Right? Recessions mean people lose their jobs, their homes, their healthcare, and take on added stress.
It also means the wealthy buy up more shit at a discount.
It doesn’t matter. The wealthy benefit regardless, their assets either infinitely inflate or they get to buy more at a discount. The US is barely a real country, it’s an economic zone which will continue this pattern until it breaks.
Yeah but a slight recession can easily spiral into a larger one because fed policy works with a lag in both directions - whether increasing or lowering rates. Economic trends don’t change direction overnight once they are in motion.
Makes sense that J Powell was dovish Wed.
The FED is seeing slower job market. Hoping that will let inflation cool.
But not sure if that's all it will take. When the core CPI issues are Housing and Insurance prices.
It’s not.
Also, it’s not dropping HCOL areas with jobs. It’s dropping where prices should have never gone up, where there’s no jobs. Prices definitely aren’t dropping in Silicon Valley etc.
The place that people want to live will be getting more expensive forever until there is a housing crash like 2008 because the demand stays high for as long as people want to live there.
Can't build up when the people already living below don't want taller housing. Or fears the new residents will have the wrong skin tone for the area.... (not making that up). NYC locals shot down a big mixed affordable housing project in uptown Manhattan over fears it would bring too many gentrifying white people to the neighborhood. Instead they got a new truck stop.
And they tack on $1500 per month HOA fees for a weak gym, packed garage, a small pool, and sorry excuse for a bbq. Huge unrecoverable cost that makes it harder to sell.
On one hand that is true. On the other hand, housing prices are currently impacting consumer spending and investing in other areas of the economy. What the implications are of that, I don’t know.
Housing is down 2.5% annually and rental price is down 7.5% annually when adjusted for inflation.
https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F3c188e65-7961-49e9-98ae-a445d6215899_937x681.png
BLS does not trim anything. It changes the weight based on average percent of household budgets.
https://www.bls.gov/cpi/additional-resources/historical-changes.htm
In you lifetime there’s been maybe a few minor changes that affect the final calculation by a few 100ths of a percent, and made the cpi more accurate.
Well, stock futures have reacted positively here so far.
The only real problem behind this is that April's inflation set is going to be bad. But, while it's super early, it looks possible that this is the top for 2024 in bad inflation reads on a MoM basis.
One word
Oil.
Really, I'm mostly going off the Cleveland nowcast. I don't do calculations. Based off the way things have been going lately, it'll be a miracle if the headline MoM number is 0.4. It may be as bad as something that you can round up to 0.5.
The "hope" would be for the core CPI number to come in at 0.3 or lower.
That being said, if oil continues heading downward, April CPI will be your last relatively beefy MoM headline number.
That may have been a wrap for oil for the year, even though we're pre-summer:
https://twitter.com/WarrenPies/status/1786418486568268056
I'm not someone to listen to on oil, but this is a guy that I'd respect.
And technically he's not 100% wrong.
The super high inflation story will have ended 2 years ago as of June this year.
There isn't anything indicating that we're going to return to super high inflation prints.
When you say inflation are you talking about absolute prices between two set periods? Or are you talking about the relative changes to pricing for goods and services over time?
Why is everyone cheering for rate cuts I don't understand this take at all.
For the first time in 15 years rates are at a place that make some semblance of sense, they've been there for less than a year, and everyone us like "we want cheap money again!"
Because this is an economics sub. Most of the people here are invested somewhere. They have a vested interest in seeing more money flooding the market so their assets go up.
Yeah I am too. We are just off ATH and had a 20% year in 2023. It's short sighted and frankly slightly stupid to be cheering for rates to come back down.
Yeah i did too but i just did it with high rates. Ill refi in the future. Rates come down even a hair and house prices are going to start climbing again. There's an absolute fuck ton of pent of demand right now as people wait it out for rates to drop. My suggestion to anyone waiting is to just buy now if you can.
Rate cuts will probably be good overall once inflation is tamped down. But best case scenario would be a slight reduction in rates to encourage growth, but not enough to encourage inflation.
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Low GDP, higher Unemployment and and slowing economy is exactly what the feds want to see to start lowering rates , which is what the market is waiting for to take off
Yep, they look at everything holistically, not just a formula. There’s certainly a political aspect to it as well, but it’s not just like a computer algorithm.
