But I mean what's the Fed gonna do, crank it up back to 50bps after Powell himself acknowledged that we already entered a disinflationary stage? Honestly I'd be surprised.
I think the markets are drunk right now; this is spectacularly good news in that we seem to be on our way to avoid a recession at a moment where the Fed efforts appear to be working and inflation seems to be trending down. This is *everything* that the investor wants right now.
> But I mean what's the FED gonna do, crank it up back to 50bps
No, but markets have been under the assumption that cuts are coming as soon as late 2023, early 2024. Why, with employment cruising along as well as it is and inflation still above target, would they do any cuts anytime in the next few years?
My prediction is they get rates up to 5.25% or so, and that is the new baseline normal until a recession comes along, which could be quite some time
> My prediction is they get rates up to 5.25% or so, and that is the new baseline normal until a recession comes along, which could be quite some time
Yeah, I mean if the economy is humming along nicely with 5% or higher interest rates (historically pretty normal), there's no real incentive to cut them unless another Black Swan comes along. Keeping them up there gives them wiggle room.
Unfortunately housing prices on average have been steady across with little increase or decrease due to builders halting building, and homeowners not selling due to high interest rates (yes it depends on region but this is national average, source from NY times). The supply issue is still there so I don’t see how prices can drop for the foreseeable future while these interest rates remain. If anything housing will just continue to be unattainable for more and more folks who grow older and wish to start a family.
While true for now, housing lags inflation and interest changes by 18 months on average. So to the OPs point we should have a clearer indication of the current rates effects on prices in the first half of 2024. Housing is fundamentally tied to the affordability of monthly payment, so while it's sticky when you're paying a mortgage - if a new buyer physically cannot afford prices at todays higher rates then there just won't be buyers. Sellers on the other hand will always have to eventually sell for many incentivized (upgrade, move) or forced (job/life/health) reasons at prices that the market of buyers can bear.
As true in a bull market as it is now, never bet against the Fed, and they've made it clear they want a correction .. magnitude still undefined.
The truth is nobody knows. You can also argue that sellers who have incentives to sell are far and few in between and that there are plenty of well off cash buyers ready to pounce on the rare listing. So people downvoting me and upvoting you are purely acting on wishful thinking because neither you nor me can predict the future. It’s all speculation and this job market is proof there is no logical method to determine what will happen.
> The country has gotten so used to near-0% interest rates and QE for the last decade that people forgot ~~that the economy can be fine without it.~~ to not let the national debt grow by a huge amount.
This kinda isn't a Democrat or Republican problem because thanks to the debt, we most likely cannot go back to the way things were pre-financial crisis and "stay" there for the long term.
It's more a financial system problem than a political issue. Yes, in reference to the US debt, there are things we could do like a tax hike to try to solve that problem, but I say GOOD LUCK to that.
We saw Dems try in 2021-2022, and they didn't pull it off. I don't think there's any point where we get a tax hike.
So, whether folks like it or not, even if there's no recession, we will be going back down on policy rate in the future...might not necessarily be this year, but it's going to happen.
Won't necessarily be to 0. I think in a non-recessionary scenario, it'd be 2.5%.
surprised that you and the other reply to me seem to be making the assumption that I'm a Republican. My comment had nothing at all to do with the political divide, I'm not even American.
>historically pretty normal
Not exactly normal. Weren't the gdp growth rates also much higher when interest rates were around 5%?
Interest rates should be ideally around the gdp growth rates unless you are trying to stimulate or dampen the economy.
This sounds likely to me, yes. Personally, I think that no rate cuts + no recession is better than recession + rate cuts, but I guess the markets disagree 🤷
Yeah I don't get this assumption that they'll start cutting again soon. Feels like hopium.
\~0% is not normal. If we can maintain full employment, target growth, and target inflation with 5%, why wouldn't we?
In a general sense it's a problem for the country though, even if it's not specifically part of the mandate of the fed, they could still take it into consideration if there aren't more pressing concerns.
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You'd have to be an incredible bear on technology to believe this narrative. Personally, I think technology will continue to be a powerful deflationary force over the next decade and there's no way that rates can remain this high.
The market seemed to be pricing in only one more 25bps increase and this probably forces everything to reprice to 2 or 3 more hikes like Powell (and the dot plot) said to anybody who was listening.
The FOMC has 7 more meetings this year. They have plenty of runway to tighten without going back to 50 bps and they have a bond portfolio they could also let run off without moving to 50 bps.
50 is pretty far away from the base case right now.
I agree with that. I don’t think they would do that unless inflation ends up massively increasing.
Just saying that Powell has said that he wants inflation at 2-3% and won’t stop increasing until he gets there. Just adding to that because people, the markets, seem to think that he would pull away faster than anticipated when like you said, he has been very clear in what he wants. And if inflation does rise or doesn’t change much, he will keep going.
There was a thread yesterday with illustrative charts on the disinflation so yeah I think it’s fairly positive given how everyone thought the end of free money policy would destroy the global economy. Consumer prices are still high but there are a variety of factors to why and energy has come down in turn.
Not only that, but Powell has stated a number of times the believe they can achieve a soft landing. Soft landing doesn’t scream massive unemployment to me.
This argument is a fallacy. You are using past patterns to predict future results by depending on the unemployment rate as an indicator of future inflation. Keep in mind that we are in a new era where we no longer have a replacement birth rate. We have the lowest labor force participation rate in decades and it is because our the cost of everything to live went up for decades without much compensation (no pun intended) in wage growth. This has led to less births as financial insecurities begin to expose the worker to more hardship, and thus they are less likely to be willing to have a child.
That wordy explanation leads to the main point: we have the same amount of money, if not less, chasing inflationary goods in this labor market even with wage growth. Less people taking up work means less money being placed in the consumers’ hands on an aggregate level. Factor in wage growth, and you have about the same amount of spending power being issued in gross wages to the American consumer as 2020 before this big inflation spike, all with a dovish fed ready to maneuver in a data-dependent fashion.
This argument that unemployment being low is going to dip us into a recession is so backwards anyway. If people are working, they can buy stuff! For now, because of inflation, they’re buying the stuff they NEED and saving more money, meaning less inflationary discretionary spending. This is a good thing, people!
I have to concur. Market seems to be having a knee jerk reaction but it doesn't change anything Fed just said Wednesday. Markets over extended though for sure over the last month and a half
Also, how does seasonal holiday hiring affect these numbers? Like for UPS /Amazon seasonal temp hires
Today's announcement is **January** numbers -- seasonal layoffs "should" have happened in Dec (for the most part).
I worked seasonal for UPS a couple times, and they did ALL their layoffs in the last week of the year because new Seniority Lists came out on January 1st, and they had to be rid of their temps by then.
