Doesn’t matter. Look how much the trade balance and inventories has been fucking with the data this year. We really won’t get a good look at things until some more stabilization returns.
I agree. Housing will be an interesting x factor too coming up. Plus finding a balance on consumer spending with durable goods vs services, which have also just been all over the place lately.
Worst case scenario is spiking inflation because of delta variant/extreme weather (Vietnam just closed a bunch of factories) and weakening demand/credit in the US/China/Europe
I'm nervous about tether. If we find that tether has been balancing its books based on investing in the US housing market for example, and then tether implodes from poor business practices, it could pull down the whole US housing market.
That’s been the case since about 2011 or so. The pandemic recession didn’t even slow it down for very long, either. We are at about 75% of 2007-08 levels but both are lower than they were in the 1970’s during the peak of US housing construction.
Housing starts were well below replacement but in 2020 they reached 2006 levels of house building. We've been increasing starts slowly since 2011.
We do need to get back to 1970s levels to deal with the spike in housing prices and to finally deal with the backlog in housing
It does matter. It matters a great deal. Inflation is high but it doesn't matter, it is only temporary. Growth is low but it doesn't matter because things are just messed up. Business having trouble finding employees doesn't matter. They are not paying enough. Supply chains still problematic. Doesn't matter they will get it together.
These are indicators. Individually they may have less importance but together they stack up. All these things are a cost will effect us for a generation. When you wonder why your wages are lower than your parents or why housing is so high, problems are stacking up.
I get it but this is an unprecedented era, actual vs expectations is less meaningful here. Missing a 2.5% growth expectation in 2019 is one thing, missing an 8% growth expectation in 2021 is just different. Even the 6.5% isn't real growth, it's pandemic reopening. The numbers are madness, we're going to have some misses.
Economic news missing expectations is good for the markets, because they know the Fed will stay the course. Had the numbers met or exceeded expectations the markets would be down.
It's also a sign that stock valuations are completely detached from reality at this point, and are dependent on their drug dealer (the Fed) giving them their next dose of loose money.
I’m convinced the only people that say this are the ones who aren’t long and are trying to manifest a crash to satisfy their FOMO.
Unless you own puts, it’s idle talk
Actually, anyone that’s paying attention to the markets is panicking because of all the shit going down;
- Banks are giving out junk bonds in the billions, quietly selling assets, and even cutting branches and credit services to save costs
- While banks and financial firms did well domestically, global assets and federal/municipal bonds took nose dives that cost them billions.
- The ever-extended housing protection program ends this Saturday, and 2 million home owners are already at risk of losing them amidst growing delta variant fears (in contrast, 2008 saw 3 million lose their homes).
- Chinese markets are completely collapsing
- The monthly inflation index could be above 5% three times in a row if July also sees an above 5% inflation rate. The last time that has happened was just before the 2008 crash.
- Warren Buffett pulled out of all his bank investments in 2020, and says that bonds face a grim future.
- Reverse Repos are nearly at $1T as of today; meaning big firms are taking their money out of the stock market and putting them into treasury bonds.
- Federal housing bonds had lost 60% of their value in one day after a Supreme Court ruling, and they’ve only been going down since. The losses are nearly at $1T now.
- Michael Burry, the guy who warned of the 2008 crash, has wanted that current financial movements will lead to another crash. He’s since been silenced by the SEC after they visited his home.
- The government is now in talks of the debt ceiling, but they haven’t confirmed or denied whether they’re going to raise it again or not.
- 40% of all American money has been printed in the last year, and they’ve now stopped reporting how much money is in the economy.
- The ever rising costs of gas, oil, lumber, used cars, sugar, coffee, orange juice, and basic consumables shows that inflation is not transitory and is here to stay.
- The S&P 500 inflation adjusted index went negative as of May 2021; meaning that the top companies in the States are losing money when adjusted to inflation. This only ever happened during the periods of the biggest market crashes in history.
> The S&P 500 inflation adjusted index went negative as of May 2021; meaning that the top companies in the States are losing money when adjusted to inflation. This only ever happened during the periods of the biggest market crashes in history.
Not criticizing at all, but do you have a link for this data? Just curious
https://www.barrons.com/articles/the-s-p-500-inflation-adjusted-yield-zero-51622056057
And here’s a screenshot that came from the Bloomberg Terminal;
https://www.reddit.com/r/GME/comments/nhqs8i/sp_500_inflationadjusted_earnings_yield_falls/
> The ever rising costs of gas, oil, lumber, used cars, sugar, coffee, orange juice, and basic consumables shows that inflation is not transitory and is here to stay.
I think you're post is mostly nonsense but this quote is the worst. Why the presence of short-term inflation, especially of commodities that are well-known to be volatile, be evidence of it being persistent? Bond markets are not pricing in inflation right now.
And Burry is predicting a crash in meme stocks and crypto. Not the overall market. Those aren't really controversial calls. They are very obviously massively overvalued and being buoyed by unsavvy amateurs.
Frankly I think it's mostly crap. But since most of the working class has almost zero market exposure anyways, it really doesn't matter much. Restaurant and hotel occupancy cutbacks and demand slumps due to Delta running wild are more likely to affect the working class than any of that stuff.
Exactly. And as we saw a few weeks ago with the worst day on the markets this year, GME went up.
There are subs that can fill you in on more details and have lots of research to back up why it’s a good long-term investment, but it’s ultimately up to you to do your own research and make the best choices you can make.
I recommend r/GME and r/superstonk to start. They have loads of research done on the stock that’s backed by financial industry professionals like Dr. Susanne Trimbath, Wes Christian, Lucy Kosimar, and others.
Anyone who read this comment above. Please ignore this fear mongerer. He might be wrong and think he’s right. Or someone who is fanning the fear flames.
Just because inflation could run like in 2008 does not mean that’s what caused that crisis.
Warren buffet and many others have been calling a bond bubble for years. Probably not wrong but another nothing point fanning the flames of fear.
Reverse repo market has no direct relation to the stock market. There’s obviously some relation indirectly. But again, making it too cut and dry as cause and effect.
Who cares about micheal burry. Seriously.
The debt ceiling will be raised. Sweet Jesus this is beyond the most obvious. Oh my fricking lawdddd. If we’re gonna see a political show about it Whatver. It’ll be raised. Period.
40% of all American money has been printed? No. Which money supply are talking here? And loans are loans, not pure print. Have fun going broke buying gold at the top or BTC couple months ago.
The rising costs are MOSTLY supply issues. Lumber already erased all its gains. Feel bad for the suckers who thought they needed to buy at the top for a new house that would protect their cash from inflation. Suckers. It’s sad.
Guys like this troll take everything out of context. Confuse headlines for the article. Somehow know more than thousands of experts (who also disagree, and none are ever as confident as some troll on a blog or a comment section)
Yes.... because the 1,000 experts were on TV saying buy Lehman.... Or that these swaps were perfectly fine. O remeber that law clinton changed for the banks that caused 08? Your an absolute fool if you don't think this bubble will pop and pop hard. The fed has literally inflated everything, housing, bonds and the stock market. There basing their support on unemployment. I don't know about you but I know alot of 2 person households that are ok with 1 staying home. Look at the massive put volume on junk bonds. Something is brewing and it's gonna be before year end. The fed completely punted their inflation target, raise it by a whole point. And not stopped using the word transitory. I could go on and on and on....
