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U.S. economy shrank at a 1.4% annual rate in the first quarter

wsj.com

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Re: U.S. economy shrank at a 1.4% annual rate in the first quarter

#151

Post by nradov »

bitcurious wrote: post #78
taylodl wrote: post #55

The fact the Fed is even contemplating a rate hike tells me they're misreading what's going on. The inflation we're seeing isn't a result of a hot economy needing to be kept in check, it's the fact that 40% of China's production is on lockdown and just about every product made, regardless of where it's made, is relying on part(s) coming from China. Supply is constrained and therefore prices are rising. Likewise, supp…

In my neck of the woods, by far the largest and most impactful inflation has been in the housing sector - 50% price inflation over the past two years. This is entirely attributable to the Fed's pumping of soft assets like stocks, leading to a bunch of paper millionaires cashing out.

Real estate prices aren't included in inflation (BLS CPI) calculations because those are investment assets, like buying stocks or gold bullion. The CPI does account for housing costs through rent and owner's imputed rent.

Re: U.S. economy shrank at a 1.4% annual rate in the first quarter

#152

Post by [deleted] »

dragonwriter wrote: post #122
omginternets wrote: post #51

Earlier quoted context omitted.

I really don’t want to sound calloused because caring for the weak and the elderly is a pillar of civilizations, but my impression was that the bulk of “excess deaths” were not among the most economically active populations. I could just as easily see this having the opposite economic effect: reducing the burden on the state for such things as retirement and Medicaid.

> I really don’t want to sound calloused because caring for the weak and the elderly is a pillar of civilizations, but my impression was that the bulk of “excess deaths” were not among the most economically active populations Really? The elderly may not be likely to work , but they still consume (they consume lots of medical services in proportion to their numbers, for instance.) > reducing the burden on the state fo…

[deleted]

Re: U.S. economy shrank at a 1.4% annual rate in the first quarter

#153

Post by HFguy »

mensetmanusman wrote: post #140

It’s always good to remind people that: GDP ~= Population * Productivity If your population growth flat-lines (which it did last year), productivity has to compensate. Can productivity compensate if the average age is getting older (people tend to be less productive after a certain median age)? One reason investing in index funds makes sense is the underlying assumption that global population growth keeps increasing…

It is a common mistake, but stocks don't have a positive return because GDP increases over time. They have a positive expected return over time because they have a risk premium. That is, to invest and take on risk, an investor will demand a return above and beyond the expected value of the cash flows the business generates. Whatever path of GDP and/or population is expected to be is already factored into the discounted valuation of the cashflows.

That is, you aren't getting a positive expected return because population growth is increasing over time (i.e., everyone knows that, it is already baked into the price). Now, if the expected population growth changes...then the price would change.

You have an expected return because you are taking on risk.

Re: U.S. economy shrank at a 1.4% annual rate in the first quarter

#154

Post by coldtea »

mensetmanusman wrote: post #140

It’s always good to remind people that: GDP ~= Population * Productivity If your population growth flat-lines (which it did last year), productivity has to compensate. Can productivity compensate if the average age is getting older (people tend to be less productive after a certain median age)? One reason investing in index funds makes sense is the underlying assumption that global population growth keeps increasing…

>I’m super interested in what investing looks like in 50-100 years as the population starts collapsing

In most countries the population has already started collapsing

Re: U.S. economy shrank at a 1.4% annual rate in the first quarter

#155

Post by beamatronic »

lumost wrote: post #40
bko wrote: post #28

Earlier quoted context omitted.

> We've encouraged everyone to lever out as far as possible Household debt to GDP has gone down since the low interest rate environment kicked off in 2010. Same is true for household debt as a percentage of personal income. Although I will note that its debt payments, not absolute amount of debt and obviously lower rates lower the interest portion of debt payments. I agree there is something troubling going on but it…

There are many troubling things happening at the moment. From a US centric point of view. - Inflation is at it's highest since the 1970s in the US - There is a large military conflict in Europe. - There are shortages of chips, energy, and food on the horizon. - Unprofitable growth stocks have valuations as high as 100:1 on revenue. - There is increasing militarized tension on many portions of the global supply chain…

All of these look like they were caused by politicians making bad choices

Re: U.S. economy shrank at a 1.4% annual rate in the first quarter

#156

Post by mynameishere »

riku_iki wrote: post #111
neffy wrote: post #84

Earlier quoted context omitted.

