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

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

#321

Post by chii »

onlyrealcuzzo wrote: post #116
chii wrote: post #106

Earlier quoted context omitted.

most services require some material goods associated with the service. Even if wages aren't raised, those materials would cause prices to rise.

The vast majority of "services" in the US are healthcare, food services, technology, and financial services. Aside from cloud hardware, the impact on the rest due to supply constraints from China has been extremely minimal. Very little food comes from China. Almost 0 energy. And financing costs are 100% set by the Fed. China plays a very small part in the US inflation story.

> "services" in the US are healthcare, food services, technology, and financial services.

with the exception of financial services, all of the other services you listed require commodity materials to work - things like food services require utensils, plates, napkins, not to mention the food. Healthcare has a lot of materials (not just the direct, but indirect materials like reagents for labs and diagnostics) which often come from overseas rather than locally produced.

As for technology, it's such a broad area that i dont know what to say about it but at least for compute, there's a lot of shortages of commodity hardware recently.

Not saying that all of the shrinkage and inflation is caused by the supply chain slowdown from china, but a large percentage of it is. The rest is from labour shortages.

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

#322

Post by dragonwriter »

onlyrealcuzzo wrote: post #116
chii wrote: post #106

Earlier quoted context omitted.

most services require some material goods associated with the service. Even if wages aren't raised, those materials would cause prices to rise.

The vast majority of "services" in the US are healthcare, food services, technology, and financial services. Aside from cloud hardware, the impact on the rest due to supply constraints from China has been extremely minimal. Very little food comes from China. Almost 0 energy. And financing costs are 100% set by the Fed. China plays a very small part in the US inflation story.

> Very little food comes from China.

Food per se may not come much from China, industrial food production is as exposed to supply chain issues involving China as anything else.

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

#323

Post by MisterMower »

MuffinFlavored wrote: post #316
anamax wrote: post #306

Earlier quoted context omitted.

The question is not whether the executives are paid in stock, it's whether they're paid at all. Executives who don't worry about share price get to work somewhere else.

i’m not asking about the executives or the board. Why does a company benefit financially if it stock goes up other than being able to issue stock more easily?

I think you are confused about the causation.

Shares of stock represent ownership in a company. If the company performs well and earns increasing amounts of money over time, that means the company is more valuable.

If the number of shares remain static, increasing earnings means the value of the company is higher on a per share basis and justifies a higher price per share. The company performance drives the stock price.

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

#324

Post by lomex2000 »

MuffinFlavored wrote: post #316
anamax wrote: post #306

Earlier quoted context omitted.

The question is not whether the executives are paid in stock, it's whether they're paid at all. Executives who don't worry about share price get to work somewhere else.

i’m not asking about the executives or the board. Why does a company benefit financially if it stock goes up other than being able to issue stock more easily?

Your question was answered before. Companies issue stocks to generate cash. The higher value the stock the more cash the company can generate by keep issuing stocks. The stocks can also be used to secure loans and as a compensation for employee and the board. So the company benefits in a lot of ways by increasing stock prices.

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

#325

Post by pjc50 »

incomingpain wrote: post #267
pjc50 wrote: post #49

Always wondering exactly what people mean when they talk of "civil unrest", and who and how will it start. Do the various riots in 2020 America or the Jan 6 storming of the capitol count? On the other hand, Elon Musk Twitter purchase: $44bn. There's plenty of money out there still. I think it's unlikely that merely raising rates will do anything, for two reasons: firstly there's a real need to do some fiscal policy a…

I haven't been able to comment on HN since my controversial post which mentions civil unrest. No doubt your comment is related? I'll eventually be able to post this response. >Always wondering exactly what people mean when they talk of "civil unrest", and who and how will it start. Do the various riots in 2020 America or the Jan 6 storming of the capitol count? For sure those count. Racial civil unrest, riots, and in…

> Something we should seriously be looking into is massive seeding effort for lakes. Get tons of fish growing this year. Get fishing boats out into the oceans pulling fish in. Major culling and harvesting of sharks.

Accelerate the destruction of the fish ecosystem? It's already being run at capacity, ditching quotas will give you more in year 1 and a total disaster in subsequent years. Most sharks are endangered species; which do you want to make extinct for a political point?