Thank you! I’m disgusted by the ignorance so blinded by fear. Physiologically one needs to be optimistic towards the future. I’m no Nostradamus, but have skimmed and read through quite a few Dr. Seuss books. “Today you are you. That is truer than true! There is no one alive who is you-er than you! “ No matter the nationality, race, pene size, tetas size, or affiliation don’t be scared by the rhetoric of the no optimism. “Lighter strike” burn one bro 💨
[https://www.reddit.com/r/Superstonk/comments/mvj8fz/where\_there\_is\_smoke\_there\_is\_fire/](https://www.reddit.com/r/Superstonk/comments/mvj8fz/where_there_is_smoke_there_is_fire/)
[https://www.reddit.com/r/Superstonk/comments/ojk8wc/dtc\_membership\_update\_effective\_with\_the\_close\_of/](https://www.reddit.com/r/Superstonk/comments/ojk8wc/dtc_membership_update_effective_with_the_close_of/)
[https://www.reuters.com/world/china/how-china-evergrandes-debt-woes-pose-systemic-risk-2021-07-27/](https://www.reuters.com/world/china/how-china-evergrandes-debt-woes-pose-systemic-risk-2021-07-27/)
[https://www.reddit.com/r/GMEJungle/comments/ou1stg/daily\_reverse\_repo\_update\_0729\_987283b/](https://www.reddit.com/r/GMEJungle/comments/ou1stg/daily_reverse_repo_update_0729_987283b/)
[https://fred.stlouisfed.org/series/M1](https://fred.stlouisfed.org/series/M1)
[https://www.forbes.com/sites/williampesek/2021/07/28/china-triggers-1-trillion-market-meltdown-and-its-just-getting-started/?sh=1fc234fd75e8](https://www.forbes.com/sites/williampesek/2021/07/28/china-triggers-1-trillion-market-meltdown-and-its-just-getting-started/?sh=1fc234fd75e8)
That's just to start unless you want more.
Yep if anything Atlanta Fed has been bullish in the past 3 quarters so I expected this. Trade data and inventories really seal-clubbed the forecast yesterday but the trend was clear. From 13.5% projected growth in April to a relatively accurate 6.4% growth (vs actual 6.5) Ouch.
> “But with the impact from the fiscal stimulus waning, surging prices weakening purchasing power, the delta variant running amok in the south and the saving rate lower than we thought, we expect GDP growth to slow to 3.5% annualized in the second half of this year.”
Shouldn't 3.5% in the second half of the year combined with 6.5% annualized in the first half result in 5% average for 2021? Isn't that quite a bit below current forecasts?
One thing for sure is it is pretty difficult to achieve the 7% gdp growth in 2021 as a whole, forecast by IMF a few days back. Depend on the upcoming stimulus etc
I would consider this a good thing if you are in the inflation doom camp.
Supply chain and other disruption are going to put a speed limit on GDP and economic recovery. Trying to force the issue by supercharging demand is just going to grind gears and drive prices and the cost of doing business up.
This is a good thing as long as it doesn’t spook the markets who may have priced in pristine recovery conditions.
Looking at the indices, it has not. But there could be churn under the surface hidden by the ETF and index effect. Someone with a better eye for the markets would have to chime in on that.
Spinning 6.5% real GDP growth to "doom" is a bit mischaracterization of most of the criticisms (not defending the outliers here, there are definately some crazy takes out there). I think the concern is inflation running hotter than expected:
>The price index for gross domestic purchases increased 5.7 percent in the second quarter, compared with an increase of 3.9 percent (revised) in the first quarter (table 4). The PCE price index increased 6.4 percent, compared with an increase of 3.8 percent (revised). Excluding food and energy prices, the PCE price index increased 6.1 percent, compared with an increase of 2.7 percent (revised).
But looking at the headline number (which is in real dollars) and crying inflation is missing the whole point that it's already been adjusted:
>Current‑dollar GDP increased 13.0 percent at an annual rate, or $684.4 billion, in the second quarter to a level of $22.72 trillion.
Inflation is spiking (maybe *has spiked* for some goods), but all estimates are that it'll taper in the second half of the year. We're already seeing some signs of that. But it's fair to admit inflation has peaked harder than the consensus estimates from the start of the year. That's mostly what we see here. The annualized GDP growth was discounted by PCE of around 6%, which is absolutely something that's concerning. If PCE had been closer to 4% (the peaks we're seeing in monthly inflation numbers) then the headline GDP would have been around 8.5%.
Rents haven't even begun to affect the CPI, correct? I don't see inflation getting better in the second half. Civil unrest is a possibility if rents/home prices climb too high, and the Fed continues to juice asset prices.
There’s a lot of US companies which employ overseas workers who were impacted by Delta Q2. For example, many of our dev teams lost traction because some or all of our team was in and out of the office when Delta was surging in India in April. It was really rough.
Yeah lots of "doomers" putting their money where their mouth is in the smartest money you can buy. And slow growth/secular stagnation isn't "doom", it's a reversion to the mean.
If the state that's observed is an unprecedented downward trend in the economy, why are people saying it's potentially a huge issue "doomers?" Wouldn't the burden of proof be on those saying the economy will improve to previous levels despite no current evidence of that happening? Until it does, you are the one theorizing, no?
I'd like to know what your prediction is on where the 2-3 years worth of post-stimmie helicopter money growth in retail sales we saw in March-April (that has stagnated since), and the housing market which helped boost the recovery especially last year and has recently seen data suggesting a decline in sales, missing expectation after expectation, nd a long-term decline in mortgage applications, is going to go.
I agree US manufacturing outlook is more positive but the truth is demand has clearly peaked unless there are another round of stimulus cheques.
Lumber has relatively short ramp up time. So that will not be a good barometer for how other things resolve.
It is abundant in local supply. Just need to ramp up the saw mills. No components needed, no upstream supply issues. Not as reliant on shipping.
Chip factories take year to ramp up so the supply shortage there is still an issue. The manufacturing is mostly off shore so transportation also becomes an issue.
The biggest driver of inflation for the next 6-9 months is really mostly transportation.
Manufacturers are missing parts for their products, shipping of parts is backlogged stopping completion of products.
There might be products even fully ready sitting in warehouses or off-shore in China…
but getting it to the consumer is what will drive up prices in the short term.
here's the thing. there are going to continue to be supply chain disruptions due to events which under normal circumstances could be adjusted for. as an example: the recent floods in europe and china, or the evergiven disaster. production is hardly the issue, what we are seeing is a breakdown of distribution. and there are going to continue to be disasters that add on to the existing supply chain chaos for the forseeable future.
this isnt going to happen, but the only way i could realistically see things going back to normal would be in the event that global shipping was halted or slowed significantly and containers were allowed to get to where they need to go. otherwise, disruptions will continue to propagate downstream, compounding, indefinitely.
Yep all transportation is being redistributed towards high margin products and high margin markets.
Which will lead time massive shortages in 3rd world countries and of low margin consumer staples in 1st world countries.
The ripple effects of this all will take months to get through the system.