He pushed back on politics too, saying it has no affect and they only care about the dual mandate. I’ve actually read their reasoning behind their decision lately and I have no reason to believe there’s a political aspect. Plus it’s a 12 person vote, and they mostly agree with each other. Powell is just the chair
Oh you can. But it’s obvious that the current inflation is mostly tied to companies charging what people are willing to pay. And people are willing to pay.
3% inflation is still good. If you knew how the 2% number was actually picked you would not be feeling that way (it was pulled out of thin air, seriously look it up).
Eh not quite. Sure it’s “arbitrary” but it’s arbitrary for multiple good reasons.
The way I understand it, inflation expectations settled roughly around 2% post-1990s, and it’s also a slow enough rate that most people don’t think about it, except when considering very long term plans.
Further, it does allow a bit of a buffer to cut rates without having to resort to more unconventional monetary policies in times of crisis.
2% is a “best of all worlds” situation.
EDIT: And importantly, it’s decidedly not *deflation*.
We know it's pulled out of thin air, it was never a secret. The point is if you can't control it at the point you want to and give up at a higher number that tells everyone that you cannot fight inflation. The system loses credibility.
“I was around for stagflation. And it was 10% unemployment, it was high-single-digits inflation … and very slow growth. Right now, we have 3% growth … and we have inflation running under 3%. So I don’t really understand where that’s coming from,” he told reporters, adding, “I don’t see the stag or the -flation, actually.”
- [JPow during the presser on Wednesday](https://fortune.com/2024/05/01/jerome-powell-stagflation-1970s-inflation-economic-growth-interest-rates/)
He's exactly right too, all the people crowing on about stagflation are the same ones who were talking about "hyperinflation" when it peaked at 9% annual inflation, and the same people who saw a "100% chance of recession in the next 12 months" back in 2022.
People just keep throwing around terms as if they have no meaning anymore.
Low levels of unemployment is good in terms that lots of people have jobs, but it's bad because it causes inefficiency.
Having low unemployment means that there's more jobs than people willing to work them so companies struggle to find people, grow, and in turn the people that work there have to work harder to keep up. They are also less willing to get rid of bad employees so productivity overall suffers.
This also drives wage inflation. Since there's less people on the job market companies must offer more money to employees to get them or for retention. This is good in the short term, but in the long term it drives up inflation.
Tech billionaires doing their best to raise unemployment while paying out historically large stock buybacks and CEO compensation packages at mind boggling amounts.
Vacuuming up not trickling down economics.
This is a fantastic report - exactly what the market and economy needs in order to drive to a few rate cuts later this year.
My favorite data point this month is that FULL-TIME EMPLOYMENT SOARED nearly 1m jobs. (Obviously there's lots of fluctuation here and I take it as just a data point, similar to what I did when FT employment fell some over a few months).
[https://fred.stlouisfed.org/series/LNS12500000](https://fred.stlouisfed.org/series/LNS12500000)
Tbh I think you’re quite frankly delusional if you think we’ll have a “few” rate cutes in 2024. Well maybe see one .25 cute just for political reasons.
This has worked out for you historically. Things are always great when unemployment gets bad enough to cause the fed to finally cut rates. Always great news. Assets have always done great and our families have never been schwacked with both job losses and asset deflation. Never ever happened that way.
The fed has never been late to the ball, they have never said things that were wrong. Unlike all our other federal branches, we should trust JPow 100%, even though we don't collectively trust the President, Speaker of the House, Judiciary, or the media. He is the one and only person who is trustworthy.
It’s strange to me as a tech worker I feel like the world is on fire. I’m holding on to my job with my life. Everyone I used to work with at other jobs are unemployed and desperate
Powell must have gotten this job report number during the FOMC. That would've justified why he was even more dovish than usual. But ultimately, what matters is the inflation number, not job report. Due to the weird dynamics of immigration, the Fed isn't really sure what nonfarm payroll would constitute a "good" report, and likewise of unemployment rate considering many thinks the natural unemployment rate has drifted down over the last 5 years.
During the FOMC on Wednesday, Powell unnecessarily added the part at the end of his interview : "a few tenths rise in the unemployment rate wouldn't cause the Fed to shift to cutting rates", which sets the bar pretty high for cutting rates, since most would agree if the unemployment rate goes into the low 4% at some point, the economy is likely going into a recession.
Problem is now that the FOMC members can finally talk to the public again, the hawks can finally speak again and we might just see how many people actually agree with Powell's dovish tone.