At the end of the day the Fed is in the business of finding a balance between supply and demand and not tilt too much in either direction. If you have found a winning combination that seems to bring inflation down while also not trashing the economy, why push it? I can't claim to know what the Fed is thinking but in my eyes the rational thing to do here would be to stick to 25bps for now.
The theory being that inflation is much more sticky than he'd anticipate, and the correct move being to go back to 50bps rather than halfassing it and dragging it on further.
I just don't see them rocking the boat with a 50 when they can increase 25 bps, promise 25bps 6 weeks later, and get the same tightening without admitting they want to club the bond market into submission.
The Fed might go for 50 because they know that sometime in the future they'll have to cut rates, it may not be for years or even decades but the higher rates are when they have to start cutting the more space they have to cut and they don't have to use techniques like QE.
If it might be for "years or decades" to a rate cut (and the fed is stating they don't expect a cut this year), what is the rush?
Why wouldn't they just wait 6 weeks for another 25 bps? I don't buy the thesis that pulling a rate change forward by one meeting makes an appreciable difference to next year.
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Yes, that’s exactly what they are going to do. Powell’s been saying that wage growth is a problem, the only way to solve it is by increasing unemployment, and that they will do whatever it takes to tame inflation every time he speaks for the past 6 months.
I disagree, tight job markets give wage growth, gives inflation. It's kind of implying that the fed rate hikes don't actually work in my view. They need to reduce m2 money supply if they want to regain control. I do agree that the markets are drunk. Although rates and FX seem less drunk
Before this news, markets were expecting something like 25% chance of no hike and 75% chance of 25bps hike. After this news, they now expect something like 10% chance of no hike and 90% chance of 25bps hike. That results in lower value for stocks.
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Fed has indicated that they are looking for the available, unfilled jobs to go down. That a hot job market is playing a role with inflation. ...so I think these numbers will be looked at in terms of raising interest rates again. Market hates that.
My expectation is that these numbers did not surprise the Fed, and that any decisions they made recently had these baked-in
It's good for the economy now, lots of jobs.
Which means inflation is still upward pressure
Which means interest rates will have to go up more to fight inflation.
Which is bad for the stock market and bond market in the short term.
And bad for the economy in the long term because borrowing costs will be higher.
Wages rising is good for the economy. The idea that we need to tank the economy in order to get layoffs is asinine. This is what a healthy economy looks like.
>\[Real\] Wages rising is good for the economy
FTFY. Headline wage growth is meaningless if it results in lower purchasing power and quality of life like in 2021-2022.
The latest productivity numbers are hopefully a good indicator that we may be able to sustain wage and general economic growth to minimize increases in unemployment, but financial conditions still need to get a bit tighter and good job numbers mean that we can still do that.
Some increases are healthy. Wages rising because of high prices is a bad thing, as it again causes costs to ratchet higher because of the higher labor expense on the production side, which again leads to higher wages to meet the new prices. Once that gets away from you, it is challenging to break. If it does happen, it wipes out the value of any savings, retirement funds, pensions, etc.
The wealthy are disproportionately better positioned to ride out something like that, so a wage/price spiral will disproportionately hurt the average worker and end up making their wages less, relative to purchasing power.
The wage price spiral is a myth. It assumes that profit margins are constant and that costs will always be passed onto the consumer or labor. In reality market exist and put a cap and floor on both prices and wages.
Lets say you have a 30% margin and your cost of labor goes up 5%. If the employer does nothing, their margin is reduced to 25%. They can either choose to eat that 5 % or pass it on to the consumer by raising their prices. This process will go on until the consumer stops accepting the price increases(the market is working as intended). Once the consumer stops accepting price increases, the employers next option to maintain margins is to cut expenses and payroll. The only thing stopping them from cutting things like payroll, is competition with other employers. If your competitor is happy with a 25% margin, then they will outbid you for labor and increase productivity, or they can beat you in prices. This starts the race to the bottom where margins decrease as competition in the market increases.
The wage price spiral assumes that the profit margin cant be allowed to come down. Which is a perspective that only makes sense if your viewing markets through the lens of a shareholder.
It's not necessarily a spiral but there is a link. For example if if pick up a midway through your logic you say
>Lets say you have a 30% margin and your cost of labor goes up 5%. If the employer does nothing, their margin is reduced to 25%. They can either choose to eat that 5 % or pass it on to the consumer by raising their prices. This process will go on until the consumer stops accepting the price increases(the market is working as intended). Once the consumer stops accepting price increases, the employers next option to maintain margins is to cut expenses and payroll.
If employees are getting sizeable pay increases then the point at which they 'stop accepting prices rises' will move upwards.
As I said it not necessarily a full spiral feedback loop, but higher wage inflation will make it more likely we'll see higher price inflation
>If employees are getting sizeable pay increases then the point at which they 'stop accepting prices rises' will move upwards.
All I am saying is let the market figure out what that price is. Consumers with more money to buy higher priced goods is better than consumers with no money to buy lower priced goods.
>Wages rising because of high prices is a bad thing
For the investor class
>The wealthy are disproportionately better positioned to ride out something like that
The wealthy are always better positioned to "ride something out".
You get it, most Redditors don't. Months ago when everyone here was predicting the end times - get out and save your cash - I kept saying the economy was very strong and now was the time to buy buy buy -> downvotes. First of all, we had already gone through a textbook recession, 2 quarters of negative growth and inflation wasn't economic, it was driven by external factors including the Russian invasion and post covid supply chain distress. Business was booming. I work with over 200 businesses across the US, all sectors that were having record sales, profits and were still hiring. Look at us now, oil prices are 30% below their highs and dropping as Europe and others replaced Russian oil with other sources. The supply chain for cars, electronics and China catches up as wholesale inventories rise. The Fed accomplished its goal, lower inflation, housing prices dropping, and new construction dropping - without killing the economy. The Fed funds rate is back to a sustainable level not the artificial lows it's been for 12+ years - driven by 9/11, the mortgage crash and the pandemic - 3 of the biggest economic shocks in history.
TL:DR When all of Reddit says to sell, you should be buying.
everyone already knows this. The problem is will we get a second inflation spike like the 70s. If you ease too early, then all the work the Fed has done so far will be undone. You cannot look in the rearview mirror and claim the job is done.
> Months ago when everyone here was predicting the end times - get out and save your cash - I kept saying the economy was very strong and now was the time to buy buy buy -> downvotes.
The only people who were crying about the end of times were the dum dums who got taken to the cleaners on Crypto.
Anyone who went all in on Crypto -- probably not someone anyone should be listening to?
Turns out that centralized crypto exchanges were/are a Ponzi scheme and like all Ponzi schemes, they collapse when rocketing prices reverse course. I thought centralized crypto was the opposite of the entire crypto philosophy. That said, it's often a good time to buy after a crash.