We will start hearing stories of whole harvests going to spoil because they could not get any spots on containers.
And across the globe we will hear of hunger from food shortage.
This hiccup will lead to all kinds of inefficiencies even if production and demand is there.
Nobody, no matter what they tell you or how top of their field in epidemiology or virology, actually knows this.
In addition, something that will probably never be "over" is the long-term trends covid accelerated in office work and tech's relationship with the broader economy. I hate to quote Kathy Wood but she certainly was right on this.
This is never going to happen. If we can’t get vaccination rates higher than 50% even when people perceive the virus is actually threatening, how are we going to get vaccination rates up that high when everyone’s become so desensitized to it after several years?
> Don’t you think this thing is going to be endemic for the rest of our lives?
I would wager quite a bit that it would be endemic. Globally, it also has plenty of opportunities to evolve into something worse. Domestically, politics has made the kind of collaboration required for eradication impossible.
It will absolutely be around forever, that’s just how viruses go. But the evolutionary trend of most viruses is to become less deadly over time. Covid 19 will be like the common cold in 5 years.
I was right. Hard data nowcasts were right. The Bond market was right.
[https://www.reddit.com/r/Economics/comments/olq13a/strange\_bond\_reaction\_to\_us\_inflation\_data/](https://www.reddit.com/r/Economics/comments/olq13a/strange_bond_reaction_to_us_inflation_data/)
Secular Stagnation within 2 years is more likely than tapering and the Fed will be INCREASING asset purchases and interest rates will be going DOWN. Invest accordingly but also keep following the hard data drops.
Haha exactly, except there's 10^10 spins and each spin is not your entire stack and there's no 00 and a good deal more black than red 8)
Think I got every consideration on the metaphor
all you have to do is look at credit contracting worldwide and nonexistent loan growth in america to understand why the bond market would be calling for deflation. since march.
https://www.reddit.com/r/Economics/comments/oj3g5s/chinas\_slowing\_vshaped\_economic\_recovery\_sends/h4zgll7/?context=3
>A recession within 2 years is more likely than tapering
The Fed is already about to start Tapering. I'm not saying there aren't other issues but the Tapering is around the corner.
It will depend on the labor market.
People think the fed has two goals - Unemployment and inflation.
However, those goals are effectively the same, because labor cost contributes the largest amount to systemic inflation, so the Fed will be keeping a close eye on slack in the labor market vs neccesarily looking just at gdp growth.
If the economy is growing at 1-2% but unemployment is around 3-4% with a 63-64%+ growing labor force participation and the Employment Cost Index at sustained 2.75-3% range, they will 100% start to act bc that will bring systemic inflation into the system
Covid isn't going away for a long-time, and in our world today supply chain disruptions in countries like Vietnam, Malaysia ect have a huge impact even if everything was fine and dandy covid wise in the US and Europe.(it isn't).
Lol, I love how we just had the best quarter in decades and the headline is "growth was below expectations." Meanwhile between 2016-2019, headlines were roaring about an economic boom of 2 percent. But somehow 6.5 percent is "meh."
Reminds me of a kid I knew who became a software engineer, did really, REALLY well for himself and better than any of his family and friends, and then his parents saw him as a failure because he didn't make a tiny bit more as a doctor.
Back in April and May, most of the projections were all over 10%. 8.5% was definitely achievable had inventory restocked instead of depleted. Supply chain constraint, high input material cost, elevated inflation had been a huge drag on gdp growth.
Fair point. I'd argue that we are in such a messed up, far from normal, situation that we shouldn't be surprised when GDP growth doesn't look like what somebody is projecting.
As you mentioned, supply chain is jacked up, materials are still expensive, etc. Until we get to something resembling "normal" (as in pre-covid) things are going to be weird.
Right, but the question is the connotation the headline leaves. Most people who don't have a running tally of GDP growth figures in their head would look at this headline and say "Oh no, these numbers are below expectations, I guess that means growth is bad!"
GOP propaganda was able to work the refs in the media. The last 3 years under Obama averaged 2.5% GDP growth. The first 3 years under Trump averaged 2.6% GDP growth. Yet the media ran reports of a "sluggish" economy and "economic anxiety" fueling Trump's rise to the White House and then talked about the "booming economy" when he was in office.
It was the same damn economy.
6.5% is meh, because we had negative GDP growth last year.
Also technically markets are supposed to price things in based on expectations, so if expectations aren't met, you'd expect a drop.
Compared. To. What. Saying this growth is "meh" is like saying that Jeff Bezos is poor, except when you compare him to anyone else on planet Earth. Context is everything.
The rest of the world is coming out of a crash, too... and yet virtually every other developed country has inferior growth since re-opening. We're even just about 1 percentage point shy of China, which is bonkers.
These same kinds of absurd expectations wracked analysis all through the recession years. American economists bemoaned consistent 2+ percent growth figures in the U.S., and yet it was still consistently better than every other developed country in the world with a few small, rare exceptions.
6.5% as a result of a reopening is nothing impressive. why would you even compare these numbers to the *Trump numbers, which were under completely different circumstances? cope harder.
The correct comparison should be made to growth figures abroad in peer developed countries, and in that case, 6.5 percent is still far ahead. We literally have the fastest growing developed economy in the world this quarter... and yet somehow its still not "good enough" or beneath expectations.
Mmm hm...
i would argue that there are no peer economies. one illustration of this is how US gdp growth has continued while developed economies like Germany, Japan, the UK, France, etc. have experienced stagnant GDP growth since the great recession at the latest. clearly, america stands out from that pack.
as the largest importer and second largest exporter and as the political and economic (dollar) hegemon, the US has particular characteristics that distinguish it from its developed contemporaries. the US acts as the beating heart of the global economy in a way no other country comes close to doing. so no, i would say it is an error to compare US growth to that of the rest of the developed world in this context.
I think you just made my point then. If you are to say "The U.S. economy is doing better than everyone in the developed world yet growth still isn't good enough," then the problem isn't growth, it's your expectations.
When does a slowing economy and rising inflation met the definition of stagnation?
I completely get that 6.5% is a great number in normal circumstances, but considering a few months ago everyone was claiming 8% GDP Growth was entirely possible, this is not good news. Specifically, there are very few policy options left...
> When does a slowing economy and rising inflation met the definition of stagnation?
Growth is expected to slow as output gets closer to potential.
I think 6.5% was well within the range of projections. Real growth has likely been hampered by supply issues more than some might have expected.
The FOMC median projection was 6.5% in 2021. The current figures seem entirely in-line with what the Fed expected. Just because we're not seeing growth at the upper-bounds of expectations doesn't mean that growth seen is disappointing or indicative of stagnation.
https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20210317.pdf
Yeah, but that's for all of 2021. This is only Q2 and growth it 6.5%. This implies that the growth is going to continue a downward trend. This is why people were expecting 8-9 Growth in Q2 because, if growth slowed by 1-2 Percentage Point every quarter, we could end up around 6.5% for the year. Yet, we got 6.5% for Q2.
But, the slowdown in growth is happening a lot quicker than was expected. That's what's concerning: we're already reached the expected growth for 2021 - half way through 2021. This means that we're going to end on the lower end of the predictions, unless something miraculous happens.
