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US economy returned to growth last quarter, expanding 2.6%

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

#111

Post by trafficante »

datadata wrote: post #14
SantalBlush wrote: post #3

The EU has a similar committee to the NBER, which identifies EU business cycles. They also do not use the colloquial "2 quarters of decline in GDP" definition, though at least 2 quarters of decline is often seen in those recessions that they do identify. [0] >Most of the recessions identified by the Committee’s procedures consist of two or more quarters of declining real GDP, but declining real GDP is not the only in…

The issue is that the definition of a recession is vague, subjective, and as a term has become so politically important. If the definition was objective, verifiable, etc, then there wouldn't be room for the idea of political manipulation. I wish that society would not place such high value on terms that are so murky. It encourages discourse where the truth is not important.

The whole “actually the terms we’ve used throughout your life aren’t correct and we’re going to pretend there’s nothing unusual about this sudden reversal” is wildly damaging to institutional credibility.

I hold a BS in Econ and even I was shocked by how it was presented to the public. I figured there was a very good chance GDP would rebound for at least a quarter - and the political spin would be “Biden saves America from the Putin recession in record time” or something.

None of those talking heads had a single clue that the “two declining quarters” definition was simply a useful shorthand and yet they all immediately hopped on the exact same script.

Edit: in case it wasn’t clear, I 100% agree that we need more accurate definitions. So much needless harm is being done when the response to edge cases falling outside the colloquial understanding of a term is to quietly change dictionary definitions instead of educating the population.

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

#112

Post by myth_drannon »

bumby wrote: post #88
nostrademons wrote: post #49

Earlier quoted context omitted.

The stock market, interest rates, and advertising spending are leading indicators, while unemployment is a lagging indicator. Business leaders know the financial structure of their company, and many of them know that they can't survive at 2% rates, let alone 5 or 10% rates. The gloom from business leaders is forward-looking. They're fine for now , while consumer spending holds up and they can run on old debt. But as…

> many of them know that they can't survive at 2% rates, let alone 5 or 10% rates. From your perspective, what is the underlying reason they cannot survive without excessively low rates? Your last statement feels like it's primed to hold the Fed hostage, which is worrisome.

I would say it's like the panicking homeowners that took variable rate mortgages(business take on a lot of debt to expand) and now their mortgage payments doubled(and also the bank demands extra lump sum payments in addition, because the monthly is only enough to payoff the interest not the principal). Now they need to make x2 of their current salary otherwise they loose the house.

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

#113

Post by modriano »

pavlov wrote: post #7
SantalBlush wrote: post #3

The EU has a similar committee to the NBER, which identifies EU business cycles. They also do not use the colloquial "2 quarters of decline in GDP" definition, though at least 2 quarters of decline is often seen in those recessions that they do identify. [0] >Most of the recessions identified by the Committee’s procedures consist of two or more quarters of declining real GDP, but declining real GDP is not the only in…

It’s shocking to me how many people in America are hoping for the national economy to do poorly so that their party could win the next election. This isn’t just limited to one tribe. The same doesn’t exist in Europe AFAICT. I don’t believe anybody is hoping that Putin would shut down the gas pipes for good so that their favorite politician could win an election next year.

I don't think that's exactly right. I think everyone wants the economy to do well, but most people's ability to gauge the economy is very limited, so they defer to other information sources to tell them how the economy is doing even if they're personally doing fine [0].

If you look at employment over the past 20 years [1], you'll see that Obama took office when the economy was in freefall and after about 9 months the economy turned around and started growing steadily until someone let COVID run wild in the US, at which point the economy fell off a cliff. But the right wing media isn't going to (and never would) say Obama handed Trump a very strong economy and Trump was the first president to oversee a net loss of jobs in over 80 years. The right wing media also won't mention that Trump was all in on making the money printer go brr so that his reelection didn't also have to overcome an explosion of poverty in addition to explosions in death and unemployment. But the right wing media isn't interested it accurately describing reality; it's goal is to secure power for right wing politicians, and to have a shot of doing that in a democracy, right wing media has to conceal the inconvenient facts that show Democrats are actually better stewards of the economy, produce lower rates of violent crime, and are consistently better at delivering improvements to the net and median quality of life of residents of the US.

[0] https://www.nytimes.com/2022/07/15/business/economy/inflatio...

[1] https://data.bls.gov/timeseries/ces0000000001

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

#114

Post by jcranmer »

datadata wrote: post #14
SantalBlush wrote: post #3

The EU has a similar committee to the NBER, which identifies EU business cycles. They also do not use the colloquial "2 quarters of decline in GDP" definition, though at least 2 quarters of decline is often seen in those recessions that they do identify. [0] >Most of the recessions identified by the Committee’s procedures consist of two or more quarters of declining real GDP, but declining real GDP is not the only in…

The issue is that the definition of a recession is vague, subjective, and as a term has become so politically important. If the definition was objective, verifiable, etc, then there wouldn't be room for the idea of political manipulation. I wish that society would not place such high value on terms that are so murky. It encourages discourse where the truth is not important.