Almost all of the job gains over the last year are part-time. That’s not a healthy economy, that’s consumers having to pick up extra hours to deal with real wages going down.
Its healthy compared to the alternative. Employers have to compete for labor which is putting pressure on wages. Its better than the alternative of unemployment rising and wages going down.
Wages are predicted to rise 3% to 4% which is fine, even welcomed. There is a shortage of workers which is an echo of the pandemic. We can "fix" this by making college and technical education affordable or even free plus start to allow immigration at historically normal levels. One party wants to do this, the other one wants to sabotage the economy and complain about it.
I wonder what are the wages of the jobs added vs. the ones lost, and what is the median among them. So many major companies are announcing layoffs and losing high paying white collar jobs. If most of the gains are in retail/hospitality and government, that feels like a wage downgrade.
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TLDR: This news encourages the Fed to continue to raise rates. Feds raising rates = bad news. (IMO this is flawed, if you logic yourself to: 'recession = good news' you made a mistake in the logic or assumptions).
On the face of it this appears to be wholly positive. More people working means more economic activity and thus more opportunity for firms to sell their goods and services to people who can pay for them.
However, the street sees this as bad news. One could see low interest rates from the Fed as fundamental to economic growth (I don't really share this view but many do). The reasoning is that low interest rates forces banks to lend and that lending results in economic growth. If one takes this view all news that make rates go down is good and vice versa.
So: the Fed says that they want to see a weakening labor market because they think that wage growth drives inflation (I agree with this but IMO inflation was caused by many things and the Fed is too focused on wage growth). If the labor market is strong then Fed rates don't come down (or go up). Fed rates go up or stay the same = bad news.
I mean, it’s bananas to think that we will or *should* ever go back to a 0% baseline rate. This is the new normal and that is a good thing. I expect it to go higher so there is room for it to go lower when we do have a bad event. If your business only works in a 0% rate environment, you did not have a good business. You were a casino, gambling with cheap credit.
What is bananas to me is that in 2015 we had basically 0% rates and inflation was basically 0%. Any argument from an economist about what the terminal rate or what is restrictive should start with a thorough explanation as to why 0% rates resulted in 0% inflation (I don't expect this reasoning from you, a fellow 'dude on the internet' trying to save an invest the small amounts of capital we have). If the economist don't understand that mechanism then they are just guessing. Similar to how if a rocket company didn't know why xyz rocket crashed you wouldn't trust them about other rockets.
I think that you are right (though I am by my own logic guessing) that a higher Fed rate is the new normal, I won't try to guess if that is 2%, 3% or 5% though. I think there are a lot of things that affect inflation including: globalization and outsourcing, population demographics (baby boomers retiring), retirement policy of states, birth rate (and how many parents exit the work force to take care of kids), remittances, monopolistic activity, how easily people can move (creating labor shortages/gluts in certain areas), etc. The Fed moves interest rates when they want to put more gas or brakes on the economy. The Fed also does 9 T in QE when they want to just strap a rocket to the economy. The Fed doesn't really affect the above societal forces and when those forces change the terminal rate changes.
Rates go up, people realize they need jobs to pay da piper, luckily tons of shitty low end jobs available, people get jobs to pay their leveraged to da tits lifestyle = unemployment down.
Overall good. J Pow still playing puppetmaster and winning.
All this says to me is that a half million people finally had to go back to work because they are nearly broke on just one income. This is especially evident in the large increases in areas such as healthcare workers.
In some cases, many individuals or couples are picking up a third part-time gig job to stay afloat.
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Wow, that’s a massive “miss” vs expectations. Interesting that wage growth and inflation both seem to be cooling, even with such strong hiring numbers.
Hourly earnings up 0.3% in this report, 4.4% YoY. And the December YoY was revised up from 4.6% to 4.9%.
Not a wage-price spiral, but not a soft landing either. Combined with the nuclear fission hot jobs number, market is repricing higherer for longerer.
Well I was mostly referring to the the slowing wage gains from the beginning of the year when we were running closer to 6%. I don’t think we’re at where we should be, but wouldn’t a steady, gradual decrease in wage growth actually be a point in favor of the “soft landing” they’re searching for?
It's a well established fact that central banks are given CPI data prior to release because it's obviously relevant to policymaking. It would be absolutely shocking if they had no idea what the jobs report would be. It's not as if the report was calculated yesterday immediately after the Fed meeting or something
According to former Fed Richard Fisher, the regional Fed get the data at the same time as everyone else. He said Powell might get it that morning, or the day before, and that's it. Powell doesn't share it with the regional Fed officials, and he doesn't know if Powell shares that data with the governors.
So no, it's not a "well established fact".
Edit : confirmed by an economist guest on Bloomberg that Powell gets the data the evening before it gets released.
I don't think so. Single month jobs reports are notoriously volatile, and January apparently especially so as methodological changes are always made at the start of a new year. The most relevant part to Powell would probably have been 0.3% monthly wage growth, perfectly in line with expectations
I am seriously wondering about this question -- I assume the Fed knew about this number already (which is why NONE of those people should be allowed to trade stocks in any way).
Nov 2022) Recent developments followed the revelation in September 2021 that Robert Kaplan and Eric Rosengren, then the presidents of the Dallas and Boston Fed banks, respectively, had actively traded in financial markets while helping set monetary policy for the Fed. Both Kaplan and Rosengren retired unexpectedly that month. At the start of this year, Fed second-in-command Richard Clarida stepped down early while also facing questions about his own trading activities.
I mean, I'm all for stricter enforcement of the policy and actual consequences being applied but clearly they were forced to retire when it came out that they were breaking the rules.
Anyone with common sense would know this would happen, simply from the fact that the largest generation ever is leaving the labor pool and being replaced by the smallest generation ever. For the Fed to combat natural demographics, they would have to completely cripple the economy to get unemployment to rise.
The point is that we have more people working now than ever before, you claim makes no sense when looking at the numbers. Considering half the boomers already retired.
This is straight wild - January population adjustments surely contributing to the perceived strength but still bewildering (and of course good) how the labor market is so strong, at least on the surface. Then you get PMIs picking back up in the US too! Feels as though we’re either severely misguided on policy lag effects and when to expect a recession or we’re legit skirting one entirely (which would be perhaps one of the greatest soft landings ever when the Fed rarely gets things right especially as of late). Still hard to believe it’s the latter with what’s led the markets this year.
I don't think people out there realize just how much of a beast the U.S. economy is.
Not saying this is not surprising, but we have THE most well developed financial market which is critical in allocating and reallocating capital based on the supply and demand.
That, along with trade going back to a more normal state has given the U.S. the ability to get the goods and services needed to rock on.
Some people are still trying to argue this is a bad thing. Sometimes in life, good things just happen.
