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Can the West’s perplexing employment miracle continue?

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Re: Can the West’s perplexing employment miracle continue?

#211

Post by ethbr0 »

ianai wrote: post #209
pbhjpbhj wrote: post #199

Earlier quoted context omitted.

How does it put up a barrier to rent seekers, it makes homes less affordable, which impacts the poorer people more. The rich can but the homes. The poor still need somewhere to live and so tent the homes, they're paying more just they're helping wealth move to the bankers more as well as the property owners. Allowing ownership of houses as an investment is just wrong. (The usual response to this is that you need inve…

Higher rates mean lower property values - and lower property values mean the rent/mortgage trade off pushes rents lower. It’s instructive to look up how much those SFHs rent for and compare it to local apartment complexes. There’s a huge premium. (And it’s of note that dealing with renting a SFH is possibly a worse experience than renting from a complex. Large enough complexes have maintenance staff and professional…

In the US at least, higher rates would seem to advantage owner-occupiers over SFH investors.

It's harder for both to purchase, but investors are also heavily leveraged and fighting investment alternatives in a higher-rate environment.

Re: Can the West’s perplexing employment miracle continue?

#212

Post by Joeri »

nightski wrote: post #204
selcuka wrote: post #125

Earlier quoted context omitted.

> Is the norm really that home loans are unaffordable even to first-time-buyer DINKs with good-to-decent six figure jobs who just want a place to live? The home loans are unaffordable because the house prices are too high. The median house price in 1989 was around $95K ($230K adjusted for inflation). Today it's about $400K.

Are houses today the same as houses in 1989? Seems like you'd need a much more detailed analysis than median price to compare apples to apples.

That doesn’t matter to buyers.

If the housing stock is too expensive for the population there can be many causes, and higher quality or larger size housing is just another cause. The causes of the high prices don’t matter to buyers, all they know is they can’t afford to buy. What use is it to them that the homes they can’t afford are better quality?

Re: Can the West’s perplexing employment miracle continue?

#213

Post by rayiner »

astrange wrote: post #202
rayiner wrote: post #195

Earlier quoted context omitted.

No, because we had low interest rates before Trump and didn’t have the same low end job growth. “Good for the economy” isn’t the relevant concept. Immigration can grow the economy overall, while putting lower end workers in a relatively worse position.

The job numbers got that good because of an uninterrupted rate of job growth from 2008 on. JPowell helped by keeping rates low instead of sticking to the previous NAIRU wisdom which says the correct interest rate is the one that reproduces the unemployment rate of 2008. > Immigration can grow the economy overall, while putting lower end workers in a relatively worse position. They don't really do that either! Immigra…

It’s not the job numbers. It’s the labor shortage and wage growth at the bottom end. My local Dunkin’ Donuts is staffed with teenagers and was paying $16 in 2020 (exurban MD). Immigrants compete with those low end workers.

Re: Can the West’s perplexing employment miracle continue?

#214

Post by ethbr0 »

mym1990 wrote: post #191
roflyear wrote: post #38

Earlier quoted context omitted.

seems the consensus is "a little more inflation" is better than "a bigger recession" which is probably true. People are still trying to get on their feet, and inflation is "felt" a lot less than losing your job (and not being able to find a new one for a long time).

It depends on a person's financial situation, from my understanding: if you have a lot of debt(which the average USA household does), you benefit greatly the more inflation goes up. If you have money sitting in the bank, you're basically getting eaten alive. If you have assets, they typically should be tracking inflation somewhat(real estate, some stock categories, TIPS, etc...). People will be in between any of the…

There's also one big winner in an inflationary environment: the US federal government, who happens to owe a LOT of debt.

Inflation shrinks the present value of that debt, without requiring the government to cut spending to pay it down, which would have serious economic consequences (see: austerity).

Re: Can the West’s perplexing employment miracle continue?

#215

Post by rsynnott »

'miracle', from the dictionary:

> an extraordinary event manifesting divine intervention in human affairs

OR

> an extremely outstanding or unusual event, thing, or accomplishment

'miracle' from an economist:

> Something slightly unexpected happened.

They really do overuse the term shamelessly.

Re: Can the West’s perplexing employment miracle continue?

#216

Post by rsynnott »

hn_throwaway_99 wrote: post #57

I thought this was a bizarre (OK, I'll be honest, shitty) article. The beginning starts out by seemingly making the point that Japan has low unemployment because it has a lot of inefficient, "make-work" jobs, e.g. "smartly dressed women help you use the lifts" (subtext being who needs help using an elevator) and "a team of four people was involved in the preparation of your correspondent’s gin martini". OK, fair enou…

I'd wonder how true it is in Japan, either; all feels a bit anecdotal.

My impression was that Japan had ~0 unemployment largely due to an increasingly small number of people of working age; per-employee productivity is actually pretty high in Japan.

