US economy returned to growth last quarter, expanding 2.6% • Hacker News Board

Re: US economy returned to growth last quarter, expanding 2.6%

#51

Post by JumpCrisscross » Thu, Oct 27, 2022, 4:24 PM UTC

yieldcrv wrote: post #42

importantbrian wrote: post #28

Earlier quoted context omitted.

Did the fed actually say this? There were a bunch of investment bankers who did, and it seems like everyone else ran with the narrative. I haven't seen that the fed actually said it. I think all the fed cares about is bringing down inflation, but if the primary factors in inflation are supply related then unemployment doesn't have to go up for inflation to come down.

Jerome Powell said this several times to Congress. You’ll be able to find it, I believe in you.

> Jerome Powell said this several times to Congress

No, he didn’t [1]. The Fed’s statements to Congress are tightly scripted, in part so professionals can pick the meat from such popular nonsense.

[1] https://www.federalreserve.gov/newsevents/testimony/powell20...

Re: US economy returned to growth last quarter, expanding 2.6%

#52

Post by spaceman_2020 » Thu, Oct 27, 2022, 4:24 PM UTC

importantbrian wrote: post #6

This is the weirdest "recession" I can remember. Business leaders are constantly talking about how challenging the economic environment is and the need for layoffs etc. Meanwhile most of the underlying indicators are actually positive. Growth is strong, employment is strong. Anecdotally we're still having trouble finding good candidates. It's almost like there is a class of business leaders who are just trying to wis…

The world is wacky right now. Normal patterns of behavior have been disrupted by 2 years of lockdowns. Some people are spending out of spite. Some people are not even leaving the house. There's a certain levity about work - no one seems to be taking it seriously.

Strange times. Really hard to capture in data. Only increases possibilities of a major economic catastrophe because the tea leaves are just too hard to read right now.

Re: US economy returned to growth last quarter, expanding 2.6%

#53

Post by supergeek133 » Thu, Oct 27, 2022, 4:24 PM UTC

importantbrian wrote: post #6

This is the weirdest "recession" I can remember. Business leaders are constantly talking about how challenging the economic environment is and the need for layoffs etc. Meanwhile most of the underlying indicators are actually positive. Growth is strong, employment is strong. Anecdotally we're still having trouble finding good candidates. It's almost like there is a class of business leaders who are just trying to wis…

This is the broadest view of the economy growing. So there may be some business leaders who work in still growing industries who are trying to "wish the recession into existence" as you say..

But on the flipside you have things like housing taking a downturn (not just home prices, but actual housing construction) which negatively impacts all of their suppliers (HVAC equipment, lumber, contracting companies, etc etc).

So there are some of those leaders who have a likely justified negative outlook.

Re: US economy returned to growth last quarter, expanding 2.6%

#54

Post by sleepydog » Thu, Oct 27, 2022, 4:24 PM UTC

alexb_ wrote: post #2

>Housing investment, though, plunged at a 26% annual pace, hammered by surging mortgage rates as the Federal Reserve aggressively raises borrowing costs to combat chronic inflation. It was the sixth straight quarterly drop in residential investment. Thank christ. Please bring on a housing crash ASAP.

If housing prices go down, but mortgage rates go up, are we still screwed?

Re: US economy returned to growth last quarter, expanding 2.6%

#55

Post by mostly_harmless » Thu, Oct 27, 2022, 4:25 PM UTC

importantbrian wrote: post #28

bagels wrote: post #9

Earlier quoted context omitted.

The fed said interest rates will keep being raised until unemployment rises.

Did the fed actually say this? There were a bunch of investment bankers who did, and it seems like everyone else ran with the narrative. I haven't seen that the fed actually said it. I think all the fed cares about is bringing down inflation, but if the primary factors in inflation are supply related then unemployment doesn't have to go up for inflation to come down.

Yes, but not directly. If you listen to the last FOMC meeting, Powell mentions there will likely be significant weakening of the labor market and a rise of unemployment. As well as his famous "there will be pain" remarks.

I don't think he directly said "he won't stop until" though.

Re: US economy returned to growth last quarter, expanding 2.6%

#56

Post by mpalczewski » Thu, Oct 27, 2022, 4:26 PM UTC

glial wrote: post #26

bagels wrote: post #9

Earlier quoted context omitted.

The fed said interest rates will keep being raised until unemployment rises.

Which is so strange and violates two of their three mandates - maximum employment and moderate interest rates.

the mandate is maximum employment and 0% inflation.