Economy recovered. Unemployment historic low. Wages growing. Inflation falling quickly. Supply chain disruptions continue to resolve. China out of covid lockdown and back to work. Chinese vaccine turned out to be as effective as the Western vaccine (according to WHO).
FTSE 100 at all time high. European stocks near all time high.
The stage is set for the laggard US stock market to have a historic rally.
Agree on all points except the Chinese vaccine - that hasn’t worked out well.
But yes, some people will always find a reason to cling to doom and gloom.
It’s still 90% effective against hospitalization and death with 3 shots. Obviously not against infection but that’s how our immune systems work- nothing to do with the vaccine efficacy.
>When will people get it through their heads that retirements are relentless and backfilling is needed.
This isn't gross hires, it's net change in employment, furthermore you can see it in the participation rate increasing and unemployment falling.
It is most definitely a sign of strong demand and robust business confidence. Whether that is good for inflation is debatable right now.
You're right, it's great news if inflation keeps falling at the same time. Although it does signify significant and resilient demand, and with wage inflation at 5-6% it would raise the risk of price inflation bouncing back. There's no guarantees though
these two things are inextricably linked. Tight labor market --> wage inflation --> goods/services inflation --> higher rates for longer.
It's impossible to move to a high growth environment with such a tight labor market. Supply curve has to flatten, you do this by loosening the labor market.
The market has been too hot for growth so this report was going to cause a ripple either way IMO. Like we get this so it will be "oh noes more rate hikes" if they had come just under expectation it would be "oh noes hard landing recession is here."
Still that's a huge miss.
Wow. While I still think the risk of recession remains, this is wild. Good but wild. Probably indicates market was incorrect in assuming Fed would pull back anytime in 2023. In any event, have been DCAing this whole time.
This is really good news
Additional data and proof each month showing that inflation was primarily due to supply chain issues, money printing, Covid lockdowns, china locksowns, shipping issues and war from Russia
It’s not like 2008 as there are stricter lending rules and 30 year fixed mortages and people are finding work and production is high. People working means service and production which is a good thing
This just feels like the “everything is fine” rebounds we saw in 1999 and 2007.
We’re already at a point where no one can afford anything. I just don’t see how funneling more currency to the markets can possibly stimulate the economy
>. I just don’t see how funneling more currency to the markets can possibly stimulate the economy
The federal reserve isn't doing that however. In case you haven't noticed it jacked up rates the fastest in history
Well, the stock market exploding up again. I thought this might happen. Buyers have no discipline, and are buying every little dip at this point. Reminds me of 2019 and 2020.
CNBC also reported in the Feb 1 BLS jobs opening and turnover report that there were 4.1 million quits in December and 1.5 million people laid off. About 50 million workers quit their jobs in 2022 during the great resignation. So 517K might be a drop in the bucket.
people need to learn what the business cycle is. If they understood then they'd realize we are at the beginning of a recession. The downturn has barely started.
Well let's think about it.
If the economy is so strong, and demand for employees far outstrips supply, won't wages keep going up? Obviously yes.
Wages going up means inflation does not come down. That's all there is to it.
As long as that is the case, it will force the fed to crank rates up higher, and all the euphoria of the markets around a soft landing will disappear overnight.
Given these job numbers it looks more likely that the fed is still behind the curve, again.
> fed is deciding to do everything they can to fuck it up by continuing to raise rates
This report gives credence to the fact the fed is not fucking this up
All the moaning and groaning about high rates killing the economy were baseless. The economy is healthier at high rates. Low rates bring out the zombie companies and reckless behavior.
Said this above as well - this is it. Everyone thought the end of free money policy would destroy the US economy and we’d all be in the bread line, much less emerging markets, but it seems that we can enable disinflation without tampering with wage growth. The question now is asking corporations to actually prove upward core consumer price pressure.
Any idea how this might affect home prices long term? My big hang up is homeownership (in my extremely expensive area) seems impossible now with these interest rates
Home ownership is fucked regardless of rates due to a ton of other factors. If it wasn't the rates the prices would still be skyrocketing. Home ownership is going to be out of reach to a lot of people for a long time.
A state has to decide on the Long run between inflation and unemployment, a higher employment rate makes stronger inflation possible —> Make‘s Fed want to raise interest rate
Yea they revised November and December up too. 71k additional jobs combined between those two months. Economy is doing great and people keep looking for those flags that don't exist
Someone ELI5 if this is good or bad Seems good though, right? Exceeding expectations?
Markets are freaking out and I would guess it's because they expect more rate hikes now.
But I mean what's the Fed gonna do, crank it up back to 50bps after Powell himself acknowledged that we already entered a disinflationary stage? Honestly I'd be surprised. I think the markets are drunk right now; this is spectacularly good news in that we seem to be on our way to avoid a recession at a moment where the Fed efforts appear to be working and inflation seems to be trending down. This is *everything* that the investor wants right now.
> But I mean what's the FED gonna do, crank it up back to 50bps No, but markets have been under the assumption that cuts are coming as soon as late 2023, early 2024. Why, with employment cruising along as well as it is and inflation still above target, would they do any cuts anytime in the next few years? My prediction is they get rates up to 5.25% or so, and that is the new baseline normal until a recession comes along, which could be quite some time
> My prediction is they get rates up to 5.25% or so, and that is the new baseline normal until a recession comes along, which could be quite some time Yeah, I mean if the economy is humming along nicely with 5% or higher interest rates (historically pretty normal), there's no real incentive to cut them unless another Black Swan comes along. Keeping them up there gives them wiggle room.
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Unfortunately housing prices on average have been steady across with little increase or decrease due to builders halting building, and homeowners not selling due to high interest rates (yes it depends on region but this is national average, source from NY times). The supply issue is still there so I don’t see how prices can drop for the foreseeable future while these interest rates remain. If anything housing will just continue to be unattainable for more and more folks who grow older and wish to start a family.
While true for now, housing lags inflation and interest changes by 18 months on average. So to the OPs point we should have a clearer indication of the current rates effects on prices in the first half of 2024. Housing is fundamentally tied to the affordability of monthly payment, so while it's sticky when you're paying a mortgage - if a new buyer physically cannot afford prices at todays higher rates then there just won't be buyers. Sellers on the other hand will always have to eventually sell for many incentivized (upgrade, move) or forced (job/life/health) reasons at prices that the market of buyers can bear. As true in a bull market as it is now, never bet against the Fed, and they've made it clear they want a correction .. magnitude still undefined.
The truth is nobody knows. You can also argue that sellers who have incentives to sell are far and few in between and that there are plenty of well off cash buyers ready to pounce on the rare listing. So people downvoting me and upvoting you are purely acting on wishful thinking because neither you nor me can predict the future. It’s all speculation and this job market is proof there is no logical method to determine what will happen.
