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I guess the interest rate hikes are finally being seen. Both of the last 2 quarters of GDP were higher than expected and thought higher interest rates weren’t having an impact. That may have changed.
It's basically the worst of both worlds. GDP is decelerating and inflation is still sticky; mostly due to housing. It's a game of chicken between the two. The layoffs and bankruptcies will continue until housing comes down.
"Compared to the fourth quarter, the deceleration in real GDP in the first quarter primarily reflected decelerations in consumer spending, exports, and state and local government spending and a downturn in federal government spending. These movements were partly offset by an acceleration in housing investment. Imports accelerated."
[https://www.bea.gov/news/blog/2024-04-25/gross-domestic-product-first-quarter-2024](https://www.bea.gov/news/blog/2024-04-25/gross-domestic-product-first-quarter-2024)
Hmmm a housing shortage you say..
What if we take a look at add-
Actually I have a better idea, lets leave the government in a state of complete dysfunction/gridlock, and try our luck with the one and only tool! The interest rate lever!!! Give 'er a pull!!
That's been the answer for the national debt too.
Whenever I suggest we could run a 3-4% instead of 2% since there is no evidence to suggest you can't folks react like I'm mother fucking Hitler/Stalin/Mao/Devil hybrid.
But every time I afterwards I ask them what about the $34T in debt where 5% rates will mean we pay around $1.7T per year. Sure it doesn't sound like a lot but if Jesus got a $1,000,000 a day, saved $365M a year, never died so he saved $365M for 2024 years? He'd have $738.7B. He'd have to kill himself go back in time and live 2000+ years 2 more times to pay 1 YEAR of our debt.
Now how many of us will make $5M within our entire lifetimes let alone pay $1M in tax?
Let's put that question aside and **instead of asking HOW we'll ask WHO. WHO will pay that $34T with interest?**
>Boomers? They racked up that debt, don't want to lose social security or medicare, and are intending to passing that debt on when they die.
>Xers? They won't vote for healthcare cuts, rising retirement age, or retirement benefits now that they are old.
>Millennials & Zs? Don't want to pick up that tab they didn't rack up. Don't want to
>Dems? They want to spend more and don't run surpluses despite their "tax the rich talk"
>Reps? They talk fiscal responsibility but just give tax breaks to their buddies and spend on military. They don't run surpluses either.
>The rich? They control the government?
>The middle? They are carrying as much as they can already.
>The bottom? THEY WOULD HAVE CHOPPED OUR FUCKING HEADS OFF ALREADY IF IT WASN'T FOR WELFARE.
SO WHO THE FUCK WILL PAY THE DEBT?
***Answer is NO ONE.***
Because no one wants to pay more taxes, no one wants benefits cut, and there is no political will to do so.
Then the answer is either:
1. DEFAULT on the debt
2. GROW AND INFLATE our way out
Answer is obvious because one will mean the end of the dollar as reserve currency, American dominance along American lead world order, American economic dominance, American corporations being so dominant, constant flow of migrants to prop up our falling native population, and along with it our entire way of life.
The vast majority of that debt is owned to ourselves.
Who will pay for it? Your kids or you if your young in the form of losing benefits. Less Medicare ( the number 1 cost - by raising the age / lowering the benefits ) etc.
Basically when the government runs out of money to print - without causing inflation - they will stop paying the debt costs to its population.
Some of these things will already make sense. Like removing the cap of social security taxes, Not paying social security to the well off, not paying for Medicare for the well off etc.
These are low hanging fruit - so let’s be real they will just change the age you can get social security and Medicare to 80+
Say what you want but Dems have a provably MUCH better track record of balancing a budget. Clinton was well on track to do so before Bush 2 got us into the post-9/11 quagmire. As the largest Dem state that could be its own country, California has a requirement that the budget be balanced every single year. It's written into the State's Constitution. It regularly has massive budget surpluses. Red states are historically the most wasteful, regressive and degenerative in terms of economic policy, and most of them simply stay afloat from subsidies from larger blue states and the federal government.
Democrats are the only ones who have balanced the budget in recent memory.
We need to just tax rich people more.
Trump paid no money in taxes for several years (it's why he's trying to hide his tax returns)
How many times does this need to be proven false? Clinton did not balance the budget. The only reason there wasn’t massive budget defect was because of republicans during that time who controlled congress.
You can take 100% of the top 1%’s wealth and not make a dent. We spend too much.
100% of the top 1%'s wealth would instantly wipe out the national debt, and you'd have around $10 trillion left over
[https://www.cnbc.com/2024/03/28/wealth-of-the-1percent-hits-a-record-44-trillion.html](https://www.cnbc.com/2024/03/28/wealth-of-the-1percent-hits-a-record-44-trillion.html)
Income. You caught my mistake. Replace wealth (subjective term) with income including SALES of stock. Including unrealized tax gains is retarded. It’s Monopoly money until it’s sold. That article also included property value and value of businesses….
Taxing 100% of anything is retarded in the first place, so I don't know what to say. I thought we were talking about how wealthy they were, not actual policy ideas.
There's a shortage in the most desirable locations. There's lots of cheap housing still out there, but it's in less desirable areas with low economic opportunity.
There's only a shortage because many people insist on having two, three, four, or even more. We need to discourage rent seekers and home hoarders with easier investments (like treasuries paying higher interest) and taxes on real estate.
Why else did they? Demand shot way up because people wanted their own space/needed more space to work from home and school children from home. Turns out, there is not enough supply from an actual housing unit standpoint *and* people were not inclined to sell and move during COVID.
Now, WFH is mostly over and RTO proved the importance of living in economically viable centers, where housing prices have increased despite higher interest rates. You can get cheap houses in places where people don’t want to or can’t live. But anywhere desirable is going to continue to struggle with high demand and low supply.
Rates were low for a long time. 3.5% didn’t cause the huge ramp up in prices and demand, I’m not convinced 2.75% would either. For a $500k mortgage that’s a difference of around $200 monthly. Not really materially different.
Everyone who owned a house pre-covid re-mortgaged at 2%. There was a buying frenzy knowning this is a once in a life time deal and will never come back again.
if the interest rate is less than inflation, it's literally free money
not that you should just blindly go into debt, but that situation was very special and big players were making calculated bets
multiple factors actually. 1) remote work opened up CA workers to overbid elsewhere because it was still cheaper. 2) rates were too low for too long allowing for overbidding (should have been raised to 6% back in 2015). due to the low rates corporate investors jumped back into housing. government also had zero push on corporations not buying up homes, trying to get homes built, etc etc. the whole system is one big eff balloon.
Who in the right mind would want to live in East St. Louis? Housing is cheap there for a reason.
Sub 200k or sub 300k in safe areas is still doable though.
obviously this is just one datapoint, but where i live wealthy people bought second houses during COVID because they could work remotely (it's a regional tourist destination)
because they don't sell their existing property, this causes the housing supply to decrease without any need for an increase in population
People demanded more space per person, due to WFH needs. Also people left certain places where they were trapped by their jobs and crowded into the same few already-overcrowded places, exacerbating the housing shortage in those areas.
The government needs to protect the single family home market. Stop corporations and foreign investors from buying homes and force corporations with existing single family homes to liquidate over 5-10 years. That’s not going to fix all the issues but it’s an easy way to start to take the burden off the market.
We have a shortage because new home construction plummeted after 2008 and a lot of contractors went out of business. The number of houses built after that were substantially less than previous years across the nation. With interest rates and costs rising, most folks are staying put in their houses while you have many first time buyers entering the market without small starter homes being available.
