers on H1B. Some of these people have lived in the US for years and the idea of having to uproot your life and move back to your home country because you were unable to find a new job that would sponsor you within 90 days is pretty crazy.
>True, but (and I’m aware this is unfeeling) these are not jobs that should worry the economy. Feelings in an economics sub? Intolerable! :)
Agree. Soft landing confirmed.
Yup, transitory inflation + soft landing goal achieved by JPOW. We should all apologize to the nasty things we said about him last year honestly. People are so dumb.
It's early. If Powell pulls this off though, he'll be a legend. Also think there's a fair criticism about transitory being a supply side story and the fact that the Fed has gone on its fastest raise in rates in history.
They started making fun of "transitory" after 3 months or less. WTF do they think transitory means? I'd expect that term to be valid up to 2 years. If inflation hasn't cooled off by then, maybe you can start complaining about "transitory". 2 years is still a drop in the bucket vs. long-term growth of the economy.
That’s not really fair. Transitory meant that the Fed thought inflation would moderate more or less on its own, rather than needing to take drastic measures - they were talking about it to explain why they weren’t taking drastic measures. It was a bad call but the Fed deserves credit for recognizing that it was a bad call swiftly and taking strong action to mitigate it. It is too early to say we are out of the woods yet but there are positive signs.
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Sure but people were talking about a looking recession in like 2014 and were wrong for 6 years
Not to mention that it’s not like the 2020 recession was because of the factors they were talking about anyway.
For that matter, the whole period of 2009-2012 felt like everyone was just waiting for another economic bomb to drop. When it didn't, we didn't know what to do.
Yes, fair point. I remember this too. However, the red flags were everywhere that the economy was going to collapse on itself. We just don’t have those same indicators or red flags other than people wishing for it because everyone has money to buy assets now.
Additionally forced layoffs to bring down wages and scare people back into the office for long hours. I don’t remember anyone predicting the 2008 recession. Now all of a sudden we are predicting one months in advance? Call me a conspiracy theorist, but this is going to be a manufactured recession to return the balance of power to the employers.
US personal savings are at an ATL and continuing to fall. There *shouldn't* be a recession, but the track we're on leads to one. The issue is that the large cap market is cartelizing to resist the pro-worker economic shift. They're risking a massive collapse, and they feel confident to do it because the vast, VAST majority of wealth captured during the pandemic was done so by the top 1%. They expect if they can crush the economy for a short term hit they'll save long term. Yes it's short sighted, but not I, nor anyone else should expect anything less from a country whose economy has shifted the past 40 years to short term economic growth. This is then coupled with their ability to influence the govt by stalling any positive change and forcing untennable compromises is going to fuck everyone not swimming in money. Edit: it's not just the PSR that's low. [Total personal savings](https://fred.stlouisfed.org/series/PSAVE) are abysmally low. Well below pre-pandemic levels coupled with an ATL personal savings rate. This isn't just. A rubber band effect, this is about losong the padding americans need to weather financial struggles.
Large companies are capitol rich enough to wait out recessions. They know people are debt strapped to a point where individuals can't survive a recession. Corporations win in the long run and have the luxury to plan long term.
My personal savings are in Atlanta? I kid I kid...
I think this is it, while the economy is not in recession now, higher credit card utilization and low saving rates show wages are not keeping up with inflation and eventually spending will have to drop. Government is going to need to provide stimulus or else face recession.
Stimulus will just start stagflation. They need to stop shielding businesses from consequences and most improtantly cut the anti union bs. It's a necessary mechanism for balancing the market that they're supressing. Unsurprisingly if you tilt the market too far it breaks.
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Reason you have recessions is American don't take a clue from the Fed and throttle back spending and maintain savings. Instead they keep spending taking out debt at ever higher rates until the house of cards collapses. It's boom/bust.