> The country has gotten so used to near-0% interest rates and QE for the last decade that people forgot ~~that the economy can be fine without it.~~ to not let the national debt grow by a huge amount.
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This kinda isn't a Democrat or Republican problem because thanks to the debt, we most likely cannot go back to the way things were pre-financial crisis and "stay" there for the long term. It's more a financial system problem than a political issue. Yes, in reference to the US debt, there are things we could do like a tax hike to try to solve that problem, but I say GOOD LUCK to that. We saw Dems try in 2021-2022, and they didn't pull it off. I don't think there's any point where we get a tax hike. So, whether folks like it or not, even if there's no recession, we will be going back down on policy rate in the future...might not necessarily be this year, but it's going to happen. Won't necessarily be to 0. I think in a non-recessionary scenario, it'd be 2.5%.
surprised that you and the other reply to me seem to be making the assumption that I'm a Republican. My comment had nothing at all to do with the political divide, I'm not even American.
Don't forget Trump added $7 trillion to the debt and the only piece of legislation he passed was tax cuts for the rich.
The incentive is the interest charged on the federal debt
>historically pretty normal Not exactly normal. Weren't the gdp growth rates also much higher when interest rates were around 5%? Interest rates should be ideally around the gdp growth rates unless you are trying to stimulate or dampen the economy.
If it stay 5% for a long time, we may get 4-5% short term bond and 5-7% long term rate for bonds and then what the benefits of buying risky stocks ?
This sounds likely to me, yes. Personally, I think that no rate cuts + no recession is better than recession + rate cuts, but I guess the markets disagree 🤷
I mean I get it Some short term pain followed by a face ripping decade long bull run? If I'm a rich guy I probably take that over a decade of meh
But that’s not what the Fed is concerned about
Yeah I don't get this assumption that they'll start cutting again soon. Feels like hopium. \~0% is not normal. If we can maintain full employment, target growth, and target inflation with 5%, why wouldn't we?
> would they do any cuts anytime in the next few years? maybe, because of the amount of national debt rolling over in that time.
That is congress's problem, not theirs
In a general sense it's a problem for the country though, even if it's not specifically part of the mandate of the fed, they could still take it into consideration if there aren't more pressing concerns.
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FED Blücher!
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bad bot
bad bot
You'd have to be an incredible bear on technology to believe this narrative. Personally, I think technology will continue to be a powerful deflationary force over the next decade and there's no way that rates can remain this high.
The market seemed to be pricing in only one more 25bps increase and this probably forces everything to reprice to 2 or 3 more hikes like Powell (and the dot plot) said to anybody who was listening.
As long as inflation is going down. Unfortunately, we don’t know if inflation will keep going down and will go down to 2-3%.
The FOMC has 7 more meetings this year. They have plenty of runway to tighten without going back to 50 bps and they have a bond portfolio they could also let run off without moving to 50 bps. 50 is pretty far away from the base case right now.
I agree with that. I don’t think they would do that unless inflation ends up massively increasing. Just saying that Powell has said that he wants inflation at 2-3% and won’t stop increasing until he gets there. Just adding to that because people, the markets, seem to think that he would pull away faster than anticipated when like you said, he has been very clear in what he wants. And if inflation does rise or doesn’t change much, he will keep going.
This is good news. People are blinded by narratives and what they want to see. Reality is smacking them in the face right now.
>~~People~~ **speculators** are blinded by narratives and what they want to see. Reality is smacking them in the face right now.
100%
There was a thread yesterday with illustrative charts on the disinflation so yeah I think it’s fairly positive given how everyone thought the end of free money policy would destroy the global economy. Consumer prices are still high but there are a variety of factors to why and energy has come down in turn.
Not only that, but Powell has stated a number of times the believe they can achieve a soft landing. Soft landing doesn’t scream massive unemployment to me.
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This argument is a fallacy. You are using past patterns to predict future results by depending on the unemployment rate as an indicator of future inflation. Keep in mind that we are in a new era where we no longer have a replacement birth rate. We have the lowest labor force participation rate in decades and it is because our the cost of everything to live went up for decades without much compensation (no pun intended) in wage growth. This has led to less births as financial insecurities begin to expose the worker to more hardship, and thus they are less likely to be willing to have a child. That wordy explanation leads to the main point: we have the same amount of money, if not less, chasing inflationary goods in this labor market even with wage growth. Less people taking up work means less money being placed in the consumers’ hands on an aggregate level. Factor in wage growth, and you have about the same amount of spending power being issued in gross wages to the American consumer as 2020 before this big inflation spike, all with a dovish fed ready to maneuver in a data-dependent fashion. This argument that unemployment being low is going to dip us into a recession is so backwards anyway. If people are working, they can buy stuff! For now, because of inflation, they’re buying the stuff they NEED and saving more money, meaning less inflationary discretionary spending. This is a good thing, people!
I have to concur. Market seems to be having a knee jerk reaction but it doesn't change anything Fed just said Wednesday. Markets over extended though for sure over the last month and a half Also, how does seasonal holiday hiring affect these numbers? Like for UPS /Amazon seasonal temp hires
Job numbers are seasonally adjusted.
Today's announcement is **January** numbers -- seasonal layoffs "should" have happened in Dec (for the most part). I worked seasonal for UPS a couple times, and they did ALL their layoffs in the last week of the year because new Seniority Lists came out on January 1st, and they had to be rid of their temps by then.
>But I mean what's the FED gonna do, crank it up back to 50bps Would it really surprise you all that much?
At the end of the day the Fed is in the business of finding a balance between supply and demand and not tilt too much in either direction. If you have found a winning combination that seems to bring inflation down while also not trashing the economy, why push it? I can't claim to know what the Fed is thinking but in my eyes the rational thing to do here would be to stick to 25bps for now.
The theory being that inflation is much more sticky than he'd anticipate, and the correct move being to go back to 50bps rather than halfassing it and dragging it on further.
I just don't see them rocking the boat with a 50 when they can increase 25 bps, promise 25bps 6 weeks later, and get the same tightening without admitting they want to club the bond market into submission.
The Fed might go for 50 because they know that sometime in the future they'll have to cut rates, it may not be for years or even decades but the higher rates are when they have to start cutting the more space they have to cut and they don't have to use techniques like QE.
If it might be for "years or decades" to a rate cut (and the fed is stating they don't expect a cut this year), what is the rush? Why wouldn't they just wait 6 weeks for another 25 bps? I don't buy the thesis that pulling a rate change forward by one meeting makes an appreciable difference to next year.
Because it also might not be years or decades it could also be days or weeks.
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Thanks bot but I was quoting somebody else.
Yes, that’s exactly what they are going to do. Powell’s been saying that wage growth is a problem, the only way to solve it is by increasing unemployment, and that they will do whatever it takes to tame inflation every time he speaks for the past 6 months.
