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U.S. economy shrank at a 1.4% annual rate in the first quarter

wsj.com

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Re: U.S. economy shrank at a 1.4% annual rate in the first quarter

#21

Post by bko »

MaysonL wrote: post #5

US economy grew at a 6.9% rate in the fourth quarter last year.

How much of that was due to inflation? Remember these numbers are nominal GDP. So if price levels doubled and nothing else changed, GDP would more or less double as consumption went up due to higher prices.

The worrying thing is there are no monetary levers available without the risk of higher inflation. And if people don't think GDP matters, its actually a very good indicator of all sorts of well being measures such as unemployment and premature deaths among other things

[EDIT] This is real GDP. I was mistaken

Re: U.S. economy shrank at a 1.4% annual rate in the first quarter

#22

Post by kasey_junk »

recursivedoubts wrote: post #20
kasey_junk wrote: post #16

Earlier quoted context omitted.

The US Fed didn’t raise interest rates until March, much too late to cause this number.

They began talking about raising rates much earlier. Markets and the economy are forward looking.

All of the predictions ahead of this number and the article itself were predicting this based on inventory surpluses that had been built up in the previous 2 quarters. That seems a more directly attributable cause than fears of interest rate increases. In fact, if you anticipate interest rate increases it makes more sense to bring spending forward not to delay it.

Re: U.S. economy shrank at a 1.4% annual rate in the first quarter

#23

Post by jlmorton »

recursivedoubts wrote: post #20
kasey_junk wrote: post #16

Earlier quoted context omitted.

The US Fed didn’t raise interest rates until March, much too late to cause this number.

They began talking about raising rates much earlier. Markets and the economy are forward looking.

I'm not sure what you're suggesting. What was the mechanism by which talk of higher rates reduced GDP? Consumer and business spending both increased. Personal consumption expenditures increased at 2.7%, and business investment increased at 2.1%.

The big drag in the report is from inventories and trade, which are being impacted by pandemic-related supply chain issues and geopolitics.

Re: U.S. economy shrank at a 1.4% annual rate in the first quarter

#24

Post by causi »

usrn wrote: post #3
incomingpain wrote: post #2

GDP: -1.4% DOW: -8.36% YTD S&P500: -12.22% YTD NASDAQ: -20.17% YTD Inflation: 8.5% Interest rate: 0.5%(increasing once by 0.25%) Balance of trade: $-89.2B >they still think the Fed will be able to rein in inflation without triggering a recession. It was raised once and everything is collapsing underneath. Don't know how you look at all this and think 'it'll be fine'. There's a general rule that this kind of behaviour…

They're saying there will be food shortages this year. Combined with mass immigration from failed states (so already bringing violence + spreading what little we have even thinner) civil unrest is certain.

Maybe not this year and maybe not in the US, but next year much of the world will see significantly reduced food production both as a result of war/sanctions with food-exporting nations and a global fertilizer shortage.

https://i.imgur.com/DqKpRbU.gif

Re: U.S. economy shrank at a 1.4% annual rate in the first quarter

#25

Post by incomingpain »

paywallasinbeer wrote: post #19
usrn wrote: post #3

Earlier quoted context omitted.

They're saying there will be food shortages this year. Combined with mass immigration from failed states (so already bringing violence + spreading what little we have even thinner) civil unrest is certain.

The White House is saying the opposite in relation to food shortages: https://twitter.com/TPostMillennial/status/15190405387790377...

https://www.bloomberg.com/news/articles/2022-03-24/biden-say...

In terms of farmers retiring with a non-zero reduction of food produced but also farmers in north america getting more $ to ship their food overseas. In addition to food inflation pushing food prices up to unaffordable levels.

I agree with biden, food shortages will be happening.

