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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

#301

Post by [deleted] »

JumpCrisscross wrote: post #300
MatteoFrigo wrote: post #298

Earlier quoted context omitted.

I don't think the bloomberg explanation is right, because the net effect of imports on GDP is zero. Assume you import $1 of goods, which are consumed. Then the GDP reflects $1 consumption (either private or government) minus $1 imports, for a net zero. The goods may not be consumed immediately, in which case GDP counts $1 inventories minus $1 imports, still net zero. The thing to remember is that GDP is domestic prod…

> the net effect of imports on GDP is zero Correct [1]. Net exports is a non-zero component of GDP, but "the imports variable (M) correct[s] for the value of imports that have already been counted as personal consumption (C), gross private investment (I), or government purchases (G)" [2]. [1] https://fredblog.stlouisfed.org/2018/09/do-imports-subtract-... [2] https://research.stlouisfed.org/publications/page1-econ/20…

[deleted]

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

#302

Post by MuffinFlavored »

anamax wrote: post #284
MuffinFlavored wrote: post #273

Earlier quoted context omitted.

> You have an expected return because you are taking on risk. I have a dumb question. Most publicly traded companies rarely issue new shares. Why does a company care about its share price? If we are being rewarded for buying and holding their shares based on the growth a company makes quarterly, how does the company benefit from their share price going up? They don't commonly take loans against their shares or issue…

> I have a dumb question. Most publicly traded companies rarely issue new shares. Why does a company care about its share price? If a company doesn't care about share price, the shareholders will elect a board of directors who will install a management team that does care about share price.

i’m just trying to understand why a good share price benefits the company financially? It benefits the shareholders, and all the executives who are paid in stock. But I don’t understand why financially accompany benefits from a high share price unless they are diluting and issuing shares

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

#303

Post by riku_iki »

mynameishere wrote: post #156
riku_iki wrote: post #111

Earlier quoted context omitted.

> with low interest 30 year loans Are those loans supported by other low interest loans they took themself?

Sure, checking accounts and the like.

I was thinking about banks taking loans from Fed.

I may be wrong, not an expert in this topic.

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

#304

Post by godshatter »

taylodl wrote: post #125
adolph wrote: post #77

Earlier quoted context omitted.

> supply is constrained and money is not constrained. What could go wrong?

Inflation should take care of demand. A constrained supply is going to move the demand curve to higher prices - which we're seeing. The higher prices will bring demand in alignment with supply. Traditionally, to deal with the problem of constrained supply you would lower rates to make more capital available in order to create more supply-producing assets. I don't think the Fed should lower rates in this situation bec…

> ...because we all know that building more factories won't solve the supply chain issues due to the pandemic.

Wouldn't it be wise to start building more factories so that a supply chain disruption in one area doesn't cause such painful shortfalls in supply on a global scale? It seems like a China-free supply chain would be making bank right now. I guess you'd have to weigh the time to ramp that up versus the odds of China locking down severely again. Still, I would hope that a lasting consequence of this would be a diversification of supply chains to mitigate this kind of problem in the future.

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

#305

Post by godshatter »

monkeynotes wrote: post #142
lumost wrote: post #40

Earlier quoted context omitted.

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…

Let's not forget COVID is not done yet. We've had two years of restrictions and now it seems like folks are behaving as if it's over. Mutations are propagating and yet most people are out and about without masks and the dialog around vaccines has all but dried up. The ongoing confusion about what this disease's risk factor is worrisome. First I think people have much more distrust in science and government. There is…

I'm out and about without wearing a mask because the numbers of deaths per day due to covid in my state has dropped down to single digit numbers and the number of current cases is currently 1/30 of where it was at it's peak. Should those numbers start going back up, I'll start taking more precautions. We have to start living life again where we are able to or a series of economic woes will become the new normal instead of a single correction due to the pandemic.

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

#306

Post by anamax »

MuffinFlavored wrote: post #302
anamax wrote: post #284

Earlier quoted context omitted.

> I have a dumb question. Most publicly traded companies rarely issue new shares. Why does a company care about its share price? If a company doesn't care about share price, the shareholders will elect a board of directors who will install a management team that does care about share price.

i’m just trying to understand why a good share price benefits the company financially? It benefits the shareholders, and all the executives who are paid in stock. But I don’t understand why financially accompany benefits from a high share price unless they are diluting and issuing shares

The question is not whether the executives are paid in stock, it's whether they're paid at all.

Executives who don't worry about share price get to work somewhere else.

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

#307

Post by 30944836 »

jagraff wrote: post #245
30944836 wrote: post #218

Earlier quoted context omitted.

>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). The good news is, this won't happen in the US, at least not in the 21st century. So if you're an American, feel lucky.

Care to elaborate? What makes you so sure that won't happen in the US?

The population growth of the United States will never flatline for any appreciable amount of time. In other words, we'll never run out of workers. This is for two reasons:

(1) We border a rapidly developing nation to the south (Mexico), with significant economic ties at that border.

(2) The United States is, hands down, the most effective society at integrating immigrants and allowing them to be productive. We can always, always import more workers, and people will always, always want to come here.

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

#308

Post by presentation »

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

It’s probably also that it really depends on the place. If you’re in SF really does feel like the housing market has stood still.

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

#309

Post by snake_doc »

MuffinFlavored wrote: post #280
snake_doc wrote: post #279

Earlier quoted context omitted.

> Most publicly traded companies rarely issue new shares. False, most public companies have stock based compensation plans, which are ways of issuing new shares. Without them, they would need to substitute stock compensation with cash to acquire talent. Facebook issues shares every time they approve a new stock based compensation plan.

https://finance.yahoo.com/quote/FB/key-statistics?p=FB FB has 2.3b shares outstanding. How much has that number grown past 12 months, 24 months, 36 months so I can put what you are discussing into perspective?

It's not as simple as looking at the stock of outstanding shares to determine issuance, as it's a net figure.

In terms of new issuance, FB spends billions in stock based compensation each year since 2012, all of these are new issuance under the equity incentive plan. It was ~$9.164B for FY2021 alone.

In terms of buybacks, FB started buying back stocks in 2017 and has continued since. In FY2021, they spent ~$55.47B to buy back stocks.

Therefore, outstanding shares have been decreasing since around 2020. But this doesn't mean the company stops issuing shares. The more stock prices fall, the more equity they would need to issue to compete for talent, or alternatively supplement with cash. Long term, stock prices is one of many measures of how the company would be able to raise capital (stock based compensation is an indirect way of raising capital).

Data from Bloomberg: https://postimg.cc/Lq0sNCJV

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

#310

Post by adolph »

taylodl wrote: post #283
adolph wrote: post #277

Earlier quoted context omitted.

> Inflation should take care of demand. Indeed, may as well buy now (if you can) since you'll get less for the same money in the future. > The higher prices will bring demand in alignment with supply. Unless the stimulus cash injection policy allows people to continue to buy now (see above).

With everything opening back up and experiencing a labor shortage it would be very difficult to justify any further stimulus monies. I don't think we have to worry about that. Economists expected a rise in inflation due to stimulus spending in 2020 - that had already been factored in to their forecasts. What has surprised them is the rate of inflation is higher than expected. I'm arguing the reason they're surprised…

Hayek’s greatest contribution to economics was to show that society is far more complex than we realize, with little pieces of knowledge dispersed among millions of individuals. “The curious task of economics,” he famously wrote in “The Fatal Conceit,” which he published in 1988, “is to demonstrate to men how little they really know about what they imagine they can design.”

https://www.washingtonpost.com/news/volokh-conspiracy/wp/201...

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