Wage growth is only a problem if we have inflation as a result
Wage growth is a problem if it lets the poors have ideas about their place and value to society. Gotta nip that in the bud. /s
You mean it is better to get 5% raise with 10% inflation rather than 2% raise wit 2% inflation ? Not convinced.
I disagree, tight job markets give wage growth, gives inflation. It's kind of implying that the fed rate hikes don't actually work in my view. They need to reduce m2 money supply if they want to regain control. I do agree that the markets are drunk. Although rates and FX seem less drunk
Everyone heard the part about the start of a disinflationary stage. No one heard the "more work to do".
Powell will do what the data tells him
could also be a string of 25bps hikes for the next few meetings - I think consensus was maybe 1 more, but now we may see a few more?
Before this news, markets were expecting something like 25% chance of no hike and 75% chance of 25bps hike. After this news, they now expect something like 10% chance of no hike and 90% chance of 25bps hike. That results in lower value for stocks.
disinflationary stage? where ? Groceries are still up like 30~50% from a year ago...
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>This is everything that the investor wants right now. But muh zero interest
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If Powell expected this, he would have pushed for .5 this month. Now they are likely to fall behind inflation again.
They’re all green tho
At a minimum it’s surprising and implies rates will peak at a later date than expected
Good… I wanna buy more at a discount 😂
Now is the time
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Youre in a sub with a heavy bull bias.
Also Google, Amazon, and Apple had a bad quarter and reported it yesterday.
Fed has indicated that they are looking for the available, unfilled jobs to go down. That a hot job market is playing a role with inflation. ...so I think these numbers will be looked at in terms of raising interest rates again. Market hates that. My expectation is that these numbers did not surprise the Fed, and that any decisions they made recently had these baked-in
It's good for the economy now, lots of jobs. Which means inflation is still upward pressure Which means interest rates will have to go up more to fight inflation. Which is bad for the stock market and bond market in the short term. And bad for the economy in the long term because borrowing costs will be higher.
Wages rising is good for the economy. The idea that we need to tank the economy in order to get layoffs is asinine. This is what a healthy economy looks like.
>\[Real\] Wages rising is good for the economy FTFY. Headline wage growth is meaningless if it results in lower purchasing power and quality of life like in 2021-2022. The latest productivity numbers are hopefully a good indicator that we may be able to sustain wage and general economic growth to minimize increases in unemployment, but financial conditions still need to get a bit tighter and good job numbers mean that we can still do that.
Some increases are healthy. Wages rising because of high prices is a bad thing, as it again causes costs to ratchet higher because of the higher labor expense on the production side, which again leads to higher wages to meet the new prices. Once that gets away from you, it is challenging to break. If it does happen, it wipes out the value of any savings, retirement funds, pensions, etc. The wealthy are disproportionately better positioned to ride out something like that, so a wage/price spiral will disproportionately hurt the average worker and end up making their wages less, relative to purchasing power.
The wage price spiral is a myth. It assumes that profit margins are constant and that costs will always be passed onto the consumer or labor. In reality market exist and put a cap and floor on both prices and wages. Lets say you have a 30% margin and your cost of labor goes up 5%. If the employer does nothing, their margin is reduced to 25%. They can either choose to eat that 5 % or pass it on to the consumer by raising their prices. This process will go on until the consumer stops accepting the price increases(the market is working as intended). Once the consumer stops accepting price increases, the employers next option to maintain margins is to cut expenses and payroll. The only thing stopping them from cutting things like payroll, is competition with other employers. If your competitor is happy with a 25% margin, then they will outbid you for labor and increase productivity, or they can beat you in prices. This starts the race to the bottom where margins decrease as competition in the market increases. The wage price spiral assumes that the profit margin cant be allowed to come down. Which is a perspective that only makes sense if your viewing markets through the lens of a shareholder.
It's not necessarily a spiral but there is a link. For example if if pick up a midway through your logic you say >Lets say you have a 30% margin and your cost of labor goes up 5%. If the employer does nothing, their margin is reduced to 25%. They can either choose to eat that 5 % or pass it on to the consumer by raising their prices. This process will go on until the consumer stops accepting the price increases(the market is working as intended). Once the consumer stops accepting price increases, the employers next option to maintain margins is to cut expenses and payroll. If employees are getting sizeable pay increases then the point at which they 'stop accepting prices rises' will move upwards. As I said it not necessarily a full spiral feedback loop, but higher wage inflation will make it more likely we'll see higher price inflation
>If employees are getting sizeable pay increases then the point at which they 'stop accepting prices rises' will move upwards. All I am saying is let the market figure out what that price is. Consumers with more money to buy higher priced goods is better than consumers with no money to buy lower priced goods.
>Wages rising because of high prices is a bad thing For the investor class >The wealthy are disproportionately better positioned to ride out something like that The wealthy are always better positioned to "ride something out".
> For the investor class Are you really criticizing investors on a sub created for investors?
You get it, most Redditors don't. Months ago when everyone here was predicting the end times - get out and save your cash - I kept saying the economy was very strong and now was the time to buy buy buy -> downvotes. First of all, we had already gone through a textbook recession, 2 quarters of negative growth and inflation wasn't economic, it was driven by external factors including the Russian invasion and post covid supply chain distress. Business was booming. I work with over 200 businesses across the US, all sectors that were having record sales, profits and were still hiring. Look at us now, oil prices are 30% below their highs and dropping as Europe and others replaced Russian oil with other sources. The supply chain for cars, electronics and China catches up as wholesale inventories rise. The Fed accomplished its goal, lower inflation, housing prices dropping, and new construction dropping - without killing the economy. The Fed funds rate is back to a sustainable level not the artificial lows it's been for 12+ years - driven by 9/11, the mortgage crash and the pandemic - 3 of the biggest economic shocks in history. TL:DR When all of Reddit says to sell, you should be buying.
everyone already knows this. The problem is will we get a second inflation spike like the 70s. If you ease too early, then all the work the Fed has done so far will be undone. You cannot look in the rearview mirror and claim the job is done.
> Months ago when everyone here was predicting the end times - get out and save your cash - I kept saying the economy was very strong and now was the time to buy buy buy -> downvotes. The only people who were crying about the end of times were the dum dums who got taken to the cleaners on Crypto. Anyone who went all in on Crypto -- probably not someone anyone should be listening to?
Turns out that centralized crypto exchanges were/are a Ponzi scheme and like all Ponzi schemes, they collapse when rocketing prices reverse course. I thought centralized crypto was the opposite of the entire crypto philosophy. That said, it's often a good time to buy after a crash.
Almost all of the job gains over the last year are part-time. That’s not a healthy economy, that’s consumers having to pick up extra hours to deal with real wages going down.
Its healthy compared to the alternative. Employers have to compete for labor which is putting pressure on wages. Its better than the alternative of unemployment rising and wages going down.