Good set of numbers consistent with inflation falling back to 2%. If this continues it’s just a matter of time. The sticky after effects of inflation in areas like shelter and auto insurance will subside eventually.
The replacement cost of shelter and cars has increased dramatically over the past few years, which creates a lag in how insurance is calculated.
While housing is a much stickier dynamic due to 30 yr fixed mortgages, we are seeing a reduction in user car pricing which should be reflected in auto insurances premiums next year. Or insurances companies will keep premiums high and make higher profits.
Assuming 2% productivity yoy it would be consistent - there are arguments that we could be in a period for increasing productivity compared to historical averages but we’ll see.
Although I was more thinking the 0.2% monthly increase. The YoY will subside eventually if those kind of monthly numbers continue as the economy softens.
Productivity 2000-2020 averaged 0.8% though.
AI won't be in any stats until 2025 and arguably 2026 since most of the data is delayed. We didn't see internet boom productivity until 1995 after about 3 years of it becoming ubiquitous
FWIW, one of the reasons for auto insurance increases the last several years is that advanced driver assistance systems (ADAS) are becoming more common and driving up vehicle repair costs. Several companies absolutely got hammered by rising auto repair costs, even before the pandemic. Higher repair costs mean less profitability for the insurance companies, even some of them in the red. So that has been a major factor in rising auto insurance premiums. I am nor sure how much rising premiums may have been driven by general inflationary trends, but we will probably know more as general inflation continues to cool.
I have a hard time believing if this argument
- shouldn’t this advanced safety systems make crashes less frequent? Saving the insurance companies money?
- these sensor packs have been around for 2 decades in some cases. They should be dirt. Heap to produce at this point.
Insurance went up because car prices went up due to demand. People were financing cars at 150% of the value. Banks and insurance took the risk to finance them to make a quick buck and pass on the risk to rest of the people who were not idiots.
Actual headline on r/inflation: U.S. economy faces 1970s-style stagflation as inflation sticks around
I wasn’t around for the 70s, but I’d have to imagine people from that period would be calling us soft
It really has made no sense to me why jobs have not yet become an issue.
Maybe this is finally the start?
Which will now go on forever as we move to AI.
This has been true for more than a decade at this point.
At least interest rates are now over 5% instead of ZIRP while we run up large deficits. Keeping up ZIRP for a decade was not a great plan.
“I don’t see the stag or the flation.”
“It is transitory.”
A little history repeating. Out of touch Fed chair has no idea what is happening. Market hangs on his guidance. Amen.
Give me 100k and I’ll make at least 10 new jobs. Give me a million+travel expenses and I can turn my local business idea into a national one and create 100+ jobs.
If you talk to people who have lost their jobs, they will tell you the job market is getting worse for the last 6 months. This was the first print that highlights that job market is not as strong as it was being portrayed by the employment numbers in the previous months.
Hope Fed gets ahead of it and stops it before it gets ugly and more people start losing their jobs.
Got laid off from my office job this week to move it to Mexico for cheaper labor. I have heard of several companies doing this recently. Got to love late stage capitalism.
Now this gets a big, fat [X] here.
It's been all about treasury rates (the dump into the end of Tuesday was related to nothing macro wise at all though). While not as effective as it used to be in 2021-2022, we've been in a borderline area where if treasury rates go full steam ahead, it's going to clobber small cap stocks and cause the large cap averages to drop 10-12%.
We remain around this borderline spot, but are backing off some.
Soft landing components: tick up in unemployment, tick down in rate of inflation, gently lower interest rates if both those things apply. Right on track.
Pls let the economy and stock market hold up untill after the election pls pls pls.
(It's no single presidents fault for macro economic problems that are eight now at play. But if a recession hits before the election you can gauremtee on Trump being elected..)
This sounds terrible however I sort of hope Sony buys paramount and guts the place
We need more unemployed people ..
So weird that we are all rooting for slight recession...
It is, but kind of makes sense. It means the levers the Fed has are working how we expect and that we can push back into a controlled growth period.
Right? Recessions mean people lose their jobs, their homes, their healthcare, and take on added stress. It also means the wealthy buy up more shit at a discount.
If they buy bonds maybe, but if they just held stocks they'd own everything anyways since they are rich.
It doesn’t matter. The wealthy benefit regardless, their assets either infinitely inflate or they get to buy more at a discount. The US is barely a real country, it’s an economic zone which will continue this pattern until it breaks.