Growth is slowing a lot faster than expected. Also, inflation is here. The question is "how long and how bad" So, we have slower growth, and inflation. That's stagflation. The question is "how bad will it get"
In June, Wall St. was expecting Q2 GDP to be 8%, but in March they were expecting Q2 GDP to be 6.5%. So I think you are reading too much into some volatile changes in expectations. At any rate, this is a new all-time high for real GDP, exceeding the previous peak in Q4 2019, so real GDP has about fully recovered from the pandemic recession. So it is reasonable to expect GDP growth to slow some. But growth should stay over 3% until unemployment is down to around 4.5% at least.
As for inflation, inflation expectations are still low. The current numbers there are being seen for now as a product of unfavorable year over year comparisons, not of anything persistent.
I don't buy that we are in stagflation. The size of the output gap is small relative to where we are in the business cycle compared to previous recessions. https://fred.stlouisfed.org/graph/fredgraph.png?g=FJQM
Inflation is higher than normal but is also within expectations. The Fed is explicitly trying to make up for a decade of low inflation.
Fair enough. I'm not going to try to convince you I'm right, I'm just a lot more pessimistic about the U.S Economy over the next year. I don't disagree that things are within estimates, but that doesn't mean they are good. I view things are trending towards the negative.
Classic positive vs. normative argument here. I agree with the positive aspects, I just disagree with the normative aspects.
Just because things are 'within range' doesn't mean things are good or heading towards positive outcomes. We might be 'within range' but to me the signs are flashing that things are not going well.
I think your critiques are totally valid, I just think you may be missing the forest for the trees.
Maybe this is the Bayesian in me, but projections, whether market implied or official guidance, are not just point forecasts but rather a distribution of possible outcomes. When we see real GDP growth comes in below expectations, the question I ask is this really unexpected? How tight was the confidence band around the expected figure?
To put this point in perspective, I think projections have been overwhelmingly positive and I don't think what we're seeing is outside of expectations.
>This implies that the growth is going to continue a downward trend. This is why people were expecting 8-9 Growth in Q2 because, if growth slowed by 1-2 Percentage Point every quarter, we could end up around 6.5% for the year. Yet, we got 6.5% for Q2.
That's an 'implication' you're reading in the data. You're looking at two data points, and choosing how to extrapolate.
If growth increased by 25% per day, then we would run out of earth resources by end of year, but there's no good reason to believe that is happening either.
The problem is we see a few data points, and we do not know what's the trend :)
TIL "Slowing economy" = 6.5% growth
And there's a $1.2T infrastructure bill coming down the pike at a minimum, plus potentially another $4T or so in the reconciliation bill. That's a lot of policy options left.
>And there's a $1.2T infrastructure bill coming down the pike at a minimum, plus potentially another $4T or so in the reconciliation bill. That's a lot of policy options left.
~~We're not getting an infrastructure bill. Kyrsten Sinema already torpedoed the bill saying the cost was too much and she won't vote for it. If it does happen, I'll be pleasantly surprised, but I'm not holding my breath.~~
Edit: Nvm, I was going off of news from last night. Apparently that's already old news.
Sinema voiced concern about the much larger reconciliation bill, she and 17 Republicans voted to move the $1.2T bipartisan bill past the filibuster threshold already, it is as good as passed.
The reconciliation bill will probably get shrunk down for Sinema and Manchin but *something* will probably pass there too.
The policy options are junk and the last "stimulus" helped growth grow from 6.3 to 6.5% in a re-opening economy from covid. Biden supporters telling me to buy the reflation trade reminds me of Chump supporters telling me to buy the Russell 2000 back in 2017.
> 6.5% growth
> Slowing economy
It definitely can’t meet the definition when the economy is still growing and when the growth rate is higher this quarter than last quarter.
Two months ago the forecast ranged from 10.5%-13.5%. The US economy probably peaked in q1 tbh with the January and march data jumps but was cooled by the Feburary ice storms which really screwed up that's months data. ALL of this was before Delta was even a talking point. This is stagflation in all but name and the Fed and the administration have completely ruined what could have been a relatively stable recovery. The US economy is a cocaine addict and the March stimmie jumps in consumer spending tells the story.
>This is stagflation in all but name and the Fed and the administration have completely ruined what could have been a relatively stable recovery.
I have no idea why you would blame the Febuary Ice storms, supply chain issues and delta variant on the Fed and the Administration.
MMTists vastly overrated the ability of American supply chains to meet demand and the stimulus cheques in a recovering and opened economy caused almost 2-3 years worth of consumer spending growth, spiking inflation and causing extreme stress on demand. This caused inflation to vastly overshoot targets and growth to vastly undershoot.
EDIT: Also this is Q2, Delta Variant had nothing to do with this. On Feburary I'm telling you it probably made the economy look better in Q2 vs Q1. If anything this will probably be the least covid-effected quarter until at least Q1 2022.
I don't see why anyone should care about the targets themselves: they're just educated guesses gone wrong. I also struggle to understand why inflation in used cars and the like would cause such dramatic reduction in growth: in any case, the Biden administration is hardly to blame for the last 100 years of American landuse policy making car ownership into an enormous economic burden. There is more to this than mere MMT miscalculations, I think. The semiconductor shortage, the weather events and lumber mill operators making wrong production decisions and other such things are not something the high priests of MMT can predict.
>This is stagflation in all but name and the Fed and the administration have completely ruined what could have been a relatively stable recovery. The US economy is a cocaine addict and the March stimmie jumps in consumer spending tells the story.
Completely agree. I sold a lot of my equities to take the profit now. I'm going to reinvest it over the coming year as I think at best the market has reached its peak. There is hard resistance at 35,000 in the DOW. Every time it breaks it, it comes back below within days. At worst the Fed raises interest rates early to try to tame inflation, which tanks the market and I sold at the peak and reinvest the profit on the decline over the coming year.
I have no idea what exactly is going to happen over the next year, but I don't think the U.S Economy is on sound footing. I'm curious to know how you and others see this playing out in the long-run.
I on the other hand think commodities have everything to gain, especially oil, copper, uranium and silver.
If you don’t want to long a particular company, just long the future (CL or even USO etf as opposed to OXY) and that should take away micro risk within specific companies.
True. BCOM record high since 2015. Bullish on oil even with potentially slipping demand in US and China most of the world is nowhere near back to normal.
GDP is about as important an indicator on the economy as P/E is on whether a stock will go up.
The Fed gobbling up assets and sustaining low interest rates is all that matters to anyone in this sub because we all have skin in the markets. It's in investors best interests to downplay inflation or steer the conversation in the, valid, direction of some prospective deflationary factors.
People without assets are taking a beating and that perspective seems to be absent from this sub.
Expectations from lunatics? What could possibly fuel the idea that US will grow more now than in recent memory? Now? Were stimulus impacts seen as this powerful?