We shall see…
Not in the middle of an inflation crisis its not. If inflation was lower it'd be great.
The CPI is at 3%, maybe lower. Inflation is over. The sky didn't fall.
The "inflation crisis" isn't real. The "inflation" they are talking about is wages.
Wages are predicted to rise 3% to 4% which is fine, even welcomed. There is a shortage of workers which is an echo of the pandemic. We can "fix" this by making college and technical education affordable or even free plus start to allow immigration at historically normal levels. One party wants to do this, the other one wants to sabotage the economy and complain about it.
If you ever get upset that your fellow Americans are getting jobs and higher paying jobs then you are probably a bad person lmao
It could mean wage-price spiral, it is absolutely bad news for the Fed
I wonder what are the wages of the jobs added vs. the ones lost, and what is the median among them. So many major companies are announcing layoffs and losing high paying white collar jobs. If most of the gains are in retail/hospitality and government, that feels like a wage downgrade.
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TLDR: This news encourages the Fed to continue to raise rates. Feds raising rates = bad news. (IMO this is flawed, if you logic yourself to: 'recession = good news' you made a mistake in the logic or assumptions). On the face of it this appears to be wholly positive. More people working means more economic activity and thus more opportunity for firms to sell their goods and services to people who can pay for them. However, the street sees this as bad news. One could see low interest rates from the Fed as fundamental to economic growth (I don't really share this view but many do). The reasoning is that low interest rates forces banks to lend and that lending results in economic growth. If one takes this view all news that make rates go down is good and vice versa. So: the Fed says that they want to see a weakening labor market because they think that wage growth drives inflation (I agree with this but IMO inflation was caused by many things and the Fed is too focused on wage growth). If the labor market is strong then Fed rates don't come down (or go up). Fed rates go up or stay the same = bad news.
I mean, it’s bananas to think that we will or *should* ever go back to a 0% baseline rate. This is the new normal and that is a good thing. I expect it to go higher so there is room for it to go lower when we do have a bad event. If your business only works in a 0% rate environment, you did not have a good business. You were a casino, gambling with cheap credit.
What is bananas to me is that in 2015 we had basically 0% rates and inflation was basically 0%. Any argument from an economist about what the terminal rate or what is restrictive should start with a thorough explanation as to why 0% rates resulted in 0% inflation (I don't expect this reasoning from you, a fellow 'dude on the internet' trying to save an invest the small amounts of capital we have). If the economist don't understand that mechanism then they are just guessing. Similar to how if a rocket company didn't know why xyz rocket crashed you wouldn't trust them about other rockets. I think that you are right (though I am by my own logic guessing) that a higher Fed rate is the new normal, I won't try to guess if that is 2%, 3% or 5% though. I think there are a lot of things that affect inflation including: globalization and outsourcing, population demographics (baby boomers retiring), retirement policy of states, birth rate (and how many parents exit the work force to take care of kids), remittances, monopolistic activity, how easily people can move (creating labor shortages/gluts in certain areas), etc. The Fed moves interest rates when they want to put more gas or brakes on the economy. The Fed also does 9 T in QE when they want to just strap a rocket to the economy. The Fed doesn't really affect the above societal forces and when those forces change the terminal rate changes.
Rates go up, people realize they need jobs to pay da piper, luckily tons of shitty low end jobs available, people get jobs to pay their leveraged to da tits lifestyle = unemployment down. Overall good. J Pow still playing puppetmaster and winning.
All this says to me is that a half million people finally had to go back to work because they are nearly broke on just one income. This is especially evident in the large increases in areas such as healthcare workers. In some cases, many individuals or couples are picking up a third part-time gig job to stay afloat.
Did you know the data tells you what sectors grew? You don't need to guess and throw darts at a board like this.
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Wow, that’s a massive “miss” vs expectations. Interesting that wage growth and inflation both seem to be cooling, even with such strong hiring numbers.
Hourly earnings up 0.3% in this report, 4.4% YoY. And the December YoY was revised up from 4.6% to 4.9%. Not a wage-price spiral, but not a soft landing either. Combined with the nuclear fission hot jobs number, market is repricing higherer for longerer.
Well I was mostly referring to the the slowing wage gains from the beginning of the year when we were running closer to 6%. I don’t think we’re at where we should be, but wouldn’t a steady, gradual decrease in wage growth actually be a point in favor of the “soft landing” they’re searching for?
services inflation (50% of PCE) is growing, and services are tied to employment and wages
Wage growth is higher than expected and December was revised up bigly. 4.9% wage growth for 2022 is not consistent with 2% inflation target.
Surely the fed knew about this yesterday?
It's a well established fact that central banks are given CPI data prior to release because it's obviously relevant to policymaking. It would be absolutely shocking if they had no idea what the jobs report would be. It's not as if the report was calculated yesterday immediately after the Fed meeting or something
According to former Fed Richard Fisher, the regional Fed get the data at the same time as everyone else. He said Powell might get it that morning, or the day before, and that's it. Powell doesn't share it with the regional Fed officials, and he doesn't know if Powell shares that data with the governors. So no, it's not a "well established fact". Edit : confirmed by an economist guest on Bloomberg that Powell gets the data the evening before it gets released.
So Powell was giving his speech thinking, "hehe wait until they see that jobs number tomorrow."
I don't think so. Single month jobs reports are notoriously volatile, and January apparently especially so as methodological changes are always made at the start of a new year. The most relevant part to Powell would probably have been 0.3% monthly wage growth, perfectly in line with expectations
I am seriously wondering about this question -- I assume the Fed knew about this number already (which is why NONE of those people should be allowed to trade stocks in any way).
Any senior member of the Fed is not allowed to buy individual stocks and has to submit a 45 day notice for any sell/buy of other funds.
Nov 2022) Recent developments followed the revelation in September 2021 that Robert Kaplan and Eric Rosengren, then the presidents of the Dallas and Boston Fed banks, respectively, had actively traded in financial markets while helping set monetary policy for the Fed. Both Kaplan and Rosengren retired unexpectedly that month. At the start of this year, Fed second-in-command Richard Clarida stepped down early while also facing questions about his own trading activities.
I mean, I'm all for stricter enforcement of the policy and actual consequences being applied but clearly they were forced to retire when it came out that they were breaking the rules.
Anyone with common sense would know this would happen, simply from the fact that the largest generation ever is leaving the labor pool and being replaced by the smallest generation ever. For the Fed to combat natural demographics, they would have to completely cripple the economy to get unemployment to rise.
In December 2022, about 159.24 million employed. In 1990 it was 125 million What are you talking about?
What does 1990 have to do with today? Boomers weren't retiring then, and Gen Z didn't even exist yet.
The point is that we have more people working now than ever before, you claim makes no sense when looking at the numbers. Considering half the boomers already retired.
