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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%

#121

Post by datadata »

treeman79 wrote: post #81
datadata wrote: post #14

Earlier quoted context omitted.

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.

It’s been 2 quarters of negative growth for decades. You can find videos of every politician on both sides saying that.

Even if that were still true, the notion of real growth depends on correctly calculating inflation. That calculation has changed over the years, and is fairly subjective.

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

#122

Post by JPKab »

davidgay wrote: post #115
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…

> 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).

Debt servicing is a constant thing for businesses to be able to make payroll and acquire inventory for later resale or processing.

Based on your thoughts here I'm going to assume you haven't worked at a small business before. If you have it must have been awesome to work at a place that didn't have to borrow money constantly.

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

#123

Post by matthewdgreen »

treeman79 wrote: post #74
supergeek133 wrote: post #53

Earlier quoted context omitted.

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).…

Be real fun when the strategic oil reserve runs out / stop draining it after November Election. Nothing was done to increase domestic supply. And OPEC has decided to tighten the screws on us.

"U.S. oil production is almost 12 million barrels per day. By the end of this year, it will be up by about one million barrels per day compared to when President Biden took office, and it is on track to reach a new annual high in 2023. However, a number of industry participants have suggested that, even with today’s high prices, they are concerned about investing in production when prices could fall in the future.

The Administration is announcing its intent to use SPR repurchases to add to global crude oil demand at times when the price of West Texas Intermediate (WTI) crude oil is at or below about $67 to $72 per barrel. This will protect taxpayer interests because the SPR will be repurchasing at a lower price than recent sales, potentially allowing it to repurchase more oil than it released with sale proceeds. It will also help address producer concerns about uncertain demand in future years, encouraging immediate investment."

https://www.whitehouse.gov/briefing-room/statements-releases...

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

#124

Post by yardie »

jandrese wrote: post #66
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.

Supposedly the car market is about to crash as well. There was supposedly 2008 like shenanigans in the auto lending segment and the crows are coming home to root. Speculation is that people were buying cars they couldn't afford using the stimulus checks as the downpayment and then immediately asking for a halt on payments due to COVID. With both factors no longer in play people can't afford their cars and are default…

Stimulus checks were what $2000 total. That's less than 10% on a new car and most competent banks look at your monthly payment and DTI to determine how much to loan.

> A recession is bad for the party in power and a lot of the economic catastrophe drumbeat started around the time early polls opened up.

They've moved from economy to gas and the polls are now on crime. Really anything to stir up FUD.

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

#125

Post by trentgreene »

JPKab wrote: post #122
davidgay wrote: post #115

Earlier quoted context omitted.

> 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).

Debt servicing is a constant thing for businesses to be able to make payroll and acquire inventory for later resale or processing. Based on your thoughts here I'm going to assume you haven't worked at a small business before. If you have it must have been awesome to work at a place that didn't have to borrow money constantly.

I've worked in small start ups before, but all boot strapped out of pocket / revenue. Wouldn't having to borrow money constantly be a red flag that the business is bad / not profitable?

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

#126

Post by kyleyeats »

roflyear wrote: post #103
kyleyeats wrote: post #47

Earlier quoted context omitted.

Yes, and the suspiciously low inflation numbers we're given are just low enough to indicate there's growth.

Everything is a conspiracy.

No, everything is 40% more expensive.

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

#127

Post by CPLX »

roflyear wrote: post #80
CPLX wrote: post #34

Earlier quoted context omitted.

So strange. It’s almost as if they’ve picked a side in the conflict between supporting labor or capital.

HN is capital not labor.

Indeed. We are in fact conversing on a website that is a marketing forum for a multi-billion dollar private equity firm.

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

#128

Post by newfocogi »

rogerkirkness wrote: post #4
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.

Housing investment would be 'housing starts' as in new houses being built. I doubt that prices will be going down if there are more people and the same number of houses. Part of the market for existing houses is sensitive to mortgages. All this means is housing will actually cost more in the future on a total cost of ownership basis. If you're a renter with a ton of cash, this is good, but for literally all other sta…

Could you explain why this is good for the renter with a ton of cash?

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

#129

Post by darawk »

davidgay wrote: post #115
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…

> 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).

That isn't quite right. What it implies is that debt service is a significant fraction of their margins, which is a subtle but actually quite significant difference.

If a grocery store makes 1% profit on each item it sells, and its debt service cost is 1% of its revenue (making it roughly "1% of its cost") a doubling of debt service cost wipes their margin to zero.

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

#130

Post by subsubzero »

UncleOxidant wrote: post #102
subsubzero wrote: post #60

Earlier quoted context omitted.

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…

Mortgage rates at 7% is pretty much the average mortgage rate going back 70 years or so. We're basically at the average mortgage rate now. The Fed screwed up by keeping rates too low for too long which juiced home prices such that a huge chunk of people who would like to be able to buy a home are priced out of the market. The problem, though, is that home building needs to continue in order to improve the housing sup…

100% agree:

> But keeping mortgage rates artificially low isn't the answer

I don't know what the solution is for the housing issue, on one hand you have people (like myself) who bought at high prices(and at low interest rates). My house will be a money loser if I try to sell, and this includes the thousands/millions? of people also in my boat(we are essentially trapped in our house and unable to move). On the other hand houses that will need to be built and houses on the market now are not selling, the cost to build a house and interest rates are too high in terms of affordability given current prices of houses. This leads to less mobility for Americans, and for those that are locked in their low rates right now(and bought in the past 7 years or so, and at lower levels pre-pandemic) would be crazy to sell which is another factor driving down supply.

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