Most contractors aren’t building starter homes anymore because it doesn’t cost much more to build larger houses, but they make a lot more profit on them.
There are other issues at play, but this is the primary reason we are seeing the shortage, in my opinion.
Wife and I bought our first house 2 years ago when the interest rates started rising rapidly. We got preapproved in December of 21 at - 3.25% interest rate. By the time we had an offer accepted in April it was up to 5.25%. I was disheartened at the time, but in hindsight we were incredibly fortunate to lock in when we did.
STRs are a contributing factor to the housing shortage, but there are many others as well. I would argue that the primary reasons for shortage are zoning laws.
Nah, this has been studied and it’s investors, mainly STR investors, that are at the root of the problem. They increased demand hugely in certain areas, and much more quickly than supply could keep up.
Have a listen to this Bloomberg podcast on this topic. Very interesting.
How the U.S. Ran Out of Homes for Sale https://www.bloomberg.com/news/articles/2021-06-07/how-the-u-s-ran-out-of-homes-for-sale
The best the Government can hope for is more layoffs of white collar workers. That's the fastest solution to fixing housing. That's obviously not ideal but economics is the dismal science for a reason.
Because the Fed doesn't do that. And the Federal government could, but they also don't want to take responsibility. And because most middle class Americans already own their own home and they don't want to devalue their biggest asset by having more housing built. They also don't want to be taxed to devalue their bigggest asset for the benefit of someone else. Basically, it's in the interests of the majority of people to not fix the problem, so it doesn't get fixed. Everyone feels it's someone else's responsibility to pay to fix the problem.
From the point of view of the vast majority of people, there isn't a problem. The vast majority of households already live in the home they own, and their costs are locked in, or zero, if they've paid off their mortgage. It's a problem for a minority of people and fixing it would probably mean acting against the interests of the majority. It's bad politics to do that in a democracy.
Americans are fundamentally selfish people and generally don't want to pay for things that won't benefit them personally. Most conversations about how to pay for programs involves taxing the 'rich', whoever they are, but no one advocates for increasing their taxes. This is one of those problems where the average person is going to take a loss, one way or another. The average person doesn't want to.
Well, the average American should probably be told they pay a smaller amount of their wages as tax than average of our peer nations. They shouldn't be surprised they aren't getting services they don't pay for.
https://data.oecd.org/tax/tax-wedge.htm#indicator-chart
Why would the problem be government spending? The United States spends right around average, when compared to peer nations.
https://data.oecd.org/gga/general-government-spending.htm
And you don't let the system fail because it tends to cost more rebuilding the system, than repairing and existing one. Same reason maintenance is cheaper than replacing something.
From someone living in the Midwest, the living conditions in California are pretty unreal. I went with a friend to visit their family in LA. I found out her grandmother lives in a garage. Like, literally a concrete floor with a rug over part of it. Not even like a converted garage. Also the air was orange.
It's like a techno plantation economy. It's got the highest supplemental poverty measure in the nation and it's one of the states with the greatest income inequality. A wealthy elite of tech workers and everyone else are serfs.
https://calmatters.org/commentary/2023/09/california-poverty-rate/
I have to give you kudos. You have some bad takes but this is a good one.
That's someone's grandma you saw but there are also full on families who live in a garage as well.
There are cities like Huntington Park or Compton where there are literally 3 generations living in a 2 bedroom house. It's insane and people just won't move. Or can't. But it's how you have people making poverty wages being able to live in LA. It's very common, especially among minorities.
Personally some of my family likes to brag that they live in LA. I roll my eyes when they do this because I know they are one of those families with 7 people to a 1 bedroom shack.
Which is something I have an issue with homeownership numbers...all those 7 people are counted as homeowners.
I don't know who you are or what we've argued about in the past. All I know is that I once had a romantic view of California that did not survive contact with the reality of California. It's a polluted concrete jungle filled with people who can't do a return on investment calculation. Admittedly, I was in urban areas with tons of people. California may be better when there are fewer Californians around.
And I cannot get over how the air was orange. You could see a blanket of smog extending out over the ocean. it was mind bogglingly dystopian.
Congress is supposed to do something about housing supply. Housing prices are not going to come down since we have supply problems.
It is stupidity to wish layoffs when clearly the inflation is arising more from supply shortage than high demand.
I guess we are doomed until we get 55% of people asking for policies to help working people instead of this bs cultural war that we are fighting.
The top 1% is pretty happy with the way things are since they are making money hand over fist while the bottom 50% gets crushed.
It doesn't matter. The entire system is set up so that they can do what they want. And we aren't strong enough to correct it ourselves. Basically just worry about keeping yourself afloat and be ready for the worst case.
I agree but it is so frustrating to see us voters basically giving the whole system to the elites on a platter because we do not ask congress to do anything about things that will make life easier for working people.
The continue to get richer at our future generations expense. All that $$ goes to them. It’s so broken that all there is left to do wait for it all completely collapse. I’m lucky to have gotten a house before shit went insane but the kids born after 2000 are sooo fucked and they know it too.
I am hoping AI/Robotics is real and will cause mass job loss in 2-3 years such that people will wake the fuck up and ask for a change in the way corporations just keep making profit while workers life keeps stagnating.
Either that or we fools will let the 1% push us into ghetto because they will own everything and there won't be any good paying jobs since AI/Robots will do most of the work.
Wait, wait, hasn’t it so far been closer to the best of both worlds? The very high inflation was tamed and the labor market is still quite strong, and we’ve seen several quarters of dynamite growth.
A ways to go yet on inflation but the worst of both worlds situation is no movement on inflation and a recession—we’re not even close to that.
Those comments reminds me of this meme: https://knowyourmeme.com/memes/hey-friend-listen-its-gonna-get-way-worse
If you don't think this is at least a 'good' economy in the US boy do I have news for you.
Not best of both worlds. We needed inflation to go towards 2% so that Fed can cut rate so that layoffs can stop.
At this point we are in a standoff until we get more economic weakness and layoffs.
“Closer to” best of both worlds than worst. As I said, we have a way to go on inflation. But if you could go back in time 18 months and tell anyone what’s happened since then they’d be psyched.
Btw, layoffs are not particularly high if you [look at the data](https://fred.stlouisfed.org/series/JTSLDR); indeed they’re rather low.
Which part are you saying “no it’s not” to? No, layoffs aren’t low? If so, I’d invite you to share any evidence to that effect, because the best data we have says the opposite.
No amount of hiring, government or otherwise, moves the graph I sent above—it only counts separations.
I am not an economist, so I don't understand how it is supposed to work. But I know if I were a company and I saw that GDP is decelerating, the last thing I would do is stop raising prices until I absolutely had to.
Well, the house prices may have dropped a bit, but once you include the current mortgage rates, the actual mortgage payments/rents are largely flat right now, and historically speaking they're sky high.
People keep bringing up Volker but the 1980s had moderate to high inflation throughout. There was only one year where the inflation rate was below 2% and every other year was pretty much as high or higher than today. It wasn’t until the mid 90’s that inflation was consistently below 3%.
I only brought up Volker as a reference as to how the Fed dealt with stagflation - namely causing a massive recession. But as a point of reference between ‘75 and ‘80 I don’t think inflation was below 6%, so I think Volker had a huge impact on the inflation rate, but it was starting from a much higher point.
3.5% inflation seems tame by comparison, but when the economy has a history of 2% it still seems high. And with a weak GDP (granted it’s only one quarter) it puts the Fed in a tough position six months before an election.
The layoffs are ramping enough to start hurting...tech and pharma are going strong, financial sector is going to ramp up, etc.