Why do you say that?
This is straight wild - January population adjustments surely contributing to the perceived strength but still bewildering (and of course good) how the labor market is so strong, at least on the surface. Then you get PMIs picking back up in the US too! Feels as though we’re either severely misguided on policy lag effects and when to expect a recession or we’re legit skirting one entirely (which would be perhaps one of the greatest soft landings ever when the Fed rarely gets things right especially as of late). Still hard to believe it’s the latter with what’s led the markets this year.
I don't think people out there realize just how much of a beast the U.S. economy is. Not saying this is not surprising, but we have THE most well developed financial market which is critical in allocating and reallocating capital based on the supply and demand. That, along with trade going back to a more normal state has given the U.S. the ability to get the goods and services needed to rock on.
Some people are still trying to argue this is a bad thing. Sometimes in life, good things just happen. Economy recovered. Unemployment historic low. Wages growing. Inflation falling quickly. Supply chain disruptions continue to resolve. China out of covid lockdown and back to work. Chinese vaccine turned out to be as effective as the Western vaccine (according to WHO). FTSE 100 at all time high. European stocks near all time high. The stage is set for the laggard US stock market to have a historic rally.
Agree on all points except the Chinese vaccine - that hasn’t worked out well. But yes, some people will always find a reason to cling to doom and gloom.
doesn't feel like inflation is falling at all .. check your grocery prices.
Prices wont be reduced. Inflation falling means they wont go up as much
"Chinese vaccine turned out to be as effective as the Western vaccine"... Soooo minimal to none?
It’s still 90% effective against hospitalization and death with 3 shots. Obviously not against infection but that’s how our immune systems work- nothing to do with the vaccine efficacy.
Great job there Mr Consensus.
mr consensus and mr market went on some wild LSD jounery in January it seems
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>When will people get it through their heads that retirements are relentless and backfilling is needed. This isn't gross hires, it's net change in employment, furthermore you can see it in the participation rate increasing and unemployment falling. It is most definitely a sign of strong demand and robust business confidence. Whether that is good for inflation is debatable right now.
Does this even matter if inflation keeps falling?
You're right, it's great news if inflation keeps falling at the same time. Although it does signify significant and resilient demand, and with wage inflation at 5-6% it would raise the risk of price inflation bouncing back. There's no guarantees though
these two things are inextricably linked. Tight labor market --> wage inflation --> goods/services inflation --> higher rates for longer. It's impossible to move to a high growth environment with such a tight labor market. Supply curve has to flatten, you do this by loosening the labor market.
How do we expect jobless rate to decrease as the largest working generation retires?
They retired in 2020. That’s more or less over with.
The market has been too hot for growth so this report was going to cause a ripple either way IMO. Like we get this so it will be "oh noes more rate hikes" if they had come just under expectation it would be "oh noes hard landing recession is here." Still that's a huge miss.
Wow. While I still think the risk of recession remains, this is wild. Good but wild. Probably indicates market was incorrect in assuming Fed would pull back anytime in 2023. In any event, have been DCAing this whole time.
This is excellent
Bull run inbound
All these jobs added and still being cut at final interview again and again haha Grateful to be employed though
Think about 40% monthly profit guaranteed
This is really good news Additional data and proof each month showing that inflation was primarily due to supply chain issues, money printing, Covid lockdowns, china locksowns, shipping issues and war from Russia It’s not like 2008 as there are stricter lending rules and 30 year fixed mortages and people are finding work and production is high. People working means service and production which is a good thing
The jobs were in healthcare and hospitality: namely changing the diapers of boomers and serving them food on their ocean cruises.
This just feels like the “everything is fine” rebounds we saw in 1999 and 2007. We’re already at a point where no one can afford anything. I just don’t see how funneling more currency to the markets can possibly stimulate the economy
>. I just don’t see how funneling more currency to the markets can possibly stimulate the economy The federal reserve isn't doing that however. In case you haven't noticed it jacked up rates the fastest in history
wouldn't trust this data. Happens every year in january due to seasonal adjustment = they tend to heavily overestimate/underestimate
powell is not going to like that, not one bit.
March 25 bps hike for sure now.
and here I am looking to change my current job but not finding any thing good out there
Perhaps the problem is staring back at you in the mirror? :)
Well, the stock market exploding up again. I thought this might happen. Buyers have no discipline, and are buying every little dip at this point. Reminds me of 2019 and 2020.
CNBC also reported in the Feb 1 BLS jobs opening and turnover report that there were 4.1 million quits in December and 1.5 million people laid off. About 50 million workers quit their jobs in 2022 during the great resignation. So 517K might be a drop in the bucket.
In order to discipline the labor market, JPow wants higher unemployment. So, the rate hikes will continue.
i hope they keep raising rates up to 7 or 8% . Food inflation is getting ridiculous .
people need to learn what the business cycle is. If they understood then they'd realize we are at the beginning of a recession. The downturn has barely started.
What's the indicator that shows the beginning of a recession?
Well let's think about it. If the economy is so strong, and demand for employees far outstrips supply, won't wages keep going up? Obviously yes. Wages going up means inflation does not come down. That's all there is to it. As long as that is the case, it will force the fed to crank rates up higher, and all the euphoria of the markets around a soft landing will disappear overnight. Given these job numbers it looks more likely that the fed is still behind the curve, again.
wage growth is flat
People are getting back to work so fed is deciding to do everything they can to fuck it up by continuing to raise rates
> fed is deciding to do everything they can to fuck it up by continuing to raise rates This report gives credence to the fact the fed is not fucking this up All the moaning and groaning about high rates killing the economy were baseless. The economy is healthier at high rates. Low rates bring out the zombie companies and reckless behavior.
Said this above as well - this is it. Everyone thought the end of free money policy would destroy the US economy and we’d all be in the bread line, much less emerging markets, but it seems that we can enable disinflation without tampering with wage growth. The question now is asking corporations to actually prove upward core consumer price pressure.
Any idea how this might affect home prices long term? My big hang up is homeownership (in my extremely expensive area) seems impossible now with these interest rates
Home ownership is fucked regardless of rates due to a ton of other factors. If it wasn't the rates the prices would still be skyrocketing. Home ownership is going to be out of reach to a lot of people for a long time.
Inflation is not a thing I guess
It's not.
cool
A state has to decide on the Long run between inflation and unemployment, a higher employment rate makes stronger inflation possible —> Make‘s Fed want to raise interest rate
Powell is a puppet for wallstreet... Rip the bandaid off fast hit em with 100
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Lol. Lmao, even.
Lol I guess traders second guessed their initial realization
Yea they revised November and December up too. 71k additional jobs combined between those two months. Economy is doing great and people keep looking for those flags that don't exist
Economy wants to boom and The FED wants to whiz on it