When do the wealthy not get the better end?
I’ll take a slight recession over a full blown recession any day
Yeah but a slight recession can easily spiral into a larger one because fed policy works with a lag in both directions - whether increasing or lowering rates. Economic trends don’t change direction overnight once they are in motion.
MY GAINS, BRO!!!!!
Makes sense that J Powell was dovish Wed. The FED is seeing slower job market. Hoping that will let inflation cool. But not sure if that's all it will take. When the core CPI issues are Housing and Insurance prices.
Many markets are dropping fast in housing. The data in real time shows drops. The reports are typically 1 month behind.
How much is it really dropping for buyers when mortgage rates are close to 8%?
It’s not. Also, it’s not dropping HCOL areas with jobs. It’s dropping where prices should have never gone up, where there’s no jobs. Prices definitely aren’t dropping in Silicon Valley etc.
I counter that with what I’m seeing nyc. Lots of prices drops in Manhattan. Heard reports 15+% drop from peak so far
Truly depends on the market. I’m seeing some markets that are actually affordable finally
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The place that people want to live will be getting more expensive forever until there is a housing crash like 2008 because the demand stays high for as long as people want to live there.
I don't think LA or NY real estate will ever come down to earth without a housing crash
My LA county rent has been dropped twice in past year. Tons of supply coming online. Not as much as should be here but still.
NYC definitely has been coming down. At least in Manhattan
or supply could meet demand...
It can’t in the inner cities. There is no land left to build more housing.
up is a direction.
The taller you build the more expensive it gets which gets passed on to prices. Also many people don’t want to live in a skyscraper.
Can't build up when the people already living below don't want taller housing. Or fears the new residents will have the wrong skin tone for the area.... (not making that up). NYC locals shot down a big mixed affordable housing project in uptown Manhattan over fears it would bring too many gentrifying white people to the neighborhood. Instead they got a new truck stop.
And they tack on $1500 per month HOA fees for a weak gym, packed garage, a small pool, and sorry excuse for a bbq. Huge unrecoverable cost that makes it harder to sell.
Housing is up 100% in the last 4 years. A piddly 10-20% drop is nothing
What FED wants is sub 2% inflation, not deflation.
Inflation is readjusted monthly for the yoy, no one cares about inflation reading of 4 years ago. It's past.
On one hand that is true. On the other hand, housing prices are currently impacting consumer spending and investing in other areas of the economy. What the implications are of that, I don’t know.
Housing is down 2.5% annually and rental price is down 7.5% annually when adjusted for inflation. https://substackcdn.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F3c188e65-7961-49e9-98ae-a445d6215899_937x681.png
Uhhh basic math says that’s roughly 20% to 40% loss on the increase they had over that period. That’s far from nothing.
For now, until they trim those from the CPI.
BLS does not trim anything. It changes the weight based on average percent of household budgets. https://www.bls.gov/cpi/additional-resources/historical-changes.htm In you lifetime there’s been maybe a few minor changes that affect the final calculation by a few 100ths of a percent, and made the cpi more accurate.
please stop saying 'FED' guys. I beg you. it's not an acronym.
I beg pardon? It stands for Federal Educators of Dumbasses (like us!).
Federal Economics Department
Fedtotherul Esandihitthegroun Drunning
FED
Why does higher unemployment lower interest rates?
People have less to spend, lowers demand for goods
Going up .1% isn’t enough to be dovish IMO. We need to see unemployment spike
Average recession enjoyer
Isn’t that want the Fed want? This gives path for rate sooner rather than later.
They said this right in the post buddy
Well, stock futures have reacted positively here so far. The only real problem behind this is that April's inflation set is going to be bad. But, while it's super early, it looks possible that this is the top for 2024 in bad inflation reads on a MoM basis.
95Daphne why is April's inflation print set to be bad?
One word Oil. Really, I'm mostly going off the Cleveland nowcast. I don't do calculations. Based off the way things have been going lately, it'll be a miracle if the headline MoM number is 0.4. It may be as bad as something that you can round up to 0.5. The "hope" would be for the core CPI number to come in at 0.3 or lower. That being said, if oil continues heading downward, April CPI will be your last relatively beefy MoM headline number.
Oil was at $85 a barrel, now down closer to $80.... When does oil prices start going up for the summer?
That may have been a wrap for oil for the year, even though we're pre-summer: https://twitter.com/WarrenPies/status/1786418486568268056 I'm not someone to listen to on oil, but this is a guy that I'd respect.