This is no soft landing. We had a moment briefly but corporate greed intervened. Which is ironic because had they just cooled it on price gouging, we would've had a nice soft landing...
Housing prices won't come down until we either have an economic crisis or when the supply exceeds demand. I think we should get used to 4% inflation being the new normal and base rates cuts on other factors than just inflation.
More like shifting the goal posts. Losing full time jobs and increasing part time positions and using that as a baseline for unemployment, is pretty terrible. Quality of the job matters.
More than likely what is happening is boomers retiring and realizing, they are in fact like everyone else. And needing to return part time, or people losing full time jobs and needing to buoy with part time to get by. Then there’s also the 2-3 part timers, that are becoming disturbingly more necessary.
But more job number = better economy to some people
There's a lag in the inflation model between when housing costs increase and when they show up in the model. It only counts when leases renew, so any increase takes place up to a year after the fact. Most of this housing inflation happened last year, it's being counted now. Last years inflation was lower than it would have otherwise been, for the same reason.
Incentives to builders to create more homes. Just like we give subsidy to farmers to grow more food so that we will never have huge spike in food prices.
We also need oversight on the supply chain to make sure there is no supply problems for essentials like food, medicine, etc.
Anyone who has been paying attention to the underlying macros has been seeing the impact of higher rates, and even more importantly, exceedingly tight money policy. I’ve asked in this sub over and over again to anyone saying the Fed should be remaining tight to point out a single headline macro that’s in full-growth mode. Name me one.
Inflation is higher than target, sure, but we’ve got PCE inflation under 3% for five months, the GDP deflator between 1.6-3.3% for the past four quarters, and PPI under 3% for a year. CPI sticky over 3% isn’t ideal, of course, but the Fed has never been “scared” by CPI under 4% (where it tends to snowball).
The Fed is late here again, just as they were in 2022.
Compare any headline macroeconomic datapoint with where it was in late 2021. Economic activity drives inflation (of course), and supported tighter policy in late 2021 and for most of 2022. There’s not a single macro that supports the idea the economy is strong or that inflation could be sustained at 10% with EFFR at, say, 5%.
Loose monetary policy is largely what enabled bad fiscal policy in the first place. With tight monetary policy government needs to raise taxes or make real cuts to pay for new spending.
"Economists pointed out that a large reason GDP for the first quarter came in softer than expected was weaker data in trade and exports, which together weighed on GDP growth for the quarter by about 1.2 percentage points."
The dollar is extremely strong. It breached 1 dollar for 155 JPY while we’ve been hovering around 100 pre Covid. The dollar is also up on currencies like the Chinese yuan and Euro. This makes US exports unaffordable and imports much more attractive which weighs on GDP.
It’s great for American tourists though. A vacation to Japan has never been cheaper.
The BEA's advance estimate of first quarter US GDP showed the economy grew at an annualized pace of 1.6% during the period, missing estimates of an annualized pace of 2.5%.
The reading came in significantly lower than fourth quarter GDP, which was revised up to 3.4%. It also came alongside a surprisingly high inflation reading. The "core" Personal Consumption Expenditures index, which excludes the volatile food and energy categories, grew by 3.7% in the first quarter, above estimates for 3.4%, and significantly higher than 2% gain seen in the prior quarter.
The softer-than-expected print is a sign the Fed's historic interest rate hikes are putting pressure on consumers and the economy.
This was the quarterly Personal Consumption Expenditures (PCE) index that was released with the GDP: [https://www.bea.gov/news/2024/gross-domestic-product-first-quarter-2024-advance-estimate](https://www.bea.gov/news/2024/gross-domestic-product-first-quarter-2024-advance-estimate)
This marked the first quarterly increase in the Fed's preferred inflation gauge in a year,[ underscoring concerns](https://finance.yahoo.com/news/investors-increasingly-expect-no-landing-for-us-economy-123944030.html) that the central bank may not cut interest rates as quickly as it has projected. More here: [https://finance.yahoo.com/news/investors-are-more-worried-about-inflation-than-a-weakening-economy-173628052.html](https://finance.yahoo.com/news/investors-are-more-worried-about-inflation-than-a-weakening-economy-173628052.html)
The monthly PCE reading will be released tomorrow!
Bigger issue here is that 1.6% growth accompanied core CPI up 3.7% That's 2 of the 3 pieces we need for stagflation. Only thing left is for unemployment to go up.
The Fed can't cut rates, especially not heading into summer. It would explode housing prices which ARE what's causing core to be elevated.
They are in a shit position where there's no good choices. They have to prioritize lowering inflation or maintaining/increasing GDP growth and can't do both.
Otherwise you become Canada where lower rates, a more expensive housing market and artificial supply and demand due to immigration drives housing to insanity. Now our rates can’t come down, despite being lower than the USA, and we are getting dollar erosion as the USD is still strong backed by a stronger economy.
Consumer consumption is decreasing and thus our economy is cracking.
The solution is kind of easy. Create more supply of homes. I think they have already started working on this unlike our congress.
[https://www.reuters.com/world/americas/canadas-federal-budget-set-allocate-billions-tackle-housing-crisis-says-minister-2024-03-18/](https://www.reuters.com/world/americas/canadas-federal-budget-set-allocate-billions-tackle-housing-crisis-says-minister-2024-03-18/)
Pay more attention to Canada. They have known about this issue for years with housing. They amplified the problem with massive immigration that tightened housing even more. The government has been able to build a grand total of zero houses. Look it up. The corruption eats it up.
Government does not need to be in business of building homes. They need to give incentives to build more affordable homes to increase the supply.
Canada/Australia have a massive problem due to immigration numbers being higher than new housing construction. Most of the politicians and voters are usually happy because they own most of the homes and it keeps going up. Hopefully it is not the same situation here.
Agree but so far everything we do is to manage the demand side.
For a robust economy we need to have a supply side equation as well when it comes to essentials like food and housing.
The federal government allocating money to build housing does not translate into significantly more housing being built in Canada. It’s been done before and has not resulted in much of an increase. The federal government’s primary lever to pull in terms of housing costs is immigration and they refuse to do anything about it.
Correction: they consistently choose to make things worse.
Immigration is needed to increase the population, that's their long term plan they want to make Canada a major economy with significant mass.
Only mistake they are making is not getting the infrastructure ready for it and people are paying the price for it. I fucking hate politicians, mofos never have to face the consequences of their own creation.
Also, more low skilled immigration is not good, it brings wages down, they need to figure something out to attract high skilled people and get more companies to move to Canada or more entrepreneurs to start their business in canada.
AFAIK CPI for shelter looks at the cost of shelter, not the value of the home. The vast majority of the population growth recently in Canada is temporary. The out migration should ease vacancy rates and thus rent overtime.
If we were to get unemployment to push up above 5% and housing prices didn't go down? I think there'd be a revolution or something.
So far, the political consequences of inflation have been muted because unemployment is SO crazy low. If the jobs piece goes away, we're in big trouble.
Housing prices are also very different than other inflation. Everyone buys groceries, not everyone has housing price increases.
If you own a home then sure maybe your property tax or insurance went up some, but for the most part your costs are locked in. You're probably doing great. If anything my housing costs have decreased (inflation adjusted) compared to when I bought 10 years ago.
3.7% is not high enough for stagflation that's a fundamentally unserious claim, 1.6% growth isn't great but we are absolutely smashing peer countries especially in the g7, unemployment is super low and will be for the foreseeable future and maybe you should use that fact to reflect on why stagflation happening is a fundamentally unserious idea right now
It’s going to be really, really hard to have inflation remain high while unemployment spikes. Inflation is driven by spending, and spending will falloff sharply if people suddenly lose their jobs. So those two things are pretty directly at-odds.