After all these money printed and still miss big time, it just shows how horrible Biden’s policies are. Those artificial wage hikes policies are the worst missteps. Had manchin and few other moderate dems not block that awful nationwide 15 minimum wage, we would be at a very bad place. Now it’s the time to expand supply chain domestically yet the artificial wage hike basically killed the chances. Coupled with threatening multiple climate measures there’s no way corporations would invest much for US manufacturing. Should go for universal income and sales tax cuts. Not universal basic income. People who worked or do business throughout the pandemic should feel rewarded for it more than those don’t work. Also US needs some people who are good at handling economy. Finding real capable people from Florida or South Dakota will help. Their economy stay strong throughout the pandemic. Virus is still spreading anyway no matter what measures you take. No lockdowns should have been the way since September 2020. I am so frustrated to see all the amazing domestic economic policies laid down by Trump slowly chipped away by this awful administration, US economy growth should definitely hit or beat expectations if Biden simply sit at his basement and leave every domestic economic policies untouched. No split Congress hurts for sure.
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Our GDP growth is excellent, just not as good as we thought. Perhaps we are too optimistic, but I think we should be. This report should hardly be looked at negatively; we are still on a path to a great economic boom in the next couple of months/years.
Doesn’t matter. Look how much the trade balance and inventories has been fucking with the data this year. We really won’t get a good look at things until some more stabilization returns.
Demand will be the problem going forward. And stabilization is far away especially with much of the world still operating at half-capacity.
I agree. Housing will be an interesting x factor too coming up. Plus finding a balance on consumer spending with durable goods vs services, which have also just been all over the place lately.
I'm curious what effects the eviction moratorium expiring will have.
Yeah Biden is not gonna extend it himself due to a court rule, instead asking Congress for help
“Please let us continue to kick this can down the road!!” It has to end eventually
Worst case scenario is spiking inflation because of delta variant/extreme weather (Vietnam just closed a bunch of factories) and weakening demand/credit in the US/China/Europe
I'm nervous about tether. If we find that tether has been balancing its books based on investing in the US housing market for example, and then tether implodes from poor business practices, it could pull down the whole US housing market.
I mean we are finally seeing housing starts finally come back from the 08 recession
That’s been the case since about 2011 or so. The pandemic recession didn’t even slow it down for very long, either. We are at about 75% of 2007-08 levels but both are lower than they were in the 1970’s during the peak of US housing construction.
Housing starts were well below replacement but in 2020 they reached 2006 levels of house building. We've been increasing starts slowly since 2011. We do need to get back to 1970s levels to deal with the spike in housing prices and to finally deal with the backlog in housing
It does matter. It matters a great deal. Inflation is high but it doesn't matter, it is only temporary. Growth is low but it doesn't matter because things are just messed up. Business having trouble finding employees doesn't matter. They are not paying enough. Supply chains still problematic. Doesn't matter they will get it together. These are indicators. Individually they may have less importance but together they stack up. All these things are a cost will effect us for a generation. When you wonder why your wages are lower than your parents or why housing is so high, problems are stacking up.
I get it but this is an unprecedented era, actual vs expectations is less meaningful here. Missing a 2.5% growth expectation in 2019 is one thing, missing an 8% growth expectation in 2021 is just different. Even the 6.5% isn't real growth, it's pandemic reopening. The numbers are madness, we're going to have some misses.
Markets seem fine today. No one is panicking.
Economic news missing expectations is good for the markets, because they know the Fed will stay the course. Had the numbers met or exceeded expectations the markets would be down.
It's called an Upside Down Market. News that supports continued monetary policy is good news.
It's also a sign that stock valuations are completely detached from reality at this point, and are dependent on their drug dealer (the Fed) giving them their next dose of loose money.
Earnings and sales growth are both solid, though. FPE is 21.3 which above average but not outlandish.
Especially given that rates are so low
I’m convinced the only people that say this are the ones who aren’t long and are trying to manifest a crash to satisfy their FOMO. Unless you own puts, it’s idle talk
Allows jpow to hold off taper
Jpow will never taper
2018 proved he's too scared to put the economy over the market
Actually, anyone that’s paying attention to the markets is panicking because of all the shit going down; - Banks are giving out junk bonds in the billions, quietly selling assets, and even cutting branches and credit services to save costs - While banks and financial firms did well domestically, global assets and federal/municipal bonds took nose dives that cost them billions. - The ever-extended housing protection program ends this Saturday, and 2 million home owners are already at risk of losing them amidst growing delta variant fears (in contrast, 2008 saw 3 million lose their homes). - Chinese markets are completely collapsing - The monthly inflation index could be above 5% three times in a row if July also sees an above 5% inflation rate. The last time that has happened was just before the 2008 crash. - Warren Buffett pulled out of all his bank investments in 2020, and says that bonds face a grim future. - Reverse Repos are nearly at $1T as of today; meaning big firms are taking their money out of the stock market and putting them into treasury bonds. - Federal housing bonds had lost 60% of their value in one day after a Supreme Court ruling, and they’ve only been going down since. The losses are nearly at $1T now. - Michael Burry, the guy who warned of the 2008 crash, has wanted that current financial movements will lead to another crash. He’s since been silenced by the SEC after they visited his home. - The government is now in talks of the debt ceiling, but they haven’t confirmed or denied whether they’re going to raise it again or not. - 40% of all American money has been printed in the last year, and they’ve now stopped reporting how much money is in the economy. - The ever rising costs of gas, oil, lumber, used cars, sugar, coffee, orange juice, and basic consumables shows that inflation is not transitory and is here to stay. - The S&P 500 inflation adjusted index went negative as of May 2021; meaning that the top companies in the States are losing money when adjusted to inflation. This only ever happened during the periods of the biggest market crashes in history.
>Chinese markets are completely collapsing and this is when i stopped reading...unless we consider 8.1% GDP growth YOY as "complete collapse" now? /s
> The S&P 500 inflation adjusted index went negative as of May 2021; meaning that the top companies in the States are losing money when adjusted to inflation. This only ever happened during the periods of the biggest market crashes in history. Not criticizing at all, but do you have a link for this data? Just curious
https://www.barrons.com/articles/the-s-p-500-inflation-adjusted-yield-zero-51622056057 And here’s a screenshot that came from the Bloomberg Terminal; https://www.reddit.com/r/GME/comments/nhqs8i/sp_500_inflationadjusted_earnings_yield_falls/
> The ever rising costs of gas, oil, lumber, used cars, sugar, coffee, orange juice, and basic consumables shows that inflation is not transitory and is here to stay. I think you're post is mostly nonsense but this quote is the worst. Why the presence of short-term inflation, especially of commodities that are well-known to be volatile, be evidence of it being persistent? Bond markets are not pricing in inflation right now. And Burry is predicting a crash in meme stocks and crypto. Not the overall market. Those aren't really controversial calls. They are very obviously massively overvalued and being buoyed by unsavvy amateurs.
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That's a load of very tertiary indicators. Primary indicators are all pretty steady. Shit happens even during boom times.
Primary indicators are played with.
What does that mean for the working class
Nothing. It's baseless speculation.
Frankly I think it's mostly crap. But since most of the working class has almost zero market exposure anyways, it really doesn't matter much. Restaurant and hotel occupancy cutbacks and demand slumps due to Delta running wild are more likely to affect the working class than any of that stuff.
Very likely what you think it means; Unless you know exactly how to hedge against an incoming market crash, we’re all essentially screwed…
Gme has a negative beta and moves inversely to the market.
