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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

#131

Post by [deleted] »

onlyrealcuzzo wrote: post #116
chii wrote: post #106

Earlier quoted context omitted.

most services require some material goods associated with the service. Even if wages aren't raised, those materials would cause prices to rise.

The vast majority of "services" in the US are healthcare, food services, technology, and financial services. Aside from cloud hardware, the impact on the rest due to supply constraints from China has been extremely minimal. Very little food comes from China. Almost 0 energy. And financing costs are 100% set by the Fed. China plays a very small part in the US inflation story.

[deleted]

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

#132

Post by wcfields »

omginternets wrote: post #51
matthewdgreen wrote: post #29

Earlier quoted context omitted.

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.

> economically active populations

I've seen this thrown about and have to take this with a grain of salt because even the infirmed/elderly/retired are still part of the economy. They consume food and resources, albeit they aren't out buying durable goods and new cars, but they are paying rent/mortgage in their retirement communities, eating food, buying CPGs* (some of which fully rely on an older population).

I'll take the example of my two relatives that died from COVID, neither had underlying conditions: One was a 65 yo former airline mechanic on the verge of retirement with a McMansion in Houston area, he spent a lot of money keeping up that lifestyle, and when he passed my aunt moved back to a small town, and downsized, considerably shrinking her spending. They had planned to spend the next 10 years in an RV that is no longer going to happen. The other is my 46 yo cousin with 4 kids and was a seven figure earner in sales living in Kansas City area. Again, huge amount of spend and now his wife is getting by with a massively reduced house and budget.

* Did the hard candy industry take a nose-dive? Should I be shorting Werther's Original stock?

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

#133

Post by colechristensen »

omginternets wrote: post #51
matthewdgreen wrote: post #29

Earlier quoted context omitted.

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.

3/4 of the million US deaths attributed to COVID-19 were age ~64 and above.

Only 1 in 20 deaths attributed to COVID-19 were between 0 and ~49.

Abstract models of "productivity" vs age peak close to where the covid death hockey stick turns upwards.

The 50-60 age bracket is where the big losses are, losing 100k-200k people near their prime and 5-15 years of remaining economic contributions. Younger populations saw much fewer losses, older populations mostly left the workforce.

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

#134

Post by monkeynotes »

colinmhayes wrote: post #128
giantrobot wrote: post #123

Earlier quoted context omitted.

I'm currently sitting in a house that completed construction in December. I suspect your information might not be right.

https://www.statista.com/statistics/1041889/construction-yea...

Even your source shows that ~17M homes have been built since 2008. I mean, it's a drop off from previous decades, but it's hyperbole to say no homes have been built.

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

#135

Post by monkeynotes »

klyrs wrote: post #113
chii wrote: post #101

Earlier quoted context omitted.

> a bunch of paper millionaires cashing out [to buy property] so what did the seller of those property spend their profits on?

More expensive real estate

Yeah, cash out and leverage to bigger investments. Rinse and repeat.

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

#136

Post by incomingpain »

dntrkv wrote: post #118
incomingpain wrote: post #72

Earlier quoted context omitted.

>Oh yeah, remember the civil war of 1982? When inflation was 14% and The Fed raised rates to purposefully start a recession? High inflation and raising rates going into a recession is not going to trigger a civil war or even really unrest in any major way. >Give me a break, we’ve been through much worse. Let’s stop with the FUD please. political polarization in the usa has never been so bad except for ...

And? Do you think Americans are willing to give up everything they have and start warring with each other? Because a civil war will mean exactly that. You think inflation is bad, civil war would crater the economy like no modern-American has ever experienced. Americans don’t even want to give up their private healthcare, and y’all talking about civil war.

>And? Do you think Americans are willing to give up everything they have and start warring with each other? Because a civil war will mean exactly that. You think inflation is bad, civil war would crater the economy like no modern-American has ever experienced.

I dont see civil war as an inevitability. Civil unrest seems inevitable. Then again not exactly much of a prediction there given ongoing civil unrest.

Also I don't believe civil war is rational as you project it to be.

Imagine republicans take over in midterms. Speaker of the house becomes Trump. They then impeach and remove biden and harris making Trump president again. What happens?

Imagine democrats clean sweep the election and they were boarding up windows again. Blue wave... what happens?

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

#137

Post by antiterra »

omginternets wrote: post #46
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…

Could that also be because people are living paycheck to paycheck and not buying things like houses and cars anymore? Relatedly: a decrease in debt is exactly what I would expect from an Uberized economy where nobody owns anything anymore. I’m not sure this is such a good measure of economic health. Stated differently: a small amount of debt is an indication that people are investing in things. That’s usually a good…

> Could that also be because people are living paycheck to paycheck and not buying things like houses and cars anymore?

No. New car sales are currently bottlenecked by supply chain issues, not demand. Housing sale demand is dropping, but still very solid compared to inventory.

At some point, this supply restriction becomes inflationary. If you can buy a new car and resell it a month later for more than you paid, the MSRP is below demand.

Since consumers react poorly to price increases, this is also coupled by reduction in quality or service.

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

#138

Post by germinalphrase »

matthewdgreen wrote: post #73
BitwiseFool wrote: post #67

Earlier quoted context omitted.

>"You don't need a civil war when you can vote for a different government." This is one of those things that works perfectly in principle but does not seem to work in practice. I've lived in solidly red or blue districts all my life and in only one election did the party representation switch to a different team. That was only because blue team had two top-tier names splitting the vote which allowed a red team repres…

The US has a lot of problems. For one thing, we have a Presidential system in which control of Congress can be held by a different party than the Presidency, which leads to a situation where there are two "plausibly legitimate" elected governments that are in conflict. In many other countries this has resulted in coups and instability (usually in favor of unilateral executive power.) The US is unique in that we're ba…

Gerrymandering will never stop grinding on me. Districts should be drawn to make races artificially competitive so leaders need to be responsive to their constituents, not the opposite.

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

#139

Post by wcfields »

buscoquadnary wrote: post #48
matthewdgreen wrote: post #29

Earlier quoted context omitted.

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

Actually as callous as it sounds extra deaths are good for the economy. More dead people means fewer competitors for all resources except labor. What that means is fewer people need stuff and there are fewer people to make stuff, so the stuff the dead people had is easy to obtain for the living while employers have to pay more for labor because there is less of it. As evidence the black plague was considered one of t…

> fewer people need stuff and there are fewer people to make stuff

But, that's the whole gist of our economy: lots of people needing stuff (consumers) and lots people making stuff (labor).

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

#140

Post by mensetmanusman »

It’s always good to remind people that:

GDP ~= Population * Productivity

If your population growth flat-lines (which it did last year), productivity has to compensate.

Can productivity compensate if the average age is getting older (people tend to be less productive after a certain median age)?

One reason investing in index funds makes sense is the underlying assumption that global population growth keeps increasing (GDP for ‘free’).

I’m super interested in what investing looks like in 50-100 years as the population starts collapsing, because it might collapse faster than productivity can possibly compensate for, which means unstoppable GDP decline.

GDP has to be at certain levels to support different types of economic activity. E.g. at some point, GDP might be low enough that new semiconductor research isn’t affordable (because all the workers are used up caring for the elderly for example).

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