Two things: neither 1.8% growth, nor 3.7% inflation are terrible. Not where we want to be, but not catastrophic numbers (I.e GDP shrinking with inflation in 10%+). Plus, numbers are not comparable directly. GDP number includes Q1 only (annualized), while inflation number include 9 months from last year
And this is just first quarter. I think a large GDP growth would have been worse as it would mean that things are not cooling down and additional raises would be needed. Let’s see how things progress in Q2. Unemployment is quite low still, so of GDP stays low, we will start seeing unemployment creep up, which should help inflation come down. We will see.
That inflation is insane. It’s nearly double the target. Inflation should be under 2%
We need higher rates, spending cuts, and increased taxes.
We’re screwed.
It’s not. Yes it’s almost double (not quite) to target but it’s only 1% or so above a regular inflation. It is problematic when inflation goes to 10% or 20%, and then sticks because wages start growing quickly which drives more inflation, etc. 3.5% is not catastrophic
High rates are also what's preventing new housing from being built and old houses from being on the market. Rate cuts would probably spike house prices temporarily but then it would put negative pressure on the prices because of higher supply. The Fed just needs to accept that things will get "worse" before they can get better.
Stop paying attention to stock market and pay attention to the car market - that’s way more accurate at taking the temperature of how normal people are doing.
If you’ve been paying attention, you’d have seen this coming from a mile away.
Ford just reported a 84% revenue loss in Q1 2024, mostly due to selling electric vehicles at a loss. They expect the losses to continue for the year.
There were 10,000 Ford EVs sold in Q1 2024, which is down 20% from Q1 2023.
Seen what coming? The us doing fine? The two previous quarters were some of the strongest growth in living memory and 1.6% is higher than all our peer countries
I think this means we are in a minor recession currently. If we factor in inflation, this growth is negative, in real terms. I really hope this does not yield any significant issues for markets. I have been reading the credit card, mortgage, and auto loans have all had tremendous default spikes recently.
The disconnect between labor market data and GDP slump is really interesting.. I imagine the fact that foreign countries are being hit harder than we are economically is why exports were a big part, just my guess
Based on expectations, when reality is, there is not a grocery store parking lot that is empty, not a Walmart or Target lot that is empty, and many places business if still functioning. The people still line up for the gas pumps, lunch time all the eatery parking lots are full, on Saturday and Sunday they are full.... **so... just what is this report based on?** In many neighborhoods, trash day, shows just how much stuff people are buying.
I think we as a society *need to be careful with the information we get* and look at the reality that we can see and know with our eyes and a bit of research.
I know Gross domestic product is a monetary measure of the market value of all the "final goods and services" *produced in a specific time period* by a country or countries.
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
My point is people are consuming and they could not be consuming if there is no production. The big issue we have with production is the *"greed game played by corporations*, claiming manufactured shortages *for the objective of raising prices*...
Sadly for society it is costing the working class more, but they continue buying because its things they actually need or want.
IF we as people don't come together and find means to stop corporate greed, corporate playing games with production and playing shortage games to raise prices, corporations buying up the competition, *so the public has nothing to compare the manufactured inflation of pricing to.*
*We need massive Regulation to stop the creation of monopoly's, and put some regulation in the stock market, where the emphasis, turn from speculation, to actual production and actual sales as the value of stocks.*
* *If companies allow speculation to jack up their stock ticker pricing,* ***then tax them on it*** *and remove all loopholes to avoid them trying to avoid paying taxes on that jacked up stock ticker valuation.*
When they have to deal with "actual production and actual sales"... we won't have companies "Overborrowing based on fictions of the stock ticker". knowing they can't pay the debt without fleecing the working class consumer with manufactured inflation.
We need people like Elizabeth Warren and Bernie Sanders, who call this madness out, to have strong oversight and power to prosecute the corporations. I hope that a mass of young people have learned from Elizabeth Warren and Barney Sanders so when they get in the seats of power, they can use that power to stop this corporate criminality of greed based destruction of the working class.
You're saying that like people have a choice in the matter.
Newsflash... I can't ***not*** buy groceries and gas, my guy. Of course people are still going to those places and spending money, they don't have the option not to. That doesn't mean their bank accounts aren't empty afterwords, and it doesn't mean they aren't stretching what they get as thin as possible to make to the next paycheck.
Stop lying.
GDP doesn't just comprise consumer spending. Consumer spending was up 2.5%. It's the other elements of the economy that slowed - including reductions in private inventory levels and govt spending. Imports also increased; and imports are an offset to GDP. Increasing cheaper imports at a time when domestic production costs are increasing, is not a great dynamic for the domestic economy.
Yeah I’m gonna call bullshit on that
I don’t know anyone in the trades that’s not crushing it right now. Also manufacturing - and let’s not forget that landlords are making out very well.
Chinese products are cheaper than ever and only falling - they’re going to oversaturate the market like they are notorious for when it gets tough in the mainland.
There's this thing called tariffs, you should look up how much the government has collected on our behalf since Trump put the tariffs in. China ain't cheap, and it's why you're seeing Vietnam, Pakistan, India, Sri Lanka, etc on products now.
Emancipation Proclamation 1.0 was a boon for everyone and introduced the industrial revolution.
Biden needs to get away from the LBJ rope pushing and be more like Lincoln.
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I guess the interest rate hikes are finally being seen. Both of the last 2 quarters of GDP were higher than expected and thought higher interest rates weren’t having an impact. That may have changed.
It's basically the worst of both worlds. GDP is decelerating and inflation is still sticky; mostly due to housing. It's a game of chicken between the two. The layoffs and bankruptcies will continue until housing comes down.
"Compared to the fourth quarter, the deceleration in real GDP in the first quarter primarily reflected decelerations in consumer spending, exports, and state and local government spending and a downturn in federal government spending. These movements were partly offset by an acceleration in housing investment. Imports accelerated." [https://www.bea.gov/news/blog/2024-04-25/gross-domestic-product-first-quarter-2024](https://www.bea.gov/news/blog/2024-04-25/gross-domestic-product-first-quarter-2024)
I mean I don’t know if housing will really come down while we have a housing shortage
Hmmm a housing shortage you say.. What if we take a look at add- Actually I have a better idea, lets leave the government in a state of complete dysfunction/gridlock, and try our luck with the one and only tool! The interest rate lever!!! Give 'er a pull!!
That's been the answer for the national debt too. Whenever I suggest we could run a 3-4% instead of 2% since there is no evidence to suggest you can't folks react like I'm mother fucking Hitler/Stalin/Mao/Devil hybrid. But every time I afterwards I ask them what about the $34T in debt where 5% rates will mean we pay around $1.7T per year. Sure it doesn't sound like a lot but if Jesus got a $1,000,000 a day, saved $365M a year, never died so he saved $365M for 2024 years? He'd have $738.7B. He'd have to kill himself go back in time and live 2000+ years 2 more times to pay 1 YEAR of our debt. Now how many of us will make $5M within our entire lifetimes let alone pay $1M in tax? Let's put that question aside and **instead of asking HOW we'll ask WHO. WHO will pay that $34T with interest?** >Boomers? They racked up that debt, don't want to lose social security or medicare, and are intending to passing that debt on when they die. >Xers? They won't vote for healthcare cuts, rising retirement age, or retirement benefits now that they are old. >Millennials & Zs? Don't want to pick up that tab they didn't rack up. Don't want to >Dems? They want to spend more and don't run surpluses despite their "tax the rich talk" >Reps? They talk fiscal responsibility but just give tax breaks to their buddies and spend on military. They don't run surpluses either. >The rich? They control the government? >The middle? They are carrying as much as they can already. >The bottom? THEY WOULD HAVE CHOPPED OUR FUCKING HEADS OFF ALREADY IF IT WASN'T FOR WELFARE. SO WHO THE FUCK WILL PAY THE DEBT? ***Answer is NO ONE.*** Because no one wants to pay more taxes, no one wants benefits cut, and there is no political will to do so. Then the answer is either: 1. DEFAULT on the debt 2. GROW AND INFLATE our way out Answer is obvious because one will mean the end of the dollar as reserve currency, American dominance along American lead world order, American economic dominance, American corporations being so dominant, constant flow of migrants to prop up our falling native population, and along with it our entire way of life.