Yes it's the perfect storm for economic theories... increases in the money supply and actual product shortages both causing inflation at the same time. Meanwhile increasing interest rates are in a nasty intersection with banks and other lenders stuck with low interest 30 year loans on their books, which make them very vulnerable to any new lenders. definitely popcorn time.

> with low interest 30 year loans Are those loans supported by other low interest loans they took themself?

Sure, checking accounts and the like.

Re: U.S. economy shrank at a 1.4% annual rate in the first quarter

#157

Post by riku_iki »

gruez wrote: post #96
kasey_junk wrote: post #16

Earlier quoted context omitted.

The US Fed didn’t raise interest rates until March, much too late to cause this number.

It was already priced in. On jan 3 the markets were predicting a 57.12% chance of interest rate increase to 25-50bp, 3.6% chance of increasing to 50-75bp. https://www.cmegroup.com/trading/interest-rates/countdown-to...

But market is not economy.

Re: U.S. economy shrank at a 1.4% annual rate in the first quarter

#158

Post by ben_w »

mensetmanusman wrote: post #140

It’s always good to remind people that: GDP ~= Population * Productivity If your population growth flat-lines (which it did last year), productivity has to compensate. Can productivity compensate if the average age is getting older (people tend to be less productive after a certain median age)? One reason investing in index funds makes sense is the underlying assumption that global population growth keeps increasing…

> I’m super interested in what investing looks like in 50-100 years as the population starts collapsing

I don’t think it’s possible to forecast economics on those scales. If I was cryonically preserved and woken up in 2122, I would be equally willing to believe we were declining or stagnant for the reasons you give… or that we had solved AI and von Neumann replicators and that the planet Mercury had been fully dismantled and used to construct a Dyson swarm whose descendants had already done the same to a similar planet around each of the nearest dozen or so stars.

Re: U.S. economy shrank at a 1.4% annual rate in the first quarter

#159

Post by radford-neal »

SubiculumCode wrote: post #147

I hate this title. It makes it seem to people that our economy shrank when in fact, it just grew bigger less fast. To me its just as egregious as headlines saying that inflation in April is 7% or whatever, leading the less informed to think that inflation grew by 7% in a single month, not on an annual basis.

First words of article: "The U.S. economy shrank at a 1.4% annual rate in the first quarter". That's an actual shrinkage, not a lower rate of growth.

"Inflation in April was 7%" is indeed a frequent misleading/ambiguous phrase. They should say, "consumer prices rose in April at a 7% annual rate", or say "consumer prices increased by 0.6% in April", though constant incorrect usage might lead people to misinterpret the latter.

Re: U.S. economy shrank at a 1.4% annual rate in the first quarter

#160

Post by jermaustin1 »

colinmhayes wrote: post #83
bitcurious wrote: post #78

Earlier quoted context omitted.

In my neck of the woods, by far the largest and most impactful inflation has been in the housing sector - 50% price inflation over the past two years. This is entirely attributable to the Fed's pumping of soft assets like stocks, leading to a bunch of paper millionaires cashing out.

Also due to the fact that we stopped building new homes after 08. If supply keeps up with rising demand prices don't change.

This is a complete anecdote, but I am surrounded by new neighborhoods all built in the last couple of years, and some new ones being built now. We also have a BUNCH of new 4 story apartments that have never been seen in suburban Houston before 2020.

I know Houston supposedly got a HUGE influx of people leaving NYC and SV in 2020-2021, but still, my home town of around 20k people just got 2 brand new neighborhoods in 2021 with 500 homes between them all selling for $300k+ when you used to be able to buy a house in town for $50-100k. Even with record breaking housing development, the cost of homes in the last few years in Houston has been ridiculous.

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