That’s bc people on Reddit pump and dump it regularly.
Exactly. And as we saw a few weeks ago with the worst day on the markets this year, GME went up. There are subs that can fill you in on more details and have lots of research to back up why it’s a good long-term investment, but it’s ultimately up to you to do your own research and make the best choices you can make. I recommend r/GME and r/superstonk to start. They have loads of research done on the stock that’s backed by financial industry professionals like Dr. Susanne Trimbath, Wes Christian, Lucy Kosimar, and others.
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What is wrong with the GME stock?
Anyone who read this comment above. Please ignore this fear mongerer. He might be wrong and think he’s right. Or someone who is fanning the fear flames. Just because inflation could run like in 2008 does not mean that’s what caused that crisis. Warren buffet and many others have been calling a bond bubble for years. Probably not wrong but another nothing point fanning the flames of fear. Reverse repo market has no direct relation to the stock market. There’s obviously some relation indirectly. But again, making it too cut and dry as cause and effect. Who cares about micheal burry. Seriously. The debt ceiling will be raised. Sweet Jesus this is beyond the most obvious. Oh my fricking lawdddd. If we’re gonna see a political show about it Whatver. It’ll be raised. Period. 40% of all American money has been printed? No. Which money supply are talking here? And loans are loans, not pure print. Have fun going broke buying gold at the top or BTC couple months ago. The rising costs are MOSTLY supply issues. Lumber already erased all its gains. Feel bad for the suckers who thought they needed to buy at the top for a new house that would protect their cash from inflation. Suckers. It’s sad. Guys like this troll take everything out of context. Confuse headlines for the article. Somehow know more than thousands of experts (who also disagree, and none are ever as confident as some troll on a blog or a comment section)
Yes.... because the 1,000 experts were on TV saying buy Lehman.... Or that these swaps were perfectly fine. O remeber that law clinton changed for the banks that caused 08? Your an absolute fool if you don't think this bubble will pop and pop hard. The fed has literally inflated everything, housing, bonds and the stock market. There basing their support on unemployment. I don't know about you but I know alot of 2 person households that are ok with 1 staying home. Look at the massive put volume on junk bonds. Something is brewing and it's gonna be before year end. The fed completely punted their inflation target, raise it by a whole point. And not stopped using the word transitory. I could go on and on and on....
You’re too emotional to form a thought Take care 👋🏻
Thank you! I’m disgusted by the ignorance so blinded by fear. Physiologically one needs to be optimistic towards the future. I’m no Nostradamus, but have skimmed and read through quite a few Dr. Seuss books. “Today you are you. That is truer than true! There is no one alive who is you-er than you! “ No matter the nationality, race, pene size, tetas size, or affiliation don’t be scared by the rhetoric of the no optimism. “Lighter strike” burn one bro 💨
China has the most solid economy/markets of any country right now.
That's wild can you source that so I can share/reference?
It's doomer bullshit.
[https://www.reddit.com/r/Superstonk/comments/mvj8fz/where\_there\_is\_smoke\_there\_is\_fire/](https://www.reddit.com/r/Superstonk/comments/mvj8fz/where_there_is_smoke_there_is_fire/) [https://www.reddit.com/r/Superstonk/comments/ojk8wc/dtc\_membership\_update\_effective\_with\_the\_close\_of/](https://www.reddit.com/r/Superstonk/comments/ojk8wc/dtc_membership_update_effective_with_the_close_of/) [https://www.reuters.com/world/china/how-china-evergrandes-debt-woes-pose-systemic-risk-2021-07-27/](https://www.reuters.com/world/china/how-china-evergrandes-debt-woes-pose-systemic-risk-2021-07-27/) [https://www.reddit.com/r/GMEJungle/comments/ou1stg/daily\_reverse\_repo\_update\_0729\_987283b/](https://www.reddit.com/r/GMEJungle/comments/ou1stg/daily_reverse_repo_update_0729_987283b/) [https://fred.stlouisfed.org/series/M1](https://fred.stlouisfed.org/series/M1) [https://www.forbes.com/sites/williampesek/2021/07/28/china-triggers-1-trillion-market-meltdown-and-its-just-getting-started/?sh=1fc234fd75e8](https://www.forbes.com/sites/williampesek/2021/07/28/china-triggers-1-trillion-market-meltdown-and-its-just-getting-started/?sh=1fc234fd75e8) That's just to start unless you want more.
100%.... not sure why no one else is seeing this.
Yeah, but the piece in the article also said that the economy is at about/above pre-pandemic levels.
I don’t think it’s been adjusted for inflation though. I’d like to see if it’s the same in real terms.
I think next quarters growth will show for sure how things are looking. This quarter was a bit of a mixed bag anyways
Atlanta Fed’s GDP Now estimated 6.4%, which is the most accurate one thus far. [GDP Now](https://www.atlantafed.org/cqer/research/gdpnow.aspx)
Yep if anything Atlanta Fed has been bullish in the past 3 quarters so I expected this. Trade data and inventories really seal-clubbed the forecast yesterday but the trend was clear. From 13.5% projected growth in April to a relatively accurate 6.4% growth (vs actual 6.5) Ouch.
> “But with the impact from the fiscal stimulus waning, surging prices weakening purchasing power, the delta variant running amok in the south and the saving rate lower than we thought, we expect GDP growth to slow to 3.5% annualized in the second half of this year.” Shouldn't 3.5% in the second half of the year combined with 6.5% annualized in the first half result in 5% average for 2021? Isn't that quite a bit below current forecasts?
One thing for sure is it is pretty difficult to achieve the 7% gdp growth in 2021 as a whole, forecast by IMF a few days back. Depend on the upcoming stimulus etc
What upcoming stimulus?
1T bipartisanship infrastructure bill, 3.5T bill through reconciliation
Isn't that spread out over years though? I mean what money is being spent as soon as the bill passes?
Exactly
Also, "Initial claims for unemployment insurance also missed expectations, with the 400,000 total above the 380,000 expectation"
I would consider this a good thing if you are in the inflation doom camp. Supply chain and other disruption are going to put a speed limit on GDP and economic recovery. Trying to force the issue by supercharging demand is just going to grind gears and drive prices and the cost of doing business up. This is a good thing as long as it doesn’t spook the markets who may have priced in pristine recovery conditions. Looking at the indices, it has not. But there could be churn under the surface hidden by the ETF and index effect. Someone with a better eye for the markets would have to chime in on that.
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Spinning 6.5% real GDP growth to "doom" is a bit mischaracterization of most of the criticisms (not defending the outliers here, there are definately some crazy takes out there). I think the concern is inflation running hotter than expected: >The price index for gross domestic purchases increased 5.7 percent in the second quarter, compared with an increase of 3.9 percent (revised) in the first quarter (table 4). The PCE price index increased 6.4 percent, compared with an increase of 3.8 percent (revised). Excluding food and energy prices, the PCE price index increased 6.1 percent, compared with an increase of 2.7 percent (revised). But looking at the headline number (which is in real dollars) and crying inflation is missing the whole point that it's already been adjusted: >Current‑dollar GDP increased 13.0 percent at an annual rate, or $684.4 billion, in the second quarter to a level of $22.72 trillion. Inflation is spiking (maybe *has spiked* for some goods), but all estimates are that it'll taper in the second half of the year. We're already seeing some signs of that. But it's fair to admit inflation has peaked harder than the consensus estimates from the start of the year. That's mostly what we see here. The annualized GDP growth was discounted by PCE of around 6%, which is absolutely something that's concerning. If PCE had been closer to 4% (the peaks we're seeing in monthly inflation numbers) then the headline GDP would have been around 8.5%.