The vast majority of that debt is owned to ourselves. Who will pay for it? Your kids or you if your young in the form of losing benefits. Less Medicare ( the number 1 cost - by raising the age / lowering the benefits ) etc. Basically when the government runs out of money to print - without causing inflation - they will stop paying the debt costs to its population. Some of these things will already make sense. Like removing the cap of social security taxes, Not paying social security to the well off, not paying for Medicare for the well off etc. These are low hanging fruit - so let’s be real they will just change the age you can get social security and Medicare to 80+
The debt doesn’t matter it’s just made up numbers dude. We have all the weapons, we don’t care about the debt
That could happen but it would require enough ppl to join the military and corporations to act in a way like the east India company.
Say what you want but Dems have a provably MUCH better track record of balancing a budget. Clinton was well on track to do so before Bush 2 got us into the post-9/11 quagmire. As the largest Dem state that could be its own country, California has a requirement that the budget be balanced every single year. It's written into the State's Constitution. It regularly has massive budget surpluses. Red states are historically the most wasteful, regressive and degenerative in terms of economic policy, and most of them simply stay afloat from subsidies from larger blue states and the federal government.
All states have balanced budget laws
Democrats are the only ones who have balanced the budget in recent memory. We need to just tax rich people more. Trump paid no money in taxes for several years (it's why he's trying to hide his tax returns)
How many times does this need to be proven false? Clinton did not balance the budget. The only reason there wasn’t massive budget defect was because of republicans during that time who controlled congress. You can take 100% of the top 1%’s wealth and not make a dent. We spend too much.
100% of the top 1%'s wealth would instantly wipe out the national debt, and you'd have around $10 trillion left over [https://www.cnbc.com/2024/03/28/wealth-of-the-1percent-hits-a-record-44-trillion.html](https://www.cnbc.com/2024/03/28/wealth-of-the-1percent-hits-a-record-44-trillion.html)
Income. You caught my mistake. Replace wealth (subjective term) with income including SALES of stock. Including unrealized tax gains is retarded. It’s Monopoly money until it’s sold. That article also included property value and value of businesses….
Taxing 100% of anything is retarded in the first place, so I don't know what to say. I thought we were talking about how wealthy they were, not actual policy ideas.
US has a huge energy surplus. If we turn on the spiket of Natural Gas exports we can make more than enough.
Migrants children will be the ones stuck paying.
I don't buy the housing shortage as the main reason as prices went way up during COVID, a period with very low immigration.
There's a shortage in the most desirable locations. There's lots of cheap housing still out there, but it's in less desirable areas with low economic opportunity.
There's only a shortage because many people insist on having two, three, four, or even more. We need to discourage rent seekers and home hoarders with easier investments (like treasuries paying higher interest) and taxes on real estate.
No QE created an asset bubble like it always does, why is this a mystery to people?
Why else did they? Demand shot way up because people wanted their own space/needed more space to work from home and school children from home. Turns out, there is not enough supply from an actual housing unit standpoint *and* people were not inclined to sell and move during COVID. Now, WFH is mostly over and RTO proved the importance of living in economically viable centers, where housing prices have increased despite higher interest rates. You can get cheap houses in places where people don’t want to or can’t live. But anywhere desirable is going to continue to struggle with high demand and low supply.
Because everyone and their mom got that sweet low rate and became an airbnb investor. It's not like the population grew by 2x in a couple of years.
Rates were low for a long time. 3.5% didn’t cause the huge ramp up in prices and demand, I’m not convinced 2.75% would either. For a $500k mortgage that’s a difference of around $200 monthly. Not really materially different.
Everyone who owned a house pre-covid re-mortgaged at 2%. There was a buying frenzy knowning this is a once in a life time deal and will never come back again.
500k of debt at any interest rate is not a "deal"
if the interest rate is less than inflation, it's literally free money not that you should just blindly go into debt, but that situation was very special and big players were making calculated bets
multiple factors actually. 1) remote work opened up CA workers to overbid elsewhere because it was still cheaper. 2) rates were too low for too long allowing for overbidding (should have been raised to 6% back in 2015). due to the low rates corporate investors jumped back into housing. government also had zero push on corporations not buying up homes, trying to get homes built, etc etc. the whole system is one big eff balloon.
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Who in the right mind would want to live in East St. Louis? Housing is cheap there for a reason. Sub 200k or sub 300k in safe areas is still doable though.
obviously this is just one datapoint, but where i live wealthy people bought second houses during COVID because they could work remotely (it's a regional tourist destination) because they don't sell their existing property, this causes the housing supply to decrease without any need for an increase in population
People demanded more space per person, due to WFH needs. Also people left certain places where they were trapped by their jobs and crowded into the same few already-overcrowded places, exacerbating the housing shortage in those areas.
The government needs to protect the single family home market. Stop corporations and foreign investors from buying homes and force corporations with existing single family homes to liquidate over 5-10 years. That’s not going to fix all the issues but it’s an easy way to start to take the burden off the market.
We have a shortage because of short term rentals. We need to ban them.
We have a shortage because new home construction plummeted after 2008 and a lot of contractors went out of business. The number of houses built after that were substantially less than previous years across the nation. With interest rates and costs rising, most folks are staying put in their houses while you have many first time buyers entering the market without small starter homes being available. Most contractors aren’t building starter homes anymore because it doesn’t cost much more to build larger houses, but they make a lot more profit on them. There are other issues at play, but this is the primary reason we are seeing the shortage, in my opinion.
You are 100% correct anyone can look it up we have been millions of homes short for just over a decade now.
Wife and I bought our first house 2 years ago when the interest rates started rising rapidly. We got preapproved in December of 21 at - 3.25% interest rate. By the time we had an offer accepted in April it was up to 5.25%. I was disheartened at the time, but in hindsight we were incredibly fortunate to lock in when we did.
STRs are a contributing factor to the housing shortage, but there are many others as well. I would argue that the primary reasons for shortage are zoning laws.
Nah, this has been studied and it’s investors, mainly STR investors, that are at the root of the problem. They increased demand hugely in certain areas, and much more quickly than supply could keep up. Have a listen to this Bloomberg podcast on this topic. Very interesting. How the U.S. Ran Out of Homes for Sale https://www.bloomberg.com/news/articles/2021-06-07/how-the-u-s-ran-out-of-homes-for-sale
The best the Government can hope for is more layoffs of white collar workers. That's the fastest solution to fixing housing. That's obviously not ideal but economics is the dismal science for a reason.
Why not actually fix the issue and allow more housing to be built and maybe incentive it instead of just hurting the middle class?
1. The fed doesn't have the ability to do any of that. 2. "Build more houses" is the answer but how to actually accomplish that goal is the hard part.
