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

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

#201

Post by dfxm12 » Thu, Oct 27, 2022, 6:09 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…

I can't figure out why other than maybe they think it would allow them to reestablish power in the labor market.

It's exactly this and actions/comments from CEOs and the Fed pretty much confirm it. When Powell said "economic pain" was necessary, he meant that mostly for the working class. Look at all the layoffs going on...

By driving up unemployment, the Fed expected “supply and demand conditions in the labor market to come into better balance over time, easing the upward pressure on wages

https://www.wsws.org/en/articles/2022/09/23/izio-s23.html

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

#202

Post by jandrese » Thu, Oct 27, 2022, 6:11 PM UTC

seanmcdirmid wrote: post #190

jandrese wrote: post #167

Earlier quoted context omitted.

Apparently there was a lot of 2008 style "ignoring the fundamentals" going on in the auto lending industry because the banks had tightened up the home lending market and the stupid money needed a new place to go. There is the further instability from the government loan crisis in China combined with continuing zero-COVID lockdowns hurting production. However, I think the China problems are being hugely overblown in t…

> Unbelievably credulous predictions that the Chinese government is going to topple on its own in the next few months are just plain out of touch. Isn't that just a straw man? Most serious reporting on China are just predicting a substantial slow down in growth (or even recession), which is what is playing out right now. Chinese emigration rates, which were dropping for many years before, are actually growing again (…

You would think so, but the stories are being repeated a lot in the news:

https://news.google.com/search?q=china%20government%20collap...

https://www.youtube.com/results?search_query=china+collapse

A slowdown is inevitable. The "china miracle" was loads of debt fueled spending to pump the books, but they still have 1.4 billion people who are still near the bottom of the S curve for domestic consumption. Even the dubious official figures showed a slowdown in growth.

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

#203

Post by cjenkins » Thu, Oct 27, 2022, 6:14 PM UTC

newfocogi wrote: post #128

rogerkirkness wrote: post #4

Earlier quoted context omitted.

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?

My understanding is as interest rates go up prices need to come down as people only have $X/month to allocate towards housing. EX: If you have $100 to put towards housing per month you can put $90 towards the house itself and $10 towards interest on the loan in low interest environments, but only $80 towards the house and $20 in high interest environments. If people can only put $80 per month towards the house you're selling that ultimately means the house price can't be as high as when people are able to put $90 per month towards the house.

For the renter with a lot of cash this means you can come out ahead if you're able to minimize the loan or outright purchase in cash a house. The renter with a lot of cash gets to benefit from the lower prices from higher interest rates while minimizing the downsides of higher interest rates.

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

#204

Post by keester » Thu, Oct 27, 2022, 6:15 PM UTC

vikingerik wrote: post #199

com2kid wrote: post #187

Earlier quoted context omitted.

> The inflation of 2022 is also largely an illusion - it's really just that a few percentage points of what should have been normal inflation in 2020 and first-half 2021 was time-shifted into 2022. Food prices are up 48% at the nations second largest grocery chain. Rent prices are now through the roof, 20-30% year over year increases are common in major cities. Things are more expensive, full stop, and it isn't just…

That's exactly what I'm talking about. Don't look at year-over-year numbers, you're falling for the illusion. A rent jump of 20% for 2022 is because rents were artificially suppressed in 2020 and 2021. The right comparison is to look at 2022 compared to 2019 and see if it looks out of line for a three-year period. A few things are, but most aren't. Also, citing one grocery chain is a cherry-picked outlier. Cite them…

rent did not go down in 2020

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

#205

Post by yieldcrv » Thu, Oct 27, 2022, 6:15 PM UTC

JumpCrisscross wrote: post #51

yieldcrv wrote: post #42

Earlier quoted context omitted.

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...

tightly scripted to be vague

https://www.bloomberg.com/news/articles/2022-09-21/powell-si...

> Powell told reporters several times that a softer labor market may be necessary to sufficiently bring down demand.

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

#206

Post by uni_rule » Thu, Oct 27, 2022, 6:17 PM UTC

com2kid wrote: post #187

vikingerik wrote: post #136

Earlier quoted context omitted.

