U.S. economy shrank at a 1.4% annual rate in the first quarter • Hacker News Board

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

#221

Post by thedailymail » Thu, Apr 28, 2022, 3:59 PM UTC

gruez wrote: post #204

CuriouslyC wrote: post #191

Earlier quoted context omitted.

Housing inflation is also exacerbated by low interest rates. I think severe taxes for unoccupied homes is a better solution than bumping rates though, as houses are already completely unaffordable for most and a rate hike just makes that worse for many while not limiting firms that buy in cash.

>I think severe taxes for unoccupied homes is a better solution than bumping rates though Yeah but unoccupied units is only a few % in the hottest housing markets. This makes sense, considering that the opportunity cost of leaving a home empty is higher if the rent is higher. Because of this I'm inclined to believe it's popular-but-ineffective intervention, like banning foreign buyers (which also make up a few % of o…

As with many complex problems, the solution will likely need to include multiple parts. Taxing unoccupied properties and putting limits on who or what can buy residential properties (and how many they can buy) could both be elements of a bigger affordable housing package.

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

#222

Post by adventured » Thu, Apr 28, 2022, 3:59 PM UTC

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…

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

Most certainly. We'll very clearly do it with robots and artificial intelligence. Although people are expecting way too much way too soon. The classic line about how people overestimate change in the short-term and underestimate change in the long-term.

Elon Musk may occasionally be a clown in his behavior, but he has persistently been out on the cutting edge where newer technology meets real-world usefulness (the point where technology is ready for mass adoption; an awareness Steve Jobs also had). That's why Musk & Tesla are so interested in robotics (and they have the cashflow now to easily afford to pursue it in a big way). It will be a very large market, 30 years out, and it'll do a lot for boosting per capita productivity while population declines or stagnates.

For example we might see a scenario where population declines in the affluent nations, with persistent aging, and productivity remains stable or even gains, thanks to all manner of human labor enhancements that we'll come up with in this looming era.

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

#223

Post by paulpauper » Thu, Apr 28, 2022, 4:01 PM UTC

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…

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.

Probably the same as today. Big tech will do well: google, tesla, amazon, etc. The wealthy and B2B will continue to provide a growing share of economic value, outpacing retail consumers and compensating for population stagnation. I don't see any reason for productivity to fall. Productivity surged during pandemic.

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

#224

Post by gruez » Thu, Apr 28, 2022, 4:02 PM UTC

lkxijlewlf wrote: post #166

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%.

Isn't that a tautology? In a basket of goods there's almost certainly going to be something that's inflating above average. That means you'll always have some sector (that's inflating faster than general inflation) to blame for "greed".

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

#225

Post by QuarterReptile » Thu, Apr 28, 2022, 4:02 PM UTC

lkxijlewlf wrote: post #166

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%.

Were the food producers not being greedy before those price increases as well? I don't understand.

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

#226

Post by paulpauper » Thu, Apr 28, 2022, 4:03 PM UTC

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…

agree. GDP does not mean stock market gains. In fact, you can have strong shareholder returns even if the economy is not growing at all. If $1 billion company generates $100 million in net profit annually, this is $ that must go to shareholders regardless of GDP. This is the situation right now with the US...major companies are generating huge profits annually even if real GDP, productivity, and population growth is sluggish, which is why the stock market has done so well in spite of so many things seeming to be wrong..

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

#227

Post by aeternum » Thu, Apr 28, 2022, 4:04 PM UTC

gruez wrote: post #211

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.

>Also due to the fact that we stopped building new homes after 08. That's easily refuted with a quick search. https://tradingeconomics.com/united-states/housing-starts

If you zoom out on that graph, housing starts were well-below average for over a decade and were actually trending down even before 08: https://fred.stlouisfed.org/series/HOUST

Decreased supply along with increasing population(demand) generally yields a shortage and increased prices.

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

#228

Post by vel0city » Thu, Apr 28, 2022, 4:06 PM UTC

CuriouslyC wrote: post #191

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.

Housing inflation is also exacerbated by low interest rates. I think severe taxes for unoccupied homes is a better solution than bumping rates though, as houses are already completely unaffordable for most and a rate hike just makes that worse for many while not limiting firms that buy in cash.

> I think severe taxes for unoccupied homes is a better solution than bumping rates though

99% of homes are not vacant. The vacancy rate of housing is not significantly different from the past, in fact its actually lower than it was a few years ago. While I don't really mind the idea of taxing long-vacant properties to encourage use and discourage pure speculation, I don't think it'll make that much of a different in residential property valuations.

https://www.census.gov/housing/hvs/data/histtabs.html

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

#229

Post by QuarterReptile » Thu, Apr 28, 2022, 4:06 PM UTC

HFguy wrote: post #212

lkxijlewlf wrote: post #166

Earlier quoted context omitted.

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

A lot of commodity inputs into food production are up way more than 8.5% (e.g., corn, wheat). And a lot of the farmers inputs (e.g., energy, fertilizer) are up more than 8.5%. The 8.5% is a weighted, blended average of a lot of things. So it could be reasonable that if you were selling bread, that the price would need to go up more than 8.5%. The question is whether their profit margins are up? I don't know.

>The question is whether their profit margins are up? I don't know.

I would naturally expect companies to hold larger profit margins when there is instability. Setting up a business with low profit margin in a volatile business environment would be like building a house on a concrete slab right next to a river that often overflows its banks.

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

#230

Post by paulpauper » Thu, Apr 28, 2022, 4:07 PM UTC

lisper wrote: post #193

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 also good to keep in mind that GDP is not a good measure of societal well-being. If GDP double but the population quadruples, most people living at the end of that process would not consider it to be a good outcome.

I don't think it was ever meant to be a measure of well being.