Re: US economy returned to growth last quarter, expanding 2.6%

#57

Post by tschellenbach » Thu, Oct 27, 2022, 4:27 PM UTC

importantbrian wrote: post #6

This is the weirdest "recession" I can remember. Business leaders are constantly talking about how challenging the economic environment is and the need for layoffs etc. Meanwhile most of the underlying indicators are actually positive. Growth is strong, employment is strong. Anecdotally we're still having trouble finding good candidates. It's almost like there is a class of business leaders who are just trying to wis…

Companies pay employees to increase the value of the company. The market is reasonably efficient and companies will increase pay to match the value created (somewhat correlated at least. startups often pay more with the hope it balances out in the future, established companies pay less since some of them print cash and they dont have to pay more to get candidates).

Many tech companies are down 80-95%. So if you used to pay employees 100 to generate 100, now you are paying 100 to generate 20 or in some cases 5. This only works if you can massively increase productivity or reduce cost.

There is no evil conspiracy, markets are just down

Re: US economy returned to growth last quarter, expanding 2.6%

#58

Post by nobody9999 » Thu, Oct 27, 2022, 4:27 PM UTC

alexb_ wrote: post #2

>Housing investment, though, plunged at a 26% annual pace, hammered by surging mortgage rates as the Federal Reserve aggressively raises borrowing costs to combat chronic inflation. It was the sixth straight quarterly drop in residential investment. Thank christ. Please bring on a housing crash ASAP.

>Federal Reserve aggressively raises borrowing costs to combat chronic inflation. [emphasis added]

Not sure why you used that word. I don't think it applies in this circumstance. Not trying to be pedantic/snarky, I just wonder why you characterize only 18 months or so of higher than has been seen in quite some time inflation as "chronic."

Chronic (adj.):[0]

   1a : continuing or occurring again and again for a long 
        time
   2a : always present or encountered 
    b : being such habitually

[0] https://www.merriam-webster.com/dictionary/chronic

Edit: I note (after the fact) that the parent poster was quoting TFA and not making that statement themselves. My apologies for attributing that to alexb and not the AP article. That said, I still think it's odd that they'd use the term "chronic."

Re: US economy returned to growth last quarter, expanding 2.6%

#59

Post by nightski » Thu, Oct 27, 2022, 4:27 PM UTC

hartator wrote: post #45

JumpCrisscross wrote: post #37

Earlier quoted context omitted.

> adjust for money supply inflation (spiked at around 24%) instead of price inflation (spiked at around 9%) The former is a fake metric. Measuring changes in the monetary base [1] is a thing. But it’s seldom accurately reflected in a single figure. Also, the 2.6% is real GDP growth. Current-dollar growth was 6.7% annualised [1]. [1] https://en.wikipedia.org/wiki/Monetary_base [2] https://www.bea.gov/news/2022/gross-d…

> the former is a fake metric. I am using M2 money supply. Basically trying to proxy how much money more we printed this past few years. Source: https://www.longtermtrends.net/m2-money-supply-vs-inflation/

That could be skewed because they changed how M2 was calculated during the pandemic.

Re: US economy returned to growth last quarter, expanding 2.6%

#60

Post by subsubzero » Thu, Oct 27, 2022, 4:29 PM UTC

importantbrian wrote: post #6

This is the weirdest "recession" I can remember. Business leaders are constantly talking about how challenging the economic environment is and the need for layoffs etc. Meanwhile most of the underlying indicators are actually positive. Growth is strong, employment is strong. Anecdotally we're still having trouble finding good candidates. It's almost like there is a class of business leaders who are just trying to wis…

It is weird, they say history does not repeat but it rhymes. What is troubling about this good news about GDP growth is the fed's course of raising interest rates will continue on and interest rates will keep getting higher and higher. This will lead to a housing market that will grind to a halt and expect that whole sector will hemorrhage jobs. In addition growth companies will be hit hard by rates being high as we have seen since early this year. Basically the fed will do anything in its power to stop inflation and I expect the only thing to get it back to the target of 2% is to have interest rates in the low teens. I know that sounds crazy but comparing this to the 70's it took Volker raising rates to 20% to tame the bad inflation of that period[1]. We are not seeing peaks of 11%-13%(like the 70's) but 8%+ is very high and is costing Americans dearly.

[1] - https://www.npr.org/2022/09/29/1125462240/inflation-1970s-vo...