And yeah, certainly around here a lot of stuff is just reducing hours because they can't staff at previous levels.

Re: Can the West’s perplexing employment miracle continue?

#217

Post by whywhywhywhy »

hn_throwaway_99 wrote: post #57

I thought this was a bizarre (OK, I'll be honest, shitty) article. The beginning starts out by seemingly making the point that Japan has low unemployment because it has a lot of inefficient, "make-work" jobs, e.g. "smartly dressed women help you use the lifts" (subtext being who needs help using an elevator) and "a team of four people was involved in the preparation of your correspondent’s gin martini". OK, fair enou…

Pointless comparing Japan to the west at all. The work ethic is completely different, may as well be another planet. Impossible to replicate in the west so pointless to compare economies.

Re: Can the West’s perplexing employment miracle continue?

#218

Post by davemp »

nightski wrote: post #204
selcuka wrote: post #125

Earlier quoted context omitted.

> Is the norm really that home loans are unaffordable even to first-time-buyer DINKs with good-to-decent six figure jobs who just want a place to live? The home loans are unaffordable because the house prices are too high. The median house price in 1989 was around $95K ($230K adjusted for inflation). Today it's about $400K.

Are houses today the same as houses in 1989? Seems like you'd need a much more detailed analysis than median price to compare apples to apples.

The improvements in home construction have diminishing returns. For example my county now requires residential fire sprinkler systems. Such systems aren’t cheap but also don’t provide any real payoff to homeowner on average.

Improved insulation and air sealing is nice, but you’re not going to see anything close to $200k in energy savings over the building’s life vs just blasting your furnace to a comfortable temperature.

Houses certainly have increased in size though.

Re: Can the West’s perplexing employment miracle continue?

#219

Post by imtringued »

spatley wrote: post #135
almog wrote: post #50

Earlier quoted context omitted.

Claiming that "a little more inflation" is preferred to "a bigger recession" is an opinion, I'm really not sure it's a consensus, though even if it is a consensus, it's not a good argument for or against it. I think it comes down to whether we soon realize we're near hard landing (recession) or no landing (ongoing inflation). As far as I know (though I'm really not well educated when it comes to economy), in the enti…

I am starting to doubt that interest rates are the best lever against inflation. Rising prices are supply not meeting demand. It feels like improving productivity would be an equally powerful tool with less human cost. Granted that is a harder thing to control quarter over quarter. Consider this analysis that intetest rates may in some cases raise prices. https://economicsfromthetopdown.com/2023/02/04/do-high-inter..…

Raising interest rates on its own doesn't do anything about inflation at all, actually. When you raise interest rates you are decreasing demand for borrowing but even that on its own doesn't decrease inflation. Inflation slows down as people pay off their debts as this destroys money that was previously created through loans. It's basically a side effect, not the main effect.

If you have a bankrupt government that can't afford interest payments, then raising interest rates will just lead to borrowing more money to pay the interest in a vicious cycle until hyperinflation sets in.

If you can limit borrowing and speed up payback of debts through any means other than raising interest rates you achieve the same effect much sooner.

Re: Can the West’s perplexing employment miracle continue?

#220

Post by mym1990 »

pbhjpbhj wrote: post #199
mym1990 wrote: post #189

Earlier quoted context omitted.

Maybe a hot take but I feel like high(er) interest rates for homes should be the standard. This allows for demand to be modulated, and puts up a barrier to rent seekers from flooding the market. The problem is that over the past 5-10 years a lot of property has already been snapped up by investors at minimal interest rates, so as long as rents stay somewhat stable, they investors will be raking in the returns. I gues…

How does it put up a barrier to rent seekers, it makes homes less affordable, which impacts the poorer people more. The rich can but the homes. The poor still need somewhere to live and so tent the homes, they're paying more just they're helping wealth move to the bankers more as well as the property owners. Allowing ownership of houses as an investment is just wrong. (The usual response to this is that you need inve…

If you are looking to rental properties as an investment, the interest rate is a large part of the cost of doing business. If you think that you can make 10% renting out a property but the interest rate is 8%, that is a pretty slim margin for something with so much overhead. If you think you can make 10% and the rate is 2%, that a bit more juicy.

Because high interest rates can reduce demand, in a vacuum you would also see a reduction in the price of the property, making them more affordable. Of course this price is also impacted by countless other things, builder velocity being one of them, so in the real world it takes time to sort out.

The 70s, 80s, 90s had relatively stable home ownership rates despite very high interest rates. In 2016 the US reached a bottom in home ownership at 62.9 despite historically low rates.

BTW I was not referring to rich people living in their homes that they got with high interest rates, the comment was specifically towards investment property. Definitely agree that hoarding properties is out of hand.

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