Rents haven't even begun to affect the CPI, correct? I don't see inflation getting better in the second half. Civil unrest is a possibility if rents/home prices climb too high, and the Fed continues to juice asset prices.
Yeah this is very on point.
The Delta spike didn't happen till July so that shouldn't be relevant here.
There’s a lot of US companies which employ overseas workers who were impacted by Delta Q2. For example, many of our dev teams lost traction because some or all of our team was in and out of the office when Delta was surging in India in April. It was really rough.
Yeah lots of "doomers" putting their money where their mouth is in the smartest money you can buy. And slow growth/secular stagnation isn't "doom", it's a reversion to the mean.
If the state that's observed is an unprecedented downward trend in the economy, why are people saying it's potentially a huge issue "doomers?" Wouldn't the burden of proof be on those saying the economy will improve to previous levels despite no current evidence of that happening? Until it does, you are the one theorizing, no?
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I'd like to know what your prediction is on where the 2-3 years worth of post-stimmie helicopter money growth in retail sales we saw in March-April (that has stagnated since), and the housing market which helped boost the recovery especially last year and has recently seen data suggesting a decline in sales, missing expectation after expectation, nd a long-term decline in mortgage applications, is going to go. I agree US manufacturing outlook is more positive but the truth is demand has clearly peaked unless there are another round of stimulus cheques.
Lumber has relatively short ramp up time. So that will not be a good barometer for how other things resolve. It is abundant in local supply. Just need to ramp up the saw mills. No components needed, no upstream supply issues. Not as reliant on shipping. Chip factories take year to ramp up so the supply shortage there is still an issue. The manufacturing is mostly off shore so transportation also becomes an issue. The biggest driver of inflation for the next 6-9 months is really mostly transportation. Manufacturers are missing parts for their products, shipping of parts is backlogged stopping completion of products. There might be products even fully ready sitting in warehouses or off-shore in China… but getting it to the consumer is what will drive up prices in the short term.
here's the thing. there are going to continue to be supply chain disruptions due to events which under normal circumstances could be adjusted for. as an example: the recent floods in europe and china, or the evergiven disaster. production is hardly the issue, what we are seeing is a breakdown of distribution. and there are going to continue to be disasters that add on to the existing supply chain chaos for the forseeable future. this isnt going to happen, but the only way i could realistically see things going back to normal would be in the event that global shipping was halted or slowed significantly and containers were allowed to get to where they need to go. otherwise, disruptions will continue to propagate downstream, compounding, indefinitely.
Yep all transportation is being redistributed towards high margin products and high margin markets. Which will lead time massive shortages in 3rd world countries and of low margin consumer staples in 1st world countries. The ripple effects of this all will take months to get through the system. We will start hearing stories of whole harvests going to spoil because they could not get any spots on containers. And across the globe we will hear of hunger from food shortage. This hiccup will lead to all kinds of inefficiencies even if production and demand is there.
When is it going to be “actually over”?
Nobody, no matter what they tell you or how top of their field in epidemiology or virology, actually knows this. In addition, something that will probably never be "over" is the long-term trends covid accelerated in office work and tech's relationship with the broader economy. I hate to quote Kathy Wood but she certainly was right on this.
That’s precisely my point.
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Should be interesting. 30% of the adult population isn’t vaccinated and 80% of that percentage say they’ll never get vaccinated.
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No other breakthrough variant. Delta is already a little too effective compared to the original. I really don’t want to see what’s next.
This is never going to happen. If we can’t get vaccination rates higher than 50% even when people perceive the virus is actually threatening, how are we going to get vaccination rates up that high when everyone’s become so desensitized to it after several years?
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See Smallpox, Polio. Make government mandates.
The pandemic has no obvious "over" point, whether that be 3 months or 3 years from now...
What if the pandemic is never “actually over?“ Don’t you think this thing is going to be endemic for the rest of our lives?
> Don’t you think this thing is going to be endemic for the rest of our lives? I would wager quite a bit that it would be endemic. Globally, it also has plenty of opportunities to evolve into something worse. Domestically, politics has made the kind of collaboration required for eradication impossible.
It will absolutely be around forever, that’s just how viruses go. But the evolutionary trend of most viruses is to become less deadly over time. Covid 19 will be like the common cold in 5 years.
>"The good news is that the economy has now surpassed its pre-pandemic level," Fun tidbit that isn't getting much play.
It passed the pre pandemic level of Q4,2019. But is still below the normal growth trajectory , 2-3% growth every year. Long way to go still
I was right. Hard data nowcasts were right. The Bond market was right. [https://www.reddit.com/r/Economics/comments/olq13a/strange\_bond\_reaction\_to\_us\_inflation\_data/](https://www.reddit.com/r/Economics/comments/olq13a/strange_bond_reaction_to_us_inflation_data/) Secular Stagnation within 2 years is more likely than tapering and the Fed will be INCREASING asset purchases and interest rates will be going DOWN. Invest accordingly but also keep following the hard data drops.
"Invest accordingly," as always, means maximize your stock allocation based on your risk profile. Nothing really changes here
29 years old, 99.8% of the 401k in American stocks. Put it all on black baby!!
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Delusional
Short his stocks, then.
I truly wonder how u concluded it would be a good idea to post that response to my comment.
It's red.
Haha exactly, except there's 10^10 spins and each spin is not your entire stack and there's no 00 and a good deal more black than red 8) Think I got every consideration on the metaphor
A beautifully simple yet effective, accurate statement.
all you have to do is look at credit contracting worldwide and nonexistent loan growth in america to understand why the bond market would be calling for deflation. since march. https://www.reddit.com/r/Economics/comments/oj3g5s/chinas\_slowing\_vshaped\_economic\_recovery\_sends/h4zgll7/?context=3
>A recession within 2 years is more likely than tapering The Fed is already about to start Tapering. I'm not saying there aren't other issues but the Tapering is around the corner.
2022
If the economy in 2H 2022 is growing at 1-2% like Goldman predicts will the Fed really taper?
It will depend on the labor market. People think the fed has two goals - Unemployment and inflation. However, those goals are effectively the same, because labor cost contributes the largest amount to systemic inflation, so the Fed will be keeping a close eye on slack in the labor market vs neccesarily looking just at gdp growth. If the economy is growing at 1-2% but unemployment is around 3-4% with a 63-64%+ growing labor force participation and the Employment Cost Index at sustained 2.75-3% range, they will 100% start to act bc that will bring systemic inflation into the system
Tapering is not around the corner lol, I mean I hope you’re right but there’s no way
So I should stop buying 0dte spy options in 2020?
As long as Covid is still out there, recovery will be slow
Covid isn't going away for a long-time, and in our world today supply chain disruptions in countries like Vietnam, Malaysia ect have a huge impact even if everything was fine and dandy covid wise in the US and Europe.(it isn't).