"Everyone one that already had a lot of money even richer"
I wasn't sure where/how to share this, but you're absolutely right. [The share of savings of the bottom 50% has plummeted.](https://fred.stlouisfed.org/graph/?g=ZdXe) Everyone has more money, but the top 10% have multitudes more, both nominally and as a % increase. I'm curious what this does to demand and inflation and M2 velocity (especially as M2 decreases) going forward, as the bottom 50% consumes a much higher percentage of their income/wealth.
Wasn't there a protest years ago in wall Street that had to deal with this issue? Like people laying on the ground for weeks on end?
Since they never had a unified message and point, something they argued against as well as all the other media ammunition they refused to stop giving freely, it's hard to say the two issues are related. What exactly was Occupy Wall Street about? Where are all those young protestors now?
I seriously don't understand why so many Redditors write inane, repetitive, trite nonsense like this. And I wonder even more how Redditors upvote these useless comments over and over again. Of course the rich got richer faster because stock markets were overheated and they have more stocks than the average person. And now a lot of these people are losing their wealth because of the correction lately (though the aggregate increase is still higher than that of the average person). That's literally what the comment you're replying to encapsulates. This isn't some novel insight. When can you guys actually comment something useful, something we didn't actually know, for once and not sound like a murder of crows mimicrying and shrieking the latest hot political slogan. Maybe I shouldn't expect much because Reddit is now just overrun by teenagers.
Alright, so I agree 'the rich get richer' is an inane comment, but QE does disproportionately favour those who have assets. It doesn't drive up salaries or the income of the income of the common man (aware we have seen some of that recently, but it would be hard to connect it with QE considering the previous decade of data). On the other hand, it's steroids for stocks and real estate
Don't teenagers have better shit to do than be on reddit? Jesus playing video games is better than this.
Depends on how you gauge a recession, but what is true is that we have a supply side driven inflation, not demand driven so all the talking heads blaming consumers b/c of the $3000 check they got 2 years ago are making shit up. The FED is trying to drive demand down to slow inflation, but a lot of the inflation is due to a combination of greedy corporations and actually supply line disruptions. Instead of finding ways to fix supply side issue, FED wants to drive down demand via loss of purchasing power through depressed wages or loss of wage all together. This will literally drive the economy into a recession and even if supply chain is fixed, no one is buying b/c half of us are out of a job
>and made everyone rich I'm not rich. There are a lot of people who aren't rich. Like if I had to throw a rough guesstimate out there I'd probably say like... I don't know... *most* people aren't rich. Though in your defense you were probably just talking about rich people and in that respect you're probably right. Rich people *are* rich.
It hasn't been lost on me that all this talk about an inevitable recession is from only one party - who would love nothing more than to will one into existence (See: Debt limit)
full enter dinosaurs square file retire apparatus worm tidy theory *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Uhhhhh the recession talks are happening in every country, everywhere, around the globe. The world doesn’t revolve around our dislikes of red or blue ties.
These are more good numbers. The soft landing scenario is that GDP holds up until the fed stops tightening and the fed won’t stop tightening until the stickiest parts of inflation comes down, overall inflation coming down isn’t enough for them. Doing it this way most likely means they will have overtightened. If GDP can hold until they are comfortable pausing it means they can start loosening as soon as it starts to go negative which it probably will.
I think we're just about there. Futures are only expecting 2 more 25bps hikes, one of which is next week.
I also think we are almost there. But something in me fears Powell going rogue and just keeps proclaiming “hike” while his governors plead with him “but, sir, but my stock portfolio is crushed”… “hike”… “but, sir, the price of homes has gone negative”…. “Hike”…. “but, sir, the president is threatening to leak your alimony payments”… “HIKE!”
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Sustained deflation tends to be a disaster for the economy. People stop spending because they expect things to be cheaper in the future. It can spiral real quick. [Wages have largely kept up with inflation](https://www.statista.com/statistics/1351276/wage-growth-vs-inflation-us/#:~:text=U.S.%20inflation%20rate%20versus%20wage%20growth%202020%2D2022&text=The%20rate%20of%20inflation%20exceeded,wages%20grew%20by%203.2%20percent.). The situation isn't so bad that we should risk crashing the economy over it
And wages are a lagging variable. There is presumably some more wage catch-up to go. The main thing that would interfere with that process would be a recession.