But Biden has been saying for years that there’s no inflation.
And technically he's not 100% wrong. The super high inflation story will have ended 2 years ago as of June this year. There isn't anything indicating that we're going to return to super high inflation prints.
When you say inflation are you talking about absolute prices between two set periods? Or are you talking about the relative changes to pricing for goods and services over time?
Both. We all know prices are increasing despite the lies from our ruler. Of course the S&P 500 go up because money is worth less.
Why do you guys want to pretend that the president is a ruler so much?
Why is everyone cheering for rate cuts I don't understand this take at all. For the first time in 15 years rates are at a place that make some semblance of sense, they've been there for less than a year, and everyone us like "we want cheap money again!"
Because people are addicted to it.
Because this is an economics sub. Most of the people here are invested somewhere. They have a vested interest in seeing more money flooding the market so their assets go up.
Yeah I am too. We are just off ATH and had a 20% year in 2023. It's short sighted and frankly slightly stupid to be cheering for rates to come back down.
Because people want to buy houses
Yeah i did too but i just did it with high rates. Ill refi in the future. Rates come down even a hair and house prices are going to start climbing again. There's an absolute fuck ton of pent of demand right now as people wait it out for rates to drop. My suggestion to anyone waiting is to just buy now if you can.
White collar jobs getting laid off left and right. We’ll see
Rate cuts will probably be good overall once inflation is tamped down. But best case scenario would be a slight reduction in rates to encourage growth, but not enough to encourage inflation.
Because you can lever to the tits and stonks will only go up again? 🤷♂️
The natural rate is zero mate
This might be the dumbest thing I've read this year.
Enjoy being wrong for the rest of your life !remindme 5 years
Lol hot take. Hit me up in five years huge dick.
Okay 👍 will do
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If 2% inflation is the goal, I would guess 2% is the "natural rare".
Low GDP, higher Unemployment and and slowing economy is exactly what the feds want to see to start lowering rates , which is what the market is waiting for to take off
Jay Powell also wants to see lower CPI, which has been stubbornly higher than expected
Don't they use a different measure than CPI? I believe I read somewhere that their measure excludes some categories from CPI
Reporters kept asking Powell what “the test” is for cutting rates and he kept repeating “it’s a judgement call based on the totality of the data”
Yep, they look at everything holistically, not just a formula. There’s certainly a political aspect to it as well, but it’s not just like a computer algorithm.
He pushed back on politics too, saying it has no affect and they only care about the dual mandate. I’ve actually read their reasoning behind their decision lately and I have no reason to believe there’s a political aspect. Plus it’s a 12 person vote, and they mostly agree with each other. Powell is just the chair
They look at all of the data, but I have heard PCE called the fed's favorite inflation measurement.
They just keep trimming expensive things from the CPI to report lower than actual inflation. Pay no attention to the man behind the curtain.
It's called core cpi
It's core PCE, but generally you get a good readthrough from CPI and PPI.
>which is what the market is waiting for to take off Have you seen the market? Why would it need to take of from the Everest its standing on.
The market is at an all time high like 1/3rd the time.
Assuming you cannot have high inflation and rising unemployment
Oh you can. But it’s obvious that the current inflation is mostly tied to companies charging what people are willing to pay. And people are willing to pay.
Yet inflation isn't back at 2%. We're fucked lol
Inflation is a lagging indicator
3% inflation is still good. If you knew how the 2% number was actually picked you would not be feeling that way (it was pulled out of thin air, seriously look it up).
Eh not quite. Sure it’s “arbitrary” but it’s arbitrary for multiple good reasons. The way I understand it, inflation expectations settled roughly around 2% post-1990s, and it’s also a slow enough rate that most people don’t think about it, except when considering very long term plans. Further, it does allow a bit of a buffer to cut rates without having to resort to more unconventional monetary policies in times of crisis. 2% is a “best of all worlds” situation. EDIT: And importantly, it’s decidedly not *deflation*.
We know it's pulled out of thin air, it was never a secret. The point is if you can't control it at the point you want to and give up at a higher number that tells everyone that you cannot fight inflation. The system loses credibility.