There never was a real recession - it's an artifact of year-over-year numbers that were so skewed from pandemic effects. Pent-up consumer demand shifted much activity from 2020 into 2021. This is the source of all the apparent weirdness. Every yearly number in 2021 looked great thanks to comparing an artificially high number to an artificially low 2020 baseline. Then every yearly number from 2022 looks terrible, beca…

> The inflation of 2022 is also largely an illusion - it's really just that a few percentage points of what should have been normal inflation in 2020 and first-half 2021 was time-shifted into 2022. Food prices are up 48% at the nations second largest grocery chain. Rent prices are now through the roof, 20-30% year over year increases are common in major cities. Things are more expensive, full stop, and it isn't just…

If you want to start arguments you can call that opportunistic rent seeking, something to consider in face of 2021 having record corporate profits. That idea is plausible enough that even some more conservative outlets gave it coverage: https://fortune.com/2022/03/31/us-companies-record-profits-2...

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

#207

Post by hotdogrelish » Thu, Oct 27, 2022, 6:18 PM UTC

lotsofpulp wrote: post #180

cwkoss wrote: post #166

Earlier quoted context omitted.

Many middle class seniors sell their homes to pay medical or long term care expenses.

I would like to see stats on that because the Medicaid asset test excludes $636k of one’s home value. https://www.medicaidlongtermcare.org/basics/home-ownership-i... There should be no need to sell a home for almost everyone to receive healthcare or long term care (which would be covered by Medicaid/Medicare). And if people wanted to move to higher end facilities, those cost $10k+ per month, so selling a median house…

Interestingly in some states it's even higher than $636k!

However, I think you're on the nose with the long term care facilities. Medicaid will only pay 100% of any nursing home care (high end or low end) if your countable assets are $2500 or less. Additionally, Medicaid considers your income going back 5 years in order to determine eligibility, so selling (or putting into a trust) sooner rather than later can make sense for a lot of people. https://www.webmd.com/health-insurance/features/when-how-muc...

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

#208

Post by scythe » Thu, Oct 27, 2022, 6:18 PM UTC

vikingerik wrote: post #136

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…

There never was a real recession - it's an artifact of year-over-year numbers that were so skewed from pandemic effects. Pent-up consumer demand shifted much activity from 2020 into 2021. This is the source of all the apparent weirdness. Every yearly number in 2021 looked great thanks to comparing an artificially high number to an artificially low 2020 baseline. Then every yearly number from 2022 looks terrible, beca…

>a fairly normal 12% over three years

That's roughly double the Fed target rate — annualized 3.8%, which would be the highest any year save 2008, which was itself an anomaly due to the GFC. The last time inflation exceeded 3.5%, save 2008, was in 1991. So 12% in three years is in no sense normal (for the USA).

The inflation is real, and it's serious. It's actually produced a reduction in real wages [1] despite much excitement about workers' bargaining power. Progressives complaining about the Fed (which is finally reacting reasonably) seem to be missing that preventing a wage–price spiral is not the same thing as union-busting.

1: https://www.bls.gov/news.release/realer.nr0.htm

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

#209

Post by rory » Thu, Oct 27, 2022, 6:19 PM UTC

lotsofpulp wrote: post #175

function_seven wrote: post #155

Earlier quoted context omitted.

Look at the 3-month (90-day) commercial paper rates. They're split into different data sets on the FRED site[0][1], changing in 1997. I combined them into a single chart here: https://ibb.co/h7c7DJS (Is ImgBB a good site? I stopped using imgur after too many dark patterns) [0] https://fred.stlouisfed.org/series/WCP3M [1] https://fred.stlouisfed.org/series/DCPF3M

Seems like it came down after 2007 and 2000 highs at similar levels. But who knows, maybe US government will leave it high. Maybe they will bring it back down to juice asset prices. Maybe the parameters of the world have changed to not allow that.

> maybe US government will leave it high

Although the Fed can backstop commercial paper in emergencies (and they did so at the beginning of the pandemic), it's extremely unlikely that they start taking on enough to move rates in the medium term (like they did with mortgage backed securities). So this is not a rate that the government controls except very indirectly.

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

#210

Post by chickenpotpie » Thu, Oct 27, 2022, 6:20 PM UTC

mgamache wrote: post #153

The Yield curve, Mortgage Rates, Bonds and Asset Prices are all in bad shape. Combined with rapidly falling income (due to 15%+ real inflation) it's a disaster in the making. Homes will likely fall 30-35% in adjusted value in the next 12 months. A lot of people's net worth is in their homes. This will be the largest post WWII drop in home prices. Don't forget the strong dollar is crushing economies around the world,…

Citation needed on homes losing 35% of their value. I've paid a lot of attention to predictions on home values and the only people that are predicting drops that big are /r/rebubble and low quality media outlets. I have yet to find a single economist that supports a price drop that large. The biggest I've seen an economist say is a 5% drop.