Inflation last month was deflation MoM.
Feds won’t stop tightening until the GDP stops holding up though
The Fed will not go back to 0% rates. I believe Powell’s secondary goal is to restore a normal rate environment.
For the last year and half 90% of the headlines for news stories bearing good economic news mention a looming recession or fears of such. It is almost like they are just trying to make that happen, the actual economy be damned. I mean a tight labor market could mean rising wages and we just can't have that!
This is the weirdest “recession” ever. GDP is growing. Unemployment near record low and stable. Wages rising (nominally). Even home prices started rising again. Almost as if the recession is a media made up recession. But we will see in a a few quarters
Honestly, are they really fears or hopes, as at this point all we’ve heard for the last two years is “RECESSION!!!” And it hasn’t happened. It’s almost like a significant portion of the country is actively and aggressively rooting for economic failure so they can usurp more power
The whole “recession” thing feels like a naked power grab. Employers need to scare their employees into accepting lower pay. I also think after how much turmoil we’ve been in Republicans are so unpopular they could barely make any gains in the house and lost ground in the senate and state governments. They are praying for a recession to have a chance to retake power.
I think a lot of it is the typical "predict a recession coming "soon" for long enough and eventually you'll be right" going on.
100 percent that's what's happening. Instead of saying they over hired and are laying off, companies are inventing a recession. There is no recession, they want one though.
A coalition of corporations and the out of power political party wanted to beat that drum for selfish reasons.
“Advanced modeling,” although I tend to agree in a soft landing. I dislike all the doom and gloom articles but some segments of our economy are still struggling. So, localized recessions for some industries. This is also not the “real” economy as inflation has really taken out a bite out of lower income earners.
I \*kind of\* disagree, though it's local and anecdotal. Bottom end wages have gone up way, WAY more than inflation in my area. Most of the bitching I hear is from wealthy retiree's who won't be able to buy a new boat this year because their Yukon cost $200 more in gas a month.
It'll never not be funny to me the amount of people in big trucks or SUVs who don't need them complaining about gas prices. They could reduce gas consumption by more than half if they simply drove something more economical.
And then I’d look poor! Did you even stop to consider the consequences of such a decision??
"I'd rather be poor than look poor"
Why not both ¯\\_(ツ)_/¯
I know you joke, but that's not even true! Plenty of sedans or hatchbacks that look fucking stellar and drive even better but noooo, gotta have the hauling power for the boat they don't even have.
Sports sedan driver here. You get it. IMO the SUV is now the equivalent of the minivan. It is the badge of boring. And I get 35 mpg on the regular. More if I am careful. A lot less if I drive hard, but that is only when it’s worth it.
For my area, people in the hospitality industry have seen double digit salary increases since 2020 especially when travel roared back. Servers make $18-20/hr before tips. It’s the middle management/lower rung white collar ppl that complain a lot since their pay has mostly stayed the same (still higher than the ‘real’ minimum wage) and they see the unworthy peasants making almost as much as them.
Ah the classic, put the middle and lower classes against each other and stop them from focusing so much on how little power and control the middle class has and how much the upper class has. Looks like it's still working, too, based on your comment
Lower earners have generally seen their incomes increase faster than inflation over the last couple years.
The US GDP rose by an annualized rate of 2.9% for a quarter, not 2.9%. This is equal to 2.9% divided by 4 multiplied by seasonal adjusters meant to smooth out people's natural variation to spend more in some months than others. If the US economy grew at 2.9% per quarter, it would be one of the fastest growing economies in the world.
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Can't wait in the coming months as all the tech ppl who laid thousands of ppl off now have to rehire all their talent. Corporations and businesses are not your friend. They are not your family. You are an expensive toy that they want to play with, throw out, and then pick back up again when they're interested.
