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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%

#271

Post by aschearer »

Aunche wrote: post #228
aschearer wrote: post #212

Earlier quoted context omitted.

I'm not sure why you think this is true. For month's Powell has been shifting the narrative. First it was under control, then it was a soft landing, now it's going to be a rough landing. What'll it be tomorrow? I don't think they're being dishonest. I think they're constrained in how forthright they can be, lest they trigger a market reaction.

> I think they're constrained in how forthright they can be, lest they trigger a market reaction. This is why I said that they try to be honest. Doctors are also inclined to err on the side of optimism when they are uncertain. The difference is that nobody is making conspiracy theories about doctors actually wanting to make their patients sick.

Tell that to Fauci.

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

#272

Post by Auracle »

vibrio wrote: post #184
Auracle wrote: post #133

Earlier quoted context omitted.

[flagged]

Labor tightness seems to be one of the drivers of the broader inflation. Additional labor may help keep that inflation under control without having to nuke the economy.

Right, and at the same time we've seen wages go up appreciably for the low end of the labor market for the first time in a long time.

I'm not saying there wouldn't be other issues with clamping down on immigration, but if you're trying to tackle the supply and demand issue it's the easiest way to handle it.

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

#273

Post by Auracle »

allturtles wrote: post #222
Auracle wrote: post #133

Earlier quoted context omitted.

[flagged]

Where does this 5 million number come from? [0] estimates that the net change in illegal immigrant population in the U.S. since 2019 is close to 0. [0]: https://cis.org/Report/Estimating-Illegal-Immigrant-Populati...

https://www.cbp.gov/newsroom/stats/cbp-enforcement-statistic...

Note that's just "enforcement actions," which nowadays largely means giving them a court date and letting them go. It doesn't count anyone who snuck in successfully.

Here's another link: https://www.nbcnews.com/politics/immigration/migrant-border-...

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

#274

Post by Auracle »

pixelatedindex wrote: post #255
Auracle wrote: post #133

Earlier quoted context omitted.

[flagged]

> it’s insane to me that nobody is connecting the two, but in the past two years we’ve let in ~5 million illegal immigrants and built ~3 million homes. What is the connection here? And why is there a qualification of "illegal"? If these were legal immigrants, what would that change? You're implying that demand is greater than supply, which has been quite overtly mentioned by many.

Of course demand is greater than supply. If it wasn't prices wouldn't be increasing greater than the rate of inflation.

You're right that the type of immigrants don't matter, but the reason I mentioned illegal immigrants is because the amount is completely uncontrolled. Legal immigration we could easily ramp up or down.

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

#275

Post by Auracle »

UncleOxidant wrote: post #221
dsfyu404ed wrote: post #218

Earlier quoted context omitted.

He's saying that while the numbers make it look like we're building homes slightly faster than the population is growing that's not the case once you count off the books immigration. So the housing deficit is getting worse, not better.

Off-the-books immigration is by definition tough to quantify. But it doesn't seem likely that illegal immigrants are either renting or buying houses in large numbers since they don't tend to have a lot of money. More likely they're doubling up with family that's already here and as such not causing a significant amount of housing demand.

That's a huge reach. You can only "double up" so much.

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

#276

Post by Auracle »

UncleOxidant wrote: post #158
Auracle wrote: post #133

Earlier quoted context omitted.

[flagged]

Without all that immigration it would cost a lot more to build houses.

It would cost more, but materials are the largest cost. A significant part of the labor are more skilled jobs that illegal immigrants can't do - plumbing, electrical, etc.

And if people aren't building because it makes more sense to buy a "used" house material prices would also drop.

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

#277

Post by bryanlarsen »

bumby wrote: post #238
bryanlarsen wrote: post #219

Earlier quoted context omitted.

LFPR is up for people under 50. The drop in overall LFPR can be almost entirely attributed to the drop in immigration during the pandemic.

> overall LFPR can be almost entirely attributed to the drop in immigration during the pandemic. I just heard a report this morning that there was a very real labor participation rate drop among women, particularly with working mothers. How does your immigration hypothesis align with that? Is it that child care work is primarily driven by immigrant workers? Or is it that other groups more than make up for that in the…

Probably the latter. The LFPR for <25 saw a significant bump.

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

#278

Post by nostrademons »

AnotherGoodName wrote: post #72
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…

>they manage as if a Fed pivot is coming We can't argue this both ways. You can't argue that business leaders are acting as if the fed will pivot away from the current course when the parent is pointing out that they are all tightening in preparation for more to come.

It's different business leaders. The ones who expect their companies to survive are tightening their belts now, to give themselves the runway to survive. The ones that understand that their companies are dead anyway if borrowing costs skyrocket are spending like they won't skyrocket, because otherwise it doesn't matter. The former group is preparing to lose the latter group as customers.

You see this in the media too - some business leaders (often in tech, or finance) are predicting doom and gloom, while others (like in retail or experiences) are saying that it's business as usual and they haven't seen a downturn yet.

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

#279

Post by nostrademons »

lotsofpulp wrote: post #99
function_seven wrote: post #87

Earlier quoted context omitted.

Those businesses were the ones that were either created in that environment, or who survived it long enough. The last time rates were this high, they were this high for decades . I fear the cliff scenario because a lot of business models now were built on a foundation of crazy-cheap debt. The tide is about to go out. Eventually the business environment will re-adjust to the new cost of money, but the transition will…

What rates are you referring to? https://fred.stlouisfed.org/series/fedfunds Last time fed funds rates were as high as they are now was Jun 2019. And then a few more times before that.

We had a taper tantrum in Jun 2019 - the commercial paper markets almost seized up, and the Fed started dropping rates then, a good 9 months before COVID. That's what business leaders remember. We couldn't service 2.5% rates in 2019 (actually more like 2%, it takes time before companies need to rollover their debt), it seems extremely doubtful that we can service 3.25% now.

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

#280

Post by hedora »

Auracle wrote: post #276
UncleOxidant wrote: post #158

Earlier quoted context omitted.

Without all that immigration it would cost a lot more to build houses.

It would cost more, but materials are the largest cost. A significant part of the labor are more skilled jobs that illegal immigrants can't do - plumbing, electrical, etc. And if people aren't building because it makes more sense to buy a "used" house material prices would also drop.

Materials aren't the largest cost around here (California) There has been a massive worker shortage since 2008, so even incompetent people can charge way more than material costs for most installation jobs. (And then you pay a second person even more.)

Permitting, engineering, etc are also expensive.

Finally, construction costs are difficult to estimate up front, so it is difficult to be a rational actor when deciding to build or not.

After all, if you hit a 33% cost overrun half way through building, your best option is to pay the 33%. At that point the house costs 83% of the expected price of starting over. If you stop now, then you are out 50% of the initial budget.

If you think facing such a tradeoff is rare, look around for lots that are for sale with pre-approved plans or partially constructed houses. They're usually pretty easy to find.

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