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

#326

Post by imtringued »

adam_arthur wrote: post #289
Wowfunhappy wrote: post #210

Earlier quoted context omitted.

If there are fewer people to consume the fruits of productivity, does GDP decline matter?

It only matters to the extent that many existing systems are built on the assumption that the economy grows over time... e.g. taking on a 30y mortgage. If environment becomes deflationary, then it becomes a deathtrap. I think nominal GDP targeting is pretty bad policy though. Deflation can be a great thing for people, if its focused in the right areas. e.g. imagine population is cut in half overnight... suddenly hous…

>I think nominal GDP targeting is pretty bad policy though. Deflation can be a great thing for people, if its focused in the right areas.

Only if accompanied with a negative interest rate so that the real interest rate is 0%. The problem with deflation is that it raises the real interest rate, even though nobody signed a contract "hey if deflation is 5% I will willingly pay a real interest rate of 5%". When you consider that deflation primarily happens in economies that don't need further growth, paying that interest rate is not good for society.

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

#327

Post by imtringued »

recursivedoubts wrote: post #9

Shows just how sensitive our economy is to small interest rate fluctuations, having lived around the zero bound for over a decade. We've encouraged everyone to lever out as far as possible while at the same time making real production more and more difficult (or, during the early lock downs, impossible) and, well, the long run is here. Keynes was right: he's dead. Unfortunately, we, and our children, are not.

That's what you get for not listening to Keynes and Silvio Gesell. Instead of introducing a negative interest rate on cash to prevent people from accumulating capital in a low growth environment we are forced to play the endless debt game to artificially increase the return on capital to satisfy liquidity preference.

If people stop borrowing, the interest rate on existing financial capital would fall way below 0% but since cash has a 0% interest rate, it's the working population that get screwed over during deflation through involuntary unemployment (also known as a economic depression).

Eternal money is a farce, it is inherently unstable and can't exist over the long term which is why it constantly collapses and all you can do is delay the collapse as if the economy was a roguelite where you are supposed to get as much progress inbetween runs.

Demurrage currencies allow the economy to represent negative interest rates and therefore eliminate the need for endless borrowing and inflation while simultaneously achieving full employment as predicted by Say's Law, decentralization of jobs, reducing wealth inequality and rewarding long term thinking.

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

#328

Post by imtringued »

muh_gradle wrote: post #79
buscoquadnary wrote: post #48

Earlier quoted context omitted.

Actually as callous as it sounds extra deaths are good for the economy. More dead people means fewer competitors for all resources except labor. What that means is fewer people need stuff and there are fewer people to make stuff, so the stuff the dead people had is easy to obtain for the living while employers have to pay more for labor because there is less of it. As evidence the black plague was considered one of t…

This sounds almost like some version of the broken window fallacy. But there is no way that ~1 million dead Americans from COVID has helped this country economically. Supply chains have been hurt by COVID. Hospitalizations means unproductive workers. Deaths means unproductive workers. We are not thriving at all right now.

That's the broken window fallacy. Abundant capital must be destroyed. In this case the abundant capital is people.

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

#329

Post by ohiovr »

Inventories are rising. I'm an assembly line worker and our warehouses are getting stuffed. People are being sent home because we got too much product already. We make dryers. I can assume that the working class would put off buying dryers because more money has to go into rent and food. Nearly a fifth of my income goes to food now and about a quarter will go to rent.

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

#330

Post by imtringued »

boringg wrote: post #34
incomingpain wrote: post #2

GDP: -1.4% DOW: -8.36% YTD S&P500: -12.22% YTD NASDAQ: -20.17% YTD Inflation: 8.5% Interest rate: 0.5%(increasing once by 0.25%) Balance of trade: $-89.2B >they still think the Fed will be able to rein in inflation without triggering a recession. It was raised once and everything is collapsing underneath. Don't know how you look at all this and think 'it'll be fine'. There's a general rule that this kind of behaviour…

I think you are living too deep in your fears - lots of doom and gloom here. There isn't anything relative to a food shortage about to happen in the US and certainly we aren't on the cusp of a civil war. DC is actually less acrimonious than it was. The equity market is not the economy and a lot of the financial websites make money on hyping up the latest quarterly numbers. Are there concerns here? Yes, there always a…

It's kind of funny how the worst things imaginable happened and everything is still fine. We literally just need to defend Ukraine and wait things out.
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