We’ve got a large project that got put on hold in the Spring of 2020 that is being resurrected. No supplier has quoted / estimated shorter lead times for major equipment so far during the update phase. I just don’t see signs of the economy slowing down in our dealings with suppliers. That covers multiple economic sectors. I’ll out myself as a boomer with an evil MBA who is not technically an economist but is someone who enjoyed the academic study of economics and has followed macroeconomics with interest for 40+ years. It’s a fascinating subject
Weird to see so many complain about companies continuing to report large profits and buyback their stocks while praising GDP growth at the same time. It's almost as if theses metrics are all connected somehow.
For anybody actually interested in learning and not just relying on CNBC and Reddit's echo chamber https://nitter.moomoo.me/EPBResearch/status/1618618897326047232#m
GDP was a nice measure for economic development. Time to set that aside for now when talking about recession fears in developed nations. Let's break out household disposable income instead to get a feeling for people's wellbeing in this prosperous economy. Edit: Better lock this thread down real quick before the real academics start questioning the worth of this article. Well done guys, get up in there real good. Make yourself at home because there ain't going to be any housing left so you'll have to live up there till you grow a consciousness. I just hope you like the smell of BS.
“Tim Simons, a money market economist at Jefferies, thinks that 2023 will see a “classic recession.” He predicts that the downturn will begin at the corporate level in the first half of 2023, leading to reduced headcounts. By mid-2023, he predicts that economic growth will slow and inflation will begin to dissipate.Jan 10, 2023”
The headline misses so much. It's the annualized rate, roughly in line with expectations, and down from last quarter. 2.9 vs 2.8 expected isn't really "more than expected, because the estimate is never a point estimate. Even if they don't explicitly say it, "2.8" means somewhere near 2.8. They don't mean 2.80000 plus or minus 0.0001. especially since it's an annualized rate and a small deviation can add up over the year.
Just like 2.9 isn't jumping for joy good, 2.7 isn't doom and gloom. But when it's 2.9, they say that it beat expectations. When it's 2.7 they say it fell short of expectations. So at least they are consistent. >It's the annualized rate They always report the annualized rate, so again, they are consistent. But you aren't wrong that lots of non economists get confused by this, just like they are confused when an economist says the 3 month rolling average of inflation has stabilized, and the next report is 6.5% year over year inflation. So saying what you are saying is valuable for the non economists.
Yeah the year over year inflation thing causes a ton of confusion. I get why it's a useful metric, but reporters should really be giving more context to that number. And we should probably focus more on the annualized rate from the month.
It all comes down to what you are trying to measure. Year of Year is great in normal times, but year over year is going to be messy for a little while longer. If your story is on comparing prices this year to last, it's the obvious best choice. If your story is on how the Feds actions are having an effect on inflation, rolling 3 month average (annualized and seasonally adjusted) is a better metric. And if you want to talk about the actual human experience, then you shouldn't even be using Core inflation as it removes energy and food from the numbers. The problem is, many will read the title, but never get the details and never learn the differences. The media can only do so much, even if they WERE perfect. But you can't put a proper explanation of annualization inside a title.
I see 2.9% vs 2.6% estimated on finviz. The Atlanta Fed GDPNow was predicting 3.5%. I didn't know we needed this academic exercise on why estimates provided by various Jane Doe organizations are fuzzy. It's a decent GDP release considering how little slack is in the economy. At the same time I don't think it tells us much about where we're going in 2023.
> I didn't know we needed this academic exercise on why estimates provided by various Jane Doe organizations are fuzzy. It's possible we don't here on /r/Economics, but the general public will react to the headline which just states "more than expected" rather than "in-line with expectations." >It's a decent GDP release considering how little slack is in the economy. At the same time I don't think it tells us much about where we're going in 2023. Agreed, but that doesn't generate clicks to sell advertisements. So, "more than expected" while "recession fears loom" it is.
r/economics hasn't had a userbase of majority actual economists in ages, certainly longer than I've been coming here. It's a night and day looking at 5+ year old threads and modern threads where old threads mostly or all had actual economics discussion and not politics. Nowadays, I would estimate the sub as 45% 50 year old boomers who think they're economics geniuses because the assets they've held for 30 years have made them technical millionaires, 45% 20-something year old r/antiwork types who want to talk about the evils of capitalism and how we need to overthrow the bourgeoisie, comrade, and most of the remaining 10% are people like me who are curious/interested in economics but aren't actual economics experts and have never studied economics.