Re: U.S. economy shrank at a 1.4% annual rate in the first quarter

#26

Post by indymike »

ianhawes wrote: post #15
incomingpain wrote: post #2

GDP: -1.4% DOW: -8.36% YTD S&P500: -12.22% YTD NASDAQ: -20.17% YTD Inflation: 8.5% Interest rate: 0.5%(increasing once by 0.25%) Balance of trade: $-89.2B >they still think the Fed will be able to rein in inflation without triggering a recession. It was raised once and everything is collapsing underneath. Don't know how you look at all this and think 'it'll be fine'. There's a general rule that this kind of behaviour…

Not sure if you noticed but we had massive food scarcity in March and April 2020 and the most inconvenient thing about it was waiting in line to pay and my kids not having hot dogs for several months. Not saying civil unrest isn’t a possibility, but I’m not sure economic uncertainty could do any worse than airborne-once-in-a-lifetime pandemic

> Not sure if you noticed but we had massive food scarcity in March and April 2020 and the most inconvenient thing about it was waiting in line to pay and my kids not having hot dogs for several months

Where was this? I had a few trips to the grocery where specific items were out of stock or rationed (i.e. limit 2 per customer), but never saw a shortage of processed meats.

Re: U.S. economy shrank at a 1.4% annual rate in the first quarter

#27

Post by VHRanger »

recursivedoubts wrote: post #20
kasey_junk wrote: post #16

Earlier quoted context omitted.

The US Fed didn’t raise interest rates until March, much too late to cause this number.

They began talking about raising rates much earlier. Markets and the economy are forward looking.

Markets didn't react until around Feb 2022.

Look at mortgage rates for instance. Or just equities indeces.

Re: U.S. economy shrank at a 1.4% annual rate in the first quarter

#28

Post by bko »

recursivedoubts wrote: post #9

Shows just how sensitive our economy is to small interest rate fluctuations, having lived around the zero bound for over a decade. We've encouraged everyone to lever out as far as possible while at the same time making real production more and more difficult (or, during the early lock downs, impossible) and, well, the long run is here. Keynes was right: he's dead. Unfortunately, we, and our children, are not.

> We've encouraged everyone to lever out as far as possible

Household debt to GDP has gone down since the low interest rate environment kicked off in 2010. Same is true for household debt as a percentage of personal income. Although I will note that its debt payments, not absolute amount of debt and obviously lower rates lower the interest portion of debt payments.

I agree there is something troubling going on but it's not a personal debt crisis

https://fred.stlouisfed.org/series/HDTGPDUSQ163N

https://fred.stlouisfed.org/series/TDSP

Re: U.S. economy shrank at a 1.4% annual rate in the first quarter

#29

Post by matthewdgreen »

recursivedoubts wrote: post #9

Shows just how sensitive our economy is to small interest rate fluctuations, having lived around the zero bound for over a decade. We've encouraged everyone to lever out as far as possible while at the same time making real production more and more difficult (or, during the early lock downs, impossible) and, well, the long run is here. Keynes was right: he's dead. Unfortunately, we, and our children, are not.

Maybe also losing 1.1 million people (according to the CDC's "excess deaths" website) wasn't that good for our economy either.

Re: U.S. economy shrank at a 1.4% annual rate in the first quarter

#30

Post by paywallasinbeer »

incomingpain wrote: post #25
paywallasinbeer wrote: post #19

Earlier quoted context omitted.

The White House is saying the opposite in relation to food shortages: https://twitter.com/TPostMillennial/status/15190405387790377...

https://www.bloomberg.com/news/articles/2022-03-24/biden-say... In terms of farmers retiring with a non-zero reduction of food produced but also farmers in north america getting more $ to ship their food overseas. In addition to food inflation pushing food prices up to unaffordable levels. I agree with biden, food shortages will be happening.

That seems like an odd mismatch between Biden and Psaki. Do you think it's possible Biden was speaking about the World, more specifically Europe, and Psaki was speaking about the US? If not, I am curious as to why you think there is a mismatch between them on this issue.

Non paywall link to that article: https://archive.ph/Rbnv4

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