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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

#51

Post by omginternets »

matthewdgreen wrote: post #29
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.

I really don’t want to sound calloused because caring for the weak and the elderly is a pillar of civilizations, but my impression was that the bulk of “excess deaths” were not among the most economically active populations. I could just as easily see this having the opposite economic effect: reducing the burden on the state for such things as retirement and Medicaid.

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

#52

Post by bko »

jlmorton wrote: post #37
bko wrote: post #21

Earlier quoted context omitted.

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…

No one reports nominal GDP changes. BEA reports real GDP changes using the GDP implicit price deflator.

You're right. My mistake. I'll write an edit

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

#53

Post by germinalphrase »

incomingpain wrote: post #13
MaysonL wrote: post #6

Earlier quoted context omitted.

> food scarcity How much food rotted at the Texas border after Governor Abbott's PR stunt held it up? Estimated to be over $4Billion.

>How much food rotted at the Texas border after Governor Abbott's PR stunt held it up? Estimated to be over $4Billion. https://medium.com/the-haven/texas-gov-abbotts-racist-border... This article says $240 million and he reversed the policy? So it's not an ongoing issue? Also if food is 'rotting' because he is sitting in a truck for perhaps a day longer? Perhaps it was rotting before?

What I’ve read is: Refrigerated trucks only have so much fuel to maintain the coolers. Typically, this is enough fuel for a standard haul, but forcing the trucks to stand motionless in the heat leads to the coolers running out of fuel and the food spoiling in the heat. Keep in mind that food safety regulations has specific guidelines for time/temp that may not align with a common expectation for “spoiled”.

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

#55

Post by taylodl »

The fact the Fed is even contemplating a rate hike tells me they're misreading what's going on. The inflation we're seeing isn't a result of a hot economy needing to be kept in check, it's the fact that 40% of China's production is on lockdown and just about every product made, regardless of where it's made, is relying on part(s) coming from China. Supply is constrained and therefore prices are rising. Likewise, supply is constrained and that's impacting industrial output - hence a shrinking economy.

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

#56

Post by Danieru »

bko wrote: post #21
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…

GDP is always reported as "Real GDP" with the inflation taken out. In fact the need to survey inflation to calculate GDP is the primary motivator for surveying inflation in the first place. Surveying for inflation is a ton of work, but its worth it to know GDP.

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

#57

Post by [deleted] »

lumost wrote: post #40
bko wrote: post #28

Earlier quoted context omitted.

> 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…

There are many troubling things happening at the moment. From a US centric point of view. - Inflation is at it's highest since the 1970s in the US - There is a large military conflict in Europe. - There are shortages of chips, energy, and food on the horizon. - Unprofitable growth stocks have valuations as high as 100:1 on revenue. - There is increasing militarized tension on many portions of the global supply chain…

[deleted]

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

#58

Post by ssully »

altacc wrote: post #35
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…

From a non-US perspective, it seems that a lot of Americans are quick to conclude that a civil war is around the corner, even on HN where one would hope for a more nuanced analysis. There can't be that many boogaloo boys on this forum, so I wonder how common this narrative is in the US at the moment to make it a go-to conclusion. Is it really common to hear talk of this in the US? From what I see of human nature, mos…

It's not exactly a "narrative of the moment" or common talk. It's a hopeful fantasy of the right that is ever present, but seems to always burn brighter during tragic events or when democrats are in power (which to them, is a tragic event). It's incredibly ironic when you consider this is the same side that likes to call themselves patriots, but seem to always hope for a time when they could openly kill their fellow Americans.

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

#59

Post by adam_arthur »

taylodl wrote: post #55

The fact the Fed is even contemplating a rate hike tells me they're misreading what's going on. The inflation we're seeing isn't a result of a hot economy needing to be kept in check, it's the fact that 40% of China's production is on lockdown and just about every product made, regardless of where it's made, is relying on part(s) coming from China. Supply is constrained and therefore prices are rising. Likewise, supp…

It's a combination. But if you look at the actual data as it relates to consumer consumption, pretty clear the primary driver was demand driven.

The port backlogs that started in 2021 were due to excess consumption triggered by stimulus

Retail sales chart: https://fred.stlouisfed.org/series/RSXFS

Tell me you don't see a problem here ^ ?

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

#60

Post by onlyrealcuzzo »

taylodl wrote: post #55

The fact the Fed is even contemplating a rate hike tells me they're misreading what's going on. The inflation we're seeing isn't a result of a hot economy needing to be kept in check, it's the fact that 40% of China's production is on lockdown and just about every product made, regardless of where it's made, is relying on part(s) coming from China. Supply is constrained and therefore prices are rising. Likewise, supp…

Durable goods make up ~20% of the US economy at best (~12.7% on average according to the Cleveland Fed [1]).

Food, energy, & financing are >50% of the US economy.

The rest of the economy is primarily services - which have very little impact from the supply of screws & toasters coming out of China going down.

[1] https://www.clevelandfed.org/en/newsroom-and-events/publicat....

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