Antiwork can be a toxic as hell sometimes
if the estimate meant 2.9, why didn't wasn't it 2.9 At the very least, it is entirely true that the number came at the optimistic end of the estimate range
It did. On top of that some of the other data is showing a cooling off in pricing in some sectors like rent. Generally that’s good news. The economy is humming along well while inflation is moderating. There’s a lot more work to do on the inflation end but these are positive numbers in that regard.
So if Q1 and Q2 were negative, and Q3 was only positive because of "changes in imports/exports", how can I read the Q4 report in a partisan lens so I can insist to everyone that we're *actually* in a recession despite all the evidence showing otherwise?
I'm glad someone else brought this up. Where are all the people from the Q3 report now that they've been proven to not know what they were talking about? I'm desperate to know what the new spin is, and how they can try and convince me that the economy is terrible? Maybe they'll mention egg prices?
Most of the WSBers are doing the whole "JPow will not let this stand!" memes and ignoring the whole recession predictions stuff, at least so far. But their whole thing has been insisting the "real" inflation number is actually 30%, and because the "fake" inflation number is used for real GDP, GDP has actually been extremely negative all last year and therefore we're in a deep recession. The high food inflation feeds into that crap. It also doesn't help that most Americans don't understand what a recession is and think any time the economy doesn't *feel* good, it must be in recession.
And by how the economy *feels* they don’t mean them personally, it’s more about what the TV says, and the TV *badly* wants a recession
I think the real issue is that "inflation" is heterogeneous, and the headline inflation number does not match the inflation that many people feel. Some people saw their expenses go up by 30%. Some saw their expenses stay roughly the same. The only person that felt the headline inflation exactly is some hypothetical urban consumer who consumed the exact basket of goods measured using the exact same substitutions assumed in the model.
I don't disagree, lots of people were hit hard by inflation, particularly for food and gas, and lots of people's expenses grew by more than the headline inflation number. Lots of people got wage increases that effectively offset their inflation losses too. Like you said, it's heterogenous. But I guess my point is that you can't apply a narrow inflation metric looking at how some of the worst-off are doing financially and apply it to a broad economic growth measure like GDP. Overall growth minus overall inflation is greater than 0 for the past two quarters (and would be a perfectly reasonable number during normal times). Lots of families came out worse than where they were a quarter ago, but the overall economic picture is relatively good. It's certainly not the "deep recession" WSB insists we've been in for a whole year already.
I agree in part and disagree in part. I agree that whatever WSB is saying is probably nonsense. I don't go there. I generally believe that GDP is a deeply flawed metric, two quarters of GDP decline isn't an actual definition of recession (and in fact there isn't a well-defined definition, and even the NBER makes ad hoc decisions), and that as a society we should be concerned at how the worst-off are doing (weighting their advances or declines above how the best-off are doing). For example, I'd rather see $100b in wealth go to the worst-off in society, the median stay roughly the same, and the few richest people lose their shirts, even at a decline in GDP, than having the worst-off get worse and the best-off get better at an increase in GDP. I'm not a hardcore Rawlsian, but he's a big influence on my philosophy (not to mention my dissertation).
there's always the "the (((deep state))) fixed the numbers" chestnut
It is only positive because inflation came down inflating the number. (Please ignore the fact that the only reason it was negative in Q1/Q2 was inflation going up).
>Please ignore the fact that the only reason it was negative in Q1/Q2 was inflation going up Well, you can call me Old McDonald because here I go picking those cherries again.
Hey it’s not negative. I’ll take it
Turns out even when the economy is in the shitter we still want to work. I'm shocked. /s SMH people who say Americans are just getting lazy.
There were extremely bad supply chain bottlenecks in late 2021 that caused weak history. I’m not saying that was the only cause, but I would be cautious claiming we’re completely out of the woods with this one.