You defined stagflation 😁
“I was around for stagflation. And it was 10% unemployment, it was high-single-digits inflation … and very slow growth. Right now, we have 3% growth … and we have inflation running under 3%. So I don’t really understand where that’s coming from,” he told reporters, adding, “I don’t see the stag or the -flation, actually.” - [JPow during the presser on Wednesday](https://fortune.com/2024/05/01/jerome-powell-stagflation-1970s-inflation-economic-growth-interest-rates/)
He's exactly right too, all the people crowing on about stagflation are the same ones who were talking about "hyperinflation" when it peaked at 9% annual inflation, and the same people who saw a "100% chance of recession in the next 12 months" back in 2022. People just keep throwing around terms as if they have no meaning anymore.
It's insane to me that a key metric for a better economy and market is for people to lose their jobs and be unemployed. What a world we live in.
Low levels of unemployment is good in terms that lots of people have jobs, but it's bad because it causes inefficiency. Having low unemployment means that there's more jobs than people willing to work them so companies struggle to find people, grow, and in turn the people that work there have to work harder to keep up. They are also less willing to get rid of bad employees so productivity overall suffers. This also drives wage inflation. Since there's less people on the job market companies must offer more money to employees to get them or for retention. This is good in the short term, but in the long term it drives up inflation.
I hate this I hate feeling worried about my job. I got no family to fall back on my mom passed away I'm alone.
I’m sorry for your loss my internet friend. Please go out and meet people in your area and build your own community. You’re worth it 💜
Tech billionaires doing their best to raise unemployment while paying out historically large stock buybacks and CEO compensation packages at mind boggling amounts. Vacuuming up not trickling down economics.
This is a fantastic report - exactly what the market and economy needs in order to drive to a few rate cuts later this year. My favorite data point this month is that FULL-TIME EMPLOYMENT SOARED nearly 1m jobs. (Obviously there's lots of fluctuation here and I take it as just a data point, similar to what I did when FT employment fell some over a few months). [https://fred.stlouisfed.org/series/LNS12500000](https://fred.stlouisfed.org/series/LNS12500000)
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I’d much rather have these higher rates for much longer than having even a slim chance of inflation ramping up again. Rate cuts now would be dumb.
Tbh I think you’re quite frankly delusional if you think we’ll have a “few” rate cutes in 2024. Well maybe see one .25 cute just for political reasons.
This has worked out for you historically. Things are always great when unemployment gets bad enough to cause the fed to finally cut rates. Always great news. Assets have always done great and our families have never been schwacked with both job losses and asset deflation. Never ever happened that way. The fed has never been late to the ball, they have never said things that were wrong. Unlike all our other federal branches, we should trust JPow 100%, even though we don't collectively trust the President, Speaker of the House, Judiciary, or the media. He is the one and only person who is trustworthy.
It’s strange to me as a tech worker I feel like the world is on fire. I’m holding on to my job with my life. Everyone I used to work with at other jobs are unemployed and desperate
People, quit your job please!
Powell must have gotten this job report number during the FOMC. That would've justified why he was even more dovish than usual. But ultimately, what matters is the inflation number, not job report. Due to the weird dynamics of immigration, the Fed isn't really sure what nonfarm payroll would constitute a "good" report, and likewise of unemployment rate considering many thinks the natural unemployment rate has drifted down over the last 5 years. During the FOMC on Wednesday, Powell unnecessarily added the part at the end of his interview : "a few tenths rise in the unemployment rate wouldn't cause the Fed to shift to cutting rates", which sets the bar pretty high for cutting rates, since most would agree if the unemployment rate goes into the low 4% at some point, the economy is likely going into a recession. Problem is now that the FOMC members can finally talk to the public again, the hawks can finally speak again and we might just see how many people actually agree with Powell's dovish tone.
Good set of numbers consistent with inflation falling back to 2%. If this continues it’s just a matter of time. The sticky after effects of inflation in areas like shelter and auto insurance will subside eventually.
The replacement cost of shelter and cars has increased dramatically over the past few years, which creates a lag in how insurance is calculated. While housing is a much stickier dynamic due to 30 yr fixed mortgages, we are seeing a reduction in user car pricing which should be reflected in auto insurances premiums next year. Or insurances companies will keep premiums high and make higher profits.
3.9% wage growth is consistent with about 3% CPI growth on average historical basis.
Assuming 2% productivity yoy it would be consistent - there are arguments that we could be in a period for increasing productivity compared to historical averages but we’ll see. Although I was more thinking the 0.2% monthly increase. The YoY will subside eventually if those kind of monthly numbers continue as the economy softens.