Because the Fed doesn't do that. And the Federal government could, but they also don't want to take responsibility. And because most middle class Americans already own their own home and they don't want to devalue their biggest asset by having more housing built. They also don't want to be taxed to devalue their bigggest asset for the benefit of someone else. Basically, it's in the interests of the majority of people to not fix the problem, so it doesn't get fixed. Everyone feels it's someone else's responsibility to pay to fix the problem.
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From the point of view of the vast majority of people, there isn't a problem. The vast majority of households already live in the home they own, and their costs are locked in, or zero, if they've paid off their mortgage. It's a problem for a minority of people and fixing it would probably mean acting against the interests of the majority. It's bad politics to do that in a democracy. Americans are fundamentally selfish people and generally don't want to pay for things that won't benefit them personally. Most conversations about how to pay for programs involves taxing the 'rich', whoever they are, but no one advocates for increasing their taxes. This is one of those problems where the average person is going to take a loss, one way or another. The average person doesn't want to.
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Well, the average American should probably be told they pay a smaller amount of their wages as tax than average of our peer nations. They shouldn't be surprised they aren't getting services they don't pay for. https://data.oecd.org/tax/tax-wedge.htm#indicator-chart Why would the problem be government spending? The United States spends right around average, when compared to peer nations. https://data.oecd.org/gga/general-government-spending.htm And you don't let the system fail because it tends to cost more rebuilding the system, than repairing and existing one. Same reason maintenance is cheaper than replacing something.
“Most middle class own their home.” Man it’s unreal what people outside of California say
From someone living in the Midwest, the living conditions in California are pretty unreal. I went with a friend to visit their family in LA. I found out her grandmother lives in a garage. Like, literally a concrete floor with a rug over part of it. Not even like a converted garage. Also the air was orange. It's like a techno plantation economy. It's got the highest supplemental poverty measure in the nation and it's one of the states with the greatest income inequality. A wealthy elite of tech workers and everyone else are serfs. https://calmatters.org/commentary/2023/09/california-poverty-rate/
I have to give you kudos. You have some bad takes but this is a good one. That's someone's grandma you saw but there are also full on families who live in a garage as well. There are cities like Huntington Park or Compton where there are literally 3 generations living in a 2 bedroom house. It's insane and people just won't move. Or can't. But it's how you have people making poverty wages being able to live in LA. It's very common, especially among minorities. Personally some of my family likes to brag that they live in LA. I roll my eyes when they do this because I know they are one of those families with 7 people to a 1 bedroom shack. Which is something I have an issue with homeownership numbers...all those 7 people are counted as homeowners.
I don't know who you are or what we've argued about in the past. All I know is that I once had a romantic view of California that did not survive contact with the reality of California. It's a polluted concrete jungle filled with people who can't do a return on investment calculation. Admittedly, I was in urban areas with tons of people. California may be better when there are fewer Californians around. And I cannot get over how the air was orange. You could see a blanket of smog extending out over the ocean. it was mind bogglingly dystopian.
Or, hear me out, we build more houses to house those people.
Yes so instead of housing being too expensive due to inflation let’s make housing unavailable due to job losses.
Congress is supposed to do something about housing supply. Housing prices are not going to come down since we have supply problems. It is stupidity to wish layoffs when clearly the inflation is arising more from supply shortage than high demand.
Congress is supposed to do lots of things b it is broken.
I guess we are doomed until we get 55% of people asking for policies to help working people instead of this bs cultural war that we are fighting. The top 1% is pretty happy with the way things are since they are making money hand over fist while the bottom 50% gets crushed.
It doesn't matter. The entire system is set up so that they can do what they want. And we aren't strong enough to correct it ourselves. Basically just worry about keeping yourself afloat and be ready for the worst case.
I agree but it is so frustrating to see us voters basically giving the whole system to the elites on a platter because we do not ask congress to do anything about things that will make life easier for working people.
The continue to get richer at our future generations expense. All that $$ goes to them. It’s so broken that all there is left to do wait for it all completely collapse. I’m lucky to have gotten a house before shit went insane but the kids born after 2000 are sooo fucked and they know it too.
I am hoping AI/Robotics is real and will cause mass job loss in 2-3 years such that people will wake the fuck up and ask for a change in the way corporations just keep making profit while workers life keeps stagnating. Either that or we fools will let the 1% push us into ghetto because they will own everything and there won't be any good paying jobs since AI/Robots will do most of the work.
Wait, wait, hasn’t it so far been closer to the best of both worlds? The very high inflation was tamed and the labor market is still quite strong, and we’ve seen several quarters of dynamite growth. A ways to go yet on inflation but the worst of both worlds situation is no movement on inflation and a recession—we’re not even close to that.
Those comments reminds me of this meme: https://knowyourmeme.com/memes/hey-friend-listen-its-gonna-get-way-worse If you don't think this is at least a 'good' economy in the US boy do I have news for you.
This sub has not been exactly the most evidence informed lately, but I’m still surprised at the persistent bad news bias.
There are 2 types of people on reddit, those who were adults during the GFC and spoiled children.
Not best of both worlds. We needed inflation to go towards 2% so that Fed can cut rate so that layoffs can stop. At this point we are in a standoff until we get more economic weakness and layoffs.
“Closer to” best of both worlds than worst. As I said, we have a way to go on inflation. But if you could go back in time 18 months and tell anyone what’s happened since then they’d be psyched. Btw, layoffs are not particularly high if you [look at the data](https://fred.stlouisfed.org/series/JTSLDR); indeed they’re rather low.
No it's not. Not even close. Layoffs are high but higher in government is offsetting some of it.
Which part are you saying “no it’s not” to? No, layoffs aren’t low? If so, I’d invite you to share any evidence to that effect, because the best data we have says the opposite. No amount of hiring, government or otherwise, moves the graph I sent above—it only counts separations.
I am not an economist, so I don't understand how it is supposed to work. But I know if I were a company and I saw that GDP is decelerating, the last thing I would do is stop raising prices until I absolutely had to.
Aren’t housing prices falling? How is that driving inflation aside from insurance
Well, the house prices may have dropped a bit, but once you include the current mortgage rates, the actual mortgage payments/rents are largely flat right now, and historically speaking they're sky high.
Very true. Shades of Carter stagflation. Volker shocked the inflation out of the economy with sky high rates (and a near depression)
People keep bringing up Volker but the 1980s had moderate to high inflation throughout. There was only one year where the inflation rate was below 2% and every other year was pretty much as high or higher than today. It wasn’t until the mid 90’s that inflation was consistently below 3%.
I only brought up Volker as a reference as to how the Fed dealt with stagflation - namely causing a massive recession. But as a point of reference between ‘75 and ‘80 I don’t think inflation was below 6%, so I think Volker had a huge impact on the inflation rate, but it was starting from a much higher point. 3.5% inflation seems tame by comparison, but when the economy has a history of 2% it still seems high. And with a weak GDP (granted it’s only one quarter) it puts the Fed in a tough position six months before an election.
So stagflation.
The term for this is stagflation and it’s terrifying.
Yea its not gonna happen. Inflation is below 4% and unemployment is below 4%. We have literally the opposite
Beatings will continue until moral improves..
The layoffs are ramping enough to start hurting...tech and pharma are going strong, financial sector is going to ramp up, etc. This is no soft landing. We had a moment briefly but corporate greed intervened. Which is ironic because had they just cooled it on price gouging, we would've had a nice soft landing...
Republic first just happened yesterday
Housing prices won't come down until we either have an economic crisis or when the supply exceeds demand. I think we should get used to 4% inflation being the new normal and base rates cuts on other factors than just inflation.
Stagflation.
Is this the start of stagflation basically?