There is a decently objective definition of recession: two consecutive quarters of declining economic output. Most metrics of economic output tend to have high degrees of (positive or negative) correlation: GDP, (un)employment, etc.

The issue is that what you've seen since the pandemic started has been basically insane macroeconomic statistics that defy historical correlations, so whereas the US GDP declined in Q1 and Q2 of this year, there weren't corresponding declines in other statistics (e.g., unemployment stayed low). If half of the economic indicators are signalling "recession" and the other half are signalling "rip-roaring growth", any definition that pigeon-holes the economy into one or the other is likely a bad definition.

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

#115

Post by davidgay »

nostrademons wrote: post #49
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 stock market, interest rates, and advertising spending are leading indicators, while unemployment is a lagging indicator. Business leaders know the financial structure of their company, and many of them know that they can't survive at 2% rates, let alone 5 or 10% rates. The gloom from business leaders is forward-looking. They're fine for now , while consumer spending holds up and they can run on old debt. But as…

> But as soon as they need to roll over their debt, everything collapses. They'd need to increase revenues by 2-5x, and they can't.

That would imply that debt-servicing is their dominant cost. That seems wrong (e.g., a grocery store presumably spends a large fraction of its revenue on purchasing groceries from wholesalers).

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

#116

Post by lotsofpulp »

jvanderbot wrote: post #43
brink wrote: post #22

Earlier quoted context omitted.

Don't worry, population collapse will fix this in another ~20-30 years. You'll get there.

Depending on where you live, population collapse is either a myth, meme, overblown but remote possibility, or absolute certainty. In most western nations, it's not going to be that big of a deal, I wager. In areas with net emigration, especially those that are not good at sharing true demographics with their leaders, it'll be devastating.

I would say population declines within certain tribes leading to changes in political power, and hence distribution of resources, is the central issue in many societies, especially those with very low birth rates.

And the tribes are not necessarily delineated along skin color/region of origin/religion, but even age/education/immigration.

You cannot plug and play 50M young people from Latin America into the US or Africa/Middle East/Eastern Europe into Europe, and expect society to not change in ways that the existing population might not like.

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

#117

Post by fortuna86 »

Enginerrrd wrote: post #41
SantalBlush wrote: post #21

Earlier quoted context omitted.

This 2.6% figure is real GDP, meaning it's adjusted for inflation. [0] [0] https://www.bea.gov/news/2022/gross-domestic-product-third-q...

Assuming inflation is being calculated accurately...

You seem determined to find a way to discredit this figure.

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

#118

Post by JPKab »

"The U.S. economy grew at a 2.6% annual rate from July through September,"

Annual rate. That means the AP headline is deceptive, because it actually grew .6 percent.

Capital is getting more expensive. Of course a recession is inevitable.

I really hate the partisan capture of once neutral newsrooms. The headline is deceptively optimistic.

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

#119

Post by moate »

pavlov wrote: post #7
SantalBlush wrote: post #3

The EU has a similar committee to the NBER, which identifies EU business cycles. They also do not use the colloquial "2 quarters of decline in GDP" definition, though at least 2 quarters of decline is often seen in those recessions that they do identify. [0] >Most of the recessions identified by the Committee’s procedures consist of two or more quarters of declining real GDP, but declining real GDP is not the only in…

It’s shocking to me how many people in America are hoping for the national economy to do poorly so that their party could win the next election. This isn’t just limited to one tribe. The same doesn’t exist in Europe AFAICT. I don’t believe anybody is hoping that Putin would shut down the gas pipes for good so that their favorite politician could win an election next year.

You have your cause and effect backwards. People assume that "the other guy" is constantly doing all the bad stuff in the world and that "their guy" does all the good stuff. They're not hoping the economy tanks to win an election, they're hoping the electorate realizes "the other guy" tanked the economy and now their base will be energized/swing voters will move to their column.

Also, if you don't believe anyone in Europe is rooting for collapses you seem to be ignoring Short positions or how capitalism works. Everywhere in the world, someone benefits from the people in power failing/bad things happening. This isn't an exceptionally American trait.

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

#120

Post by Izkata »

jandrese wrote: post #68
jvanderbot wrote: post #5

Earlier quoted context omitted.

We took a hard look at the economy before buying our house. Ultimately, we bought when interest rates were high, but prices had not yet come down. There's no crystal ball, but it sure looks like our investment will go down in value in the next few years, perhaps precipitously. I think of it this way: We bought the house we want for the price we can afford, and will happily enjoy it for two decades without price infla…

Look at it this way: you are missing out on 25% rent hikes. https://thehustle.co/why-is-rent-skyrocketing/

This was one of the things that convinced me to buy back in 2013 - stable monthly payments for the whole mortgage duration. Just had to get over the down-payment hump.
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