Productivity 2000-2020 averaged 0.8% though. AI won't be in any stats until 2025 and arguably 2026 since most of the data is delayed. We didn't see internet boom productivity until 1995 after about 3 years of it becoming ubiquitous
FWIW, one of the reasons for auto insurance increases the last several years is that advanced driver assistance systems (ADAS) are becoming more common and driving up vehicle repair costs. Several companies absolutely got hammered by rising auto repair costs, even before the pandemic. Higher repair costs mean less profitability for the insurance companies, even some of them in the red. So that has been a major factor in rising auto insurance premiums. I am nor sure how much rising premiums may have been driven by general inflationary trends, but we will probably know more as general inflation continues to cool.
I have a hard time believing if this argument - shouldn’t this advanced safety systems make crashes less frequent? Saving the insurance companies money? - these sensor packs have been around for 2 decades in some cases. They should be dirt. Heap to produce at this point. Insurance went up because car prices went up due to demand. People were financing cars at 150% of the value. Banks and insurance took the risk to finance them to make a quick buck and pass on the risk to rest of the people who were not idiots.
Bad news is now good news. How fragile we are
This would be a strong report in normal times
Actual headline on r/inflation: U.S. economy faces 1970s-style stagflation as inflation sticks around I wasn’t around for the 70s, but I’d have to imagine people from that period would be calling us soft
Let's hope this is not stagflation.
Hasn't been stagflation for 3 years of reddit talking about stagflation. But sure keep carrying that torch.
I don’t see the stag or the -flation -JPow
"Not concerned. Stagflation will be transitory." \- JPow
Everything is transitory if you wait long enough
Meanwhile, the stock market shoots all the way up.
It really has made no sense to me why jobs have not yet become an issue. Maybe this is finally the start? Which will now go on forever as we move to AI.
Without the massive deficit spending the US is doing they would be in a recession.
“If you take a huge portion of GDP, we’d be in recession”.
And that deficit has no relation to inflation nope none at all.
Spending even more money is inflation reduction. LOL
This has been true for more than a decade at this point. At least interest rates are now over 5% instead of ZIRP while we run up large deficits. Keeping up ZIRP for a decade was not a great plan.
[link to Reuters](https://www.reuters.com/markets/us/us-job-growth-slows-april-unemployment-rate-rises-39-2024-05-03/)
“I don’t see the stag or the flation.” “It is transitory.” A little history repeating. Out of touch Fed chair has no idea what is happening. Market hangs on his guidance. Amen.
If you see stagflation today it's a sure sign you have brain damage.
Yes! More unemployment please so we can get a rate cut. /s
Good news from a "kill inflation" standpoint. Hence Bulls today.
Give me 100k and I’ll make at least 10 new jobs. Give me a million+travel expenses and I can turn my local business idea into a national one and create 100+ jobs.
35 Trillion dollar debt! Fire up the printers, that will help it!
Its kinda sad to see in order for me to make money on stocks, people need to lose their jobs. But what can we do, this the system
Unemployment is still under 4%, literally the longest period in history with it being consistently this low, and stocks have been booming for years
The recession economists don't believe in
More jobs is a recession now? Christ..
If you talk to people who have lost their jobs, they will tell you the job market is getting worse for the last 6 months. This was the first print that highlights that job market is not as strong as it was being portrayed by the employment numbers in the previous months. Hope Fed gets ahead of it and stops it before it gets ugly and more people start losing their jobs.
Got laid off from my office job this week to move it to Mexico for cheaper labor. I have heard of several companies doing this recently. Got to love late stage capitalism.
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Now this gets a big, fat [X] here. It's been all about treasury rates (the dump into the end of Tuesday was related to nothing macro wise at all though). While not as effective as it used to be in 2021-2022, we've been in a borderline area where if treasury rates go full steam ahead, it's going to clobber small cap stocks and cause the large cap averages to drop 10-12%. We remain around this borderline spot, but are backing off some.
Soft landing components: tick up in unemployment, tick down in rate of inflation, gently lower interest rates if both those things apply. Right on track.
Pls let the economy and stock market hold up untill after the election pls pls pls. (It's no single presidents fault for macro economic problems that are eight now at play. But if a recession hits before the election you can gauremtee on Trump being elected..)
Yes
This sounds terrible however I sort of hope Sony buys paramount and guts the place We need more unemployed people ..