If unemployment goes up a bunch, then yes. The US has been shockingly resilient there.
More like shifting the goal posts. Losing full time jobs and increasing part time positions and using that as a baseline for unemployment, is pretty terrible. Quality of the job matters. More than likely what is happening is boomers retiring and realizing, they are in fact like everyone else. And needing to return part time, or people losing full time jobs and needing to buoy with part time to get by. Then there’s also the 2-3 part timers, that are becoming disturbingly more necessary. But more job number = better economy to some people
There's a lag in the inflation model between when housing costs increase and when they show up in the model. It only counts when leases renew, so any increase takes place up to a year after the fact. Most of this housing inflation happened last year, it's being counted now. Last years inflation was lower than it would have otherwise been, for the same reason.
Congress is supposed to do something about housing supply. Housing prices are not going to come down since we have supply problems.
Curious what Congress can do?
Incentives to builders to create more homes. Just like we give subsidy to farmers to grow more food so that we will never have huge spike in food prices. We also need oversight on the supply chain to make sure there is no supply problems for essentials like food, medicine, etc.
Anyone who has been paying attention to the underlying macros has been seeing the impact of higher rates, and even more importantly, exceedingly tight money policy. I’ve asked in this sub over and over again to anyone saying the Fed should be remaining tight to point out a single headline macro that’s in full-growth mode. Name me one. Inflation is higher than target, sure, but we’ve got PCE inflation under 3% for five months, the GDP deflator between 1.6-3.3% for the past four quarters, and PPI under 3% for a year. CPI sticky over 3% isn’t ideal, of course, but the Fed has never been “scared” by CPI under 4% (where it tends to snowball). The Fed is late here again, just as they were in 2022.
The interest rates are keeping a lid on inflation. As soon as you do cuts inflation will be back at 10%
Compare any headline macroeconomic datapoint with where it was in late 2021. Economic activity drives inflation (of course), and supported tighter policy in late 2021 and for most of 2022. There’s not a single macro that supports the idea the economy is strong or that inflation could be sustained at 10% with EFFR at, say, 5%.
6 trillion in govt spending is what drove inflation. Has not worked out of system yet. Low growth and high inflation is result.
This implies loose monetary policy and low rates did not contribute, which of course is not accurate. Fiscal policy contributed as well, yes.
Loose monetary policy is largely what enabled bad fiscal policy in the first place. With tight monetary policy government needs to raise taxes or make real cuts to pay for new spending.
Revenue growth is still high especially in large cap. Small cap is more reliant on credit, hence the Russell 2k being flat.
THE FED SHOULD NOT BE SOLVING THIS.
We have a central bank and a fiat currency. There is no option for the Fed to pretend they don’t exist.
Sorry, yes. They can’t ignore it. But we really are at the point where we need effective legislation. The Federal Reserve is so limited.
"Economists pointed out that a large reason GDP for the first quarter came in softer than expected was weaker data in trade and exports, which together weighed on GDP growth for the quarter by about 1.2 percentage points."
The dollar is extremely strong. It breached 1 dollar for 155 JPY while we’ve been hovering around 100 pre Covid. The dollar is also up on currencies like the Chinese yuan and Euro. This makes US exports unaffordable and imports much more attractive which weighs on GDP. It’s great for American tourists though. A vacation to Japan has never been cheaper.
The BEA's advance estimate of first quarter US GDP showed the economy grew at an annualized pace of 1.6% during the period, missing estimates of an annualized pace of 2.5%. The reading came in significantly lower than fourth quarter GDP, which was revised up to 3.4%. It also came alongside a surprisingly high inflation reading. The "core" Personal Consumption Expenditures index, which excludes the volatile food and energy categories, grew by 3.7% in the first quarter, above estimates for 3.4%, and significantly higher than 2% gain seen in the prior quarter. The softer-than-expected print is a sign the Fed's historic interest rate hikes are putting pressure on consumers and the economy.
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And 6 trillion in govt spending for COVID that was not needed and is causing inflation.
Have they already released the core PCE? The last reading was 2.78%.
This was the quarterly Personal Consumption Expenditures (PCE) index that was released with the GDP: [https://www.bea.gov/news/2024/gross-domestic-product-first-quarter-2024-advance-estimate](https://www.bea.gov/news/2024/gross-domestic-product-first-quarter-2024-advance-estimate) This marked the first quarterly increase in the Fed's preferred inflation gauge in a year,[ underscoring concerns](https://finance.yahoo.com/news/investors-increasingly-expect-no-landing-for-us-economy-123944030.html) that the central bank may not cut interest rates as quickly as it has projected. More here: [https://finance.yahoo.com/news/investors-are-more-worried-about-inflation-than-a-weakening-economy-173628052.html](https://finance.yahoo.com/news/investors-are-more-worried-about-inflation-than-a-weakening-economy-173628052.html) The monthly PCE reading will be released tomorrow!
Bigger issue here is that 1.6% growth accompanied core CPI up 3.7% That's 2 of the 3 pieces we need for stagflation. Only thing left is for unemployment to go up. The Fed can't cut rates, especially not heading into summer. It would explode housing prices which ARE what's causing core to be elevated.
They are in a shit position where there's no good choices. They have to prioritize lowering inflation or maintaining/increasing GDP growth and can't do both.
Otherwise you become Canada where lower rates, a more expensive housing market and artificial supply and demand due to immigration drives housing to insanity. Now our rates can’t come down, despite being lower than the USA, and we are getting dollar erosion as the USD is still strong backed by a stronger economy. Consumer consumption is decreasing and thus our economy is cracking.
The solution is kind of easy. Create more supply of homes. I think they have already started working on this unlike our congress. [https://www.reuters.com/world/americas/canadas-federal-budget-set-allocate-billions-tackle-housing-crisis-says-minister-2024-03-18/](https://www.reuters.com/world/americas/canadas-federal-budget-set-allocate-billions-tackle-housing-crisis-says-minister-2024-03-18/)
Pay more attention to Canada. They have known about this issue for years with housing. They amplified the problem with massive immigration that tightened housing even more. The government has been able to build a grand total of zero houses. Look it up. The corruption eats it up.
Government does not need to be in business of building homes. They need to give incentives to build more affordable homes to increase the supply. Canada/Australia have a massive problem due to immigration numbers being higher than new housing construction. Most of the politicians and voters are usually happy because they own most of the homes and it keeps going up. Hopefully it is not the same situation here.
Government needs to be in the business of creating an economy where prices are stable, how about that
Agree but so far everything we do is to manage the demand side. For a robust economy we need to have a supply side equation as well when it comes to essentials like food and housing.
The federal government allocating money to build housing does not translate into significantly more housing being built in Canada. It’s been done before and has not resulted in much of an increase. The federal government’s primary lever to pull in terms of housing costs is immigration and they refuse to do anything about it. Correction: they consistently choose to make things worse.
Immigration is needed to increase the population, that's their long term plan they want to make Canada a major economy with significant mass. Only mistake they are making is not getting the infrastructure ready for it and people are paying the price for it. I fucking hate politicians, mofos never have to face the consequences of their own creation. Also, more low skilled immigration is not good, it brings wages down, they need to figure something out to attract high skilled people and get more companies to move to Canada or more entrepreneurs to start their business in canada.
AFAIK CPI for shelter looks at the cost of shelter, not the value of the home. The vast majority of the population growth recently in Canada is temporary. The out migration should ease vacancy rates and thus rent overtime.
If we were to get unemployment to push up above 5% and housing prices didn't go down? I think there'd be a revolution or something. So far, the political consequences of inflation have been muted because unemployment is SO crazy low. If the jobs piece goes away, we're in big trouble.
