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

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

#161

Post by codefreeordie »

Balero wrote: post #31
incomingpain wrote: post #18

Earlier quoted context omitted.

Arab spring is a more modern example. https://www.businessinsider.com/ukraine-russia-bread-food-pr... https://medium.com/something-about-everything/food-riots-and... >My sense is that civil wars are when states/governments fight, not hungry people. You could have stopped at civil unrest. What happens when food is scarce and people are starving for possibly the first time in their life? Anxiety, depression, etc is wel…

The food scarcity we have experienced in the pandemic is more like people wondering why there are no peppers or chicken this week. But there is plenty of other food to eat. I think any issues we have will be people not having their first option of food, not going hungry.

Maybe in your neck of the woods.

I had a solid weeklong period here where no store within 15 miles had any fresh dairy products, meats, produce other than herbs, or bulk grains (flour, rice, pasta, etc).

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

#162

Post by beamatronic »

muh_gradle wrote: post #79
buscoquadnary wrote: post #48

Earlier quoted context omitted.

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…

This sounds almost like some version of the broken window fallacy. But there is no way that ~1 million dead Americans from COVID has helped this country economically. Supply chains have been hurt by COVID. Hospitalizations means unproductive workers. Deaths means unproductive workers. We are not thriving at all right now.

Many tech workers were thriving (making and spending money) until their RSU’s crashed 75% or more

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

#163

Post by marcusverus »

giantrobot wrote: post #123
colinmhayes wrote: post #83

Earlier quoted context omitted.

Also due to the fact that we stopped building new homes after 08. If supply keeps up with rising demand prices don't change.

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

"stopped building new homes" is clearly an exaggeration, but the spirit of the comment is spot on. Housing starts did collapse around '08, and only returned to the historical average in ~2021. Even so, we're still producing fewer units than we were producing in the 70's--when the population was ~60% of what it is now!

How can there be any doubt that this production glut has played a huge role in the rise of housing prices?

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

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

#164

Post by wolverine876 »

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.

> Keynes was right: he's dead. Unfortunately, we, and our children, are not.

That's the opposite of Keynes' meaning. Keynes was satirizing economists who say, 'it might be bad now, but things will work out in the long run'.

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

#165

Post by merpnderp »

adam_arthur wrote: post #59
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 ^ ?

Couple that with the massive drawdown in Chinese imports and no wonder inflation is blowing up.

United States Imports from China: https://tradingeconomics.com/united-states/imports-from-chin...

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

#166

Post by lkxijlewlf »

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…

Some of it is from greed. Inflation is 8.5% but almost all the major food producers have raised prices by ~15%.

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

#167

Post by qiskit »

adam_arthur wrote: post #59
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 ^ ?

> pretty clear the primary driver was demand driven.

Perhaps after the sharp downward in 2020. But it isn't clear what is the primary driver after the 1st qtr of 2020.

That chart doesn't necessarily imply consumer consumption is driving the increase. It could be inflation that's driving the uptick in the chart.

If last year it cost $1 to buy a dozen eggs. And now it costs $2 to buy a dozen eggs, it would cause a spike in the chart. Same amount of purchases, but different prices.

It's hard to tell from that chart whether the rise to $600 billion in consumption is due to more consumption or higher prices. Is it 2 * $1/dozen = $2 or 1 * $2/dozen = $2. We end up at $2, but one is via greater consumption and the other via inflation.

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

#168

Post by skeeter2020 »

chii wrote: post #101
bitcurious wrote: post #78

Earlier quoted context omitted.

In my neck of the woods, by far the largest and most impactful inflation has been in the housing sector - 50% price inflation over the past two years. This is entirely attributable to the Fed's pumping of soft assets like stocks, leading to a bunch of paper millionaires cashing out.

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

Unless they moved into a van down by the river, a bigger even more expensive home. Ya gotta live somewhere!

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

#169

Post by JumpCrisscross »

HFguy wrote: post #153
mensetmanusman wrote: post #140

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…

It is a common mistake, but stocks don't have a positive return because GDP increases over time. They have a positive expected return over time because they have a risk premium. That is, to invest and take on risk, an investor will demand a return above and beyond the expected value of the cash flows the business generates. Whatever path of GDP and/or population is expected to be is already factored into the discount…

> stocks don't have a positive return because GDP increases over time. They have a positive expected return over time because they have a risk premium

You’re both right. The equity risk premium [1] is real. But it’s a premium over something. That something is, approximately, production. (It’s precisely the risk-free rate of return. Which, in the long run, is base-rate production.)

[1] https://www.investopedia.com/terms/e/equityriskpremium.asp

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

#170

Post by wolverine876 »

pjc50 wrote: post #49

Always wondering exactly what people mean when they talk of "civil unrest", and who and how will it start. Do the various riots in 2020 America or the Jan 6 storming of the capitol count? On the other hand, Elon Musk Twitter purchase: $44bn. There's plenty of money out there still. I think it's unlikely that merely raising rates will do anything, for two reasons: firstly there's a real need to do some fiscal policy a…

> On the other hand, Elon Musk Twitter purchase: $44bn. There's plenty of money out there still.

The money is concentrated in the hands of a very few.

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