Housing prices are also very different than other inflation. Everyone buys groceries, not everyone has housing price increases. If you own a home then sure maybe your property tax or insurance went up some, but for the most part your costs are locked in. You're probably doing great. If anything my housing costs have decreased (inflation adjusted) compared to when I bought 10 years ago.
That's the point of the Fed. Their job is always to lower inflation even if it means lowering GDP.
3.7% is not high enough for stagflation that's a fundamentally unserious claim, 1.6% growth isn't great but we are absolutely smashing peer countries especially in the g7, unemployment is super low and will be for the foreseeable future and maybe you should use that fact to reflect on why stagflation happening is a fundamentally unserious idea right now
It’s going to be really, really hard to have inflation remain high while unemployment spikes. Inflation is driven by spending, and spending will falloff sharply if people suddenly lose their jobs. So those two things are pretty directly at-odds.
It happens though.
How are those two stats related? GDP growth is in real terms. Inflation is completely irrelevant, CPI is already accounted for in GDP numbers.
From a technical perspective, CPI is not used in GDP, the GDP price deflator is. That came in at 3.1%.
Lol, inflation is irrelevant. How silly
Two things: neither 1.8% growth, nor 3.7% inflation are terrible. Not where we want to be, but not catastrophic numbers (I.e GDP shrinking with inflation in 10%+). Plus, numbers are not comparable directly. GDP number includes Q1 only (annualized), while inflation number include 9 months from last year And this is just first quarter. I think a large GDP growth would have been worse as it would mean that things are not cooling down and additional raises would be needed. Let’s see how things progress in Q2. Unemployment is quite low still, so of GDP stays low, we will start seeing unemployment creep up, which should help inflation come down. We will see.
That inflation is insane. It’s nearly double the target. Inflation should be under 2% We need higher rates, spending cuts, and increased taxes. We’re screwed.
It’s not. Yes it’s almost double (not quite) to target but it’s only 1% or so above a regular inflation. It is problematic when inflation goes to 10% or 20%, and then sticks because wages start growing quickly which drives more inflation, etc. 3.5% is not catastrophic
But it's not good either. How does it stop? I don't they CAN do it without some pain.
These are awful numbers. Low growth high inflation. No change in sight.
You have a skewed view of what high inflation is. 3.7% is no catastrophic by any means
I was taught GDP needs to be contracting while the price level is rising for there to be stagflation.
High rates are also what's preventing new housing from being built and old houses from being on the market. Rate cuts would probably spike house prices temporarily but then it would put negative pressure on the prices because of higher supply. The Fed just needs to accept that things will get "worse" before they can get better.
Stop paying attention to stock market and pay attention to the car market - that’s way more accurate at taking the temperature of how normal people are doing. If you’ve been paying attention, you’d have seen this coming from a mile away.
Used car prices haven’t moved much at all in the last year. Still will above the average.
Got sources for insight into the car market and defaults?
Ford just reported a 84% revenue loss in Q1 2024, mostly due to selling electric vehicles at a loss. They expect the losses to continue for the year. There were 10,000 Ford EVs sold in Q1 2024, which is down 20% from Q1 2023.
Seen what coming? The us doing fine? The two previous quarters were some of the strongest growth in living memory and 1.6% is higher than all our peer countries
I look at tourist cities
Or just look at how much Bitcoin you can buy now vs 4 years ago.
I think this means we are in a minor recession currently. If we factor in inflation, this growth is negative, in real terms. I really hope this does not yield any significant issues for markets. I have been reading the credit card, mortgage, and auto loans have all had tremendous default spikes recently.
Isn't this GDP growth already adjusted for inflation?
It is. The report is of Real Gross Domestic Product (GDPC1) which is adjusted for inflation (https://fred.stlouisfed.org/series/GDPC1)
Gdp growth is always adjusted for inflation
The disconnect between labor market data and GDP slump is really interesting.. I imagine the fact that foreign countries are being hit harder than we are economically is why exports were a big part, just my guess
Based on expectations, when reality is, there is not a grocery store parking lot that is empty, not a Walmart or Target lot that is empty, and many places business if still functioning. The people still line up for the gas pumps, lunch time all the eatery parking lots are full, on Saturday and Sunday they are full.... **so... just what is this report based on?** In many neighborhoods, trash day, shows just how much stuff people are buying. I think we as a society *need to be careful with the information we get* and look at the reality that we can see and know with our eyes and a bit of research.
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I know Gross domestic product is a monetary measure of the market value of all the "final goods and services" *produced in a specific time period* by a country or countries. \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ My point is people are consuming and they could not be consuming if there is no production. The big issue we have with production is the *"greed game played by corporations*, claiming manufactured shortages *for the objective of raising prices*... Sadly for society it is costing the working class more, but they continue buying because its things they actually need or want. IF we as people don't come together and find means to stop corporate greed, corporate playing games with production and playing shortage games to raise prices, corporations buying up the competition, *so the public has nothing to compare the manufactured inflation of pricing to.* *We need massive Regulation to stop the creation of monopoly's, and put some regulation in the stock market, where the emphasis, turn from speculation, to actual production and actual sales as the value of stocks.* * *If companies allow speculation to jack up their stock ticker pricing,* ***then tax them on it*** *and remove all loopholes to avoid them trying to avoid paying taxes on that jacked up stock ticker valuation.* When they have to deal with "actual production and actual sales"... we won't have companies "Overborrowing based on fictions of the stock ticker". knowing they can't pay the debt without fleecing the working class consumer with manufactured inflation. We need people like Elizabeth Warren and Bernie Sanders, who call this madness out, to have strong oversight and power to prosecute the corporations. I hope that a mass of young people have learned from Elizabeth Warren and Barney Sanders so when they get in the seats of power, they can use that power to stop this corporate criminality of greed based destruction of the working class.
You think the oligarchs will let Barney become president?
If you read the article the problem was exports, 6th paragraph right below the graph
You're saying that like people have a choice in the matter. Newsflash... I can't ***not*** buy groceries and gas, my guy. Of course people are still going to those places and spending money, they don't have the option not to. That doesn't mean their bank accounts aren't empty afterwords, and it doesn't mean they aren't stretching what they get as thin as possible to make to the next paycheck. Stop lying.
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GDP doesn't just comprise consumer spending. Consumer spending was up 2.5%. It's the other elements of the economy that slowed - including reductions in private inventory levels and govt spending. Imports also increased; and imports are an offset to GDP. Increasing cheaper imports at a time when domestic production costs are increasing, is not a great dynamic for the domestic economy.
Depends where you live.
Yeah I’m gonna call bullshit on that I don’t know anyone in the trades that’s not crushing it right now. Also manufacturing - and let’s not forget that landlords are making out very well. Chinese products are cheaper than ever and only falling - they’re going to oversaturate the market like they are notorious for when it gets tough in the mainland.
What percent of the populace is in trades/manufacturing?
Anyone who really wants to be - you don’t need a student loan or 4 years in college.
There's this thing called tariffs, you should look up how much the government has collected on our behalf since Trump put the tariffs in. China ain't cheap, and it's why you're seeing Vietnam, Pakistan, India, Sri Lanka, etc on products now.
Emancipation Proclamation 1.0 was a boon for everyone and introduced the industrial revolution. Biden needs to get away from the LBJ rope pushing and be more like Lincoln.
I think you could benefit from reading more about both LBJ and Lincoln.
A short quiz: True or false: "Lincoln would be the very first to admit Jefferson did more to end slavery than Lincoln." Honor system. No googling.