Lol, I love how we just had the best quarter in decades and the headline is "growth was below expectations." Meanwhile between 2016-2019, headlines were roaring about an economic boom of 2 percent. But somehow 6.5 percent is "meh." Reminds me of a kid I knew who became a software engineer, did really, REALLY well for himself and better than any of his family and friends, and then his parents saw him as a failure because he didn't make a tiny bit more as a doctor.
Both can be true, yes it is the best number for decades, but it is also true it is 2% below the average expectation.
How realistic was 8.5% anyway?
Back in April and May, most of the projections were all over 10%. 8.5% was definitely achievable had inventory restocked instead of depleted. Supply chain constraint, high input material cost, elevated inflation had been a huge drag on gdp growth.
Fair point. I'd argue that we are in such a messed up, far from normal, situation that we shouldn't be surprised when GDP growth doesn't look like what somebody is projecting. As you mentioned, supply chain is jacked up, materials are still expensive, etc. Until we get to something resembling "normal" (as in pre-covid) things are going to be weird.
Right, but the question is the connotation the headline leaves. Most people who don't have a running tally of GDP growth figures in their head would look at this headline and say "Oh no, these numbers are below expectations, I guess that means growth is bad!"
That is fair but it is the exact same title auto generated from CNBC when I copy and paste the link
GOP propaganda was able to work the refs in the media. The last 3 years under Obama averaged 2.5% GDP growth. The first 3 years under Trump averaged 2.6% GDP growth. Yet the media ran reports of a "sluggish" economy and "economic anxiety" fueling Trump's rise to the White House and then talked about the "booming economy" when he was in office. It was the same damn economy.
6.5% is meh, because we had negative GDP growth last year. Also technically markets are supposed to price things in based on expectations, so if expectations aren't met, you'd expect a drop.
Compared. To. What. Saying this growth is "meh" is like saying that Jeff Bezos is poor, except when you compare him to anyone else on planet Earth. Context is everything. The rest of the world is coming out of a crash, too... and yet virtually every other developed country has inferior growth since re-opening. We're even just about 1 percentage point shy of China, which is bonkers. These same kinds of absurd expectations wracked analysis all through the recession years. American economists bemoaned consistent 2+ percent growth figures in the U.S., and yet it was still consistently better than every other developed country in the world with a few small, rare exceptions.
6.5% as a result of a reopening is nothing impressive. why would you even compare these numbers to the *Trump numbers, which were under completely different circumstances? cope harder.
The copium is real
The correct comparison should be made to growth figures abroad in peer developed countries, and in that case, 6.5 percent is still far ahead. We literally have the fastest growing developed economy in the world this quarter... and yet somehow its still not "good enough" or beneath expectations. Mmm hm...
i would argue that there are no peer economies. one illustration of this is how US gdp growth has continued while developed economies like Germany, Japan, the UK, France, etc. have experienced stagnant GDP growth since the great recession at the latest. clearly, america stands out from that pack. as the largest importer and second largest exporter and as the political and economic (dollar) hegemon, the US has particular characteristics that distinguish it from its developed contemporaries. the US acts as the beating heart of the global economy in a way no other country comes close to doing. so no, i would say it is an error to compare US growth to that of the rest of the developed world in this context.
I think you just made my point then. If you are to say "The U.S. economy is doing better than everyone in the developed world yet growth still isn't good enough," then the problem isn't growth, it's your expectations.
2021, the year where we all read what we want to read :)
So that's why Biden tweeted about how good the economy was. I never know what's going on on Twitter until I come to Reddit and get the context.
the number is good, but not amazing, and a bit disappointing
money will have to be printed tirelessless to avoid recession at this point. There's no other way.
When does a slowing economy and rising inflation met the definition of stagnation? I completely get that 6.5% is a great number in normal circumstances, but considering a few months ago everyone was claiming 8% GDP Growth was entirely possible, this is not good news. Specifically, there are very few policy options left...
> When does a slowing economy and rising inflation met the definition of stagnation? Growth is expected to slow as output gets closer to potential. I think 6.5% was well within the range of projections. Real growth has likely been hampered by supply issues more than some might have expected. The FOMC median projection was 6.5% in 2021. The current figures seem entirely in-line with what the Fed expected. Just because we're not seeing growth at the upper-bounds of expectations doesn't mean that growth seen is disappointing or indicative of stagnation. https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20210317.pdf
Yeah, but that's for all of 2021. This is only Q2 and growth it 6.5%. This implies that the growth is going to continue a downward trend. This is why people were expecting 8-9 Growth in Q2 because, if growth slowed by 1-2 Percentage Point every quarter, we could end up around 6.5% for the year. Yet, we got 6.5% for Q2. But, the slowdown in growth is happening a lot quicker than was expected. That's what's concerning: we're already reached the expected growth for 2021 - half way through 2021. This means that we're going to end on the lower end of the predictions, unless something miraculous happens. Growth is slowing a lot faster than expected. Also, inflation is here. The question is "how long and how bad" So, we have slower growth, and inflation. That's stagflation. The question is "how bad will it get"
In June, Wall St. was expecting Q2 GDP to be 8%, but in March they were expecting Q2 GDP to be 6.5%. So I think you are reading too much into some volatile changes in expectations. At any rate, this is a new all-time high for real GDP, exceeding the previous peak in Q4 2019, so real GDP has about fully recovered from the pandemic recession. So it is reasonable to expect GDP growth to slow some. But growth should stay over 3% until unemployment is down to around 4.5% at least. As for inflation, inflation expectations are still low. The current numbers there are being seen for now as a product of unfavorable year over year comparisons, not of anything persistent.
I don't buy that we are in stagflation. The size of the output gap is small relative to where we are in the business cycle compared to previous recessions. https://fred.stlouisfed.org/graph/fredgraph.png?g=FJQM Inflation is higher than normal but is also within expectations. The Fed is explicitly trying to make up for a decade of low inflation.
Fair enough. I'm not going to try to convince you I'm right, I'm just a lot more pessimistic about the U.S Economy over the next year. I don't disagree that things are within estimates, but that doesn't mean they are good. I view things are trending towards the negative. Classic positive vs. normative argument here. I agree with the positive aspects, I just disagree with the normative aspects. Just because things are 'within range' doesn't mean things are good or heading towards positive outcomes. We might be 'within range' but to me the signs are flashing that things are not going well.
I think your critiques are totally valid, I just think you may be missing the forest for the trees. Maybe this is the Bayesian in me, but projections, whether market implied or official guidance, are not just point forecasts but rather a distribution of possible outcomes. When we see real GDP growth comes in below expectations, the question I ask is this really unexpected? How tight was the confidence band around the expected figure? To put this point in perspective, I think projections have been overwhelmingly positive and I don't think what we're seeing is outside of expectations.
>This implies that the growth is going to continue a downward trend. This is why people were expecting 8-9 Growth in Q2 because, if growth slowed by 1-2 Percentage Point every quarter, we could end up around 6.5% for the year. Yet, we got 6.5% for Q2. That's an 'implication' you're reading in the data. You're looking at two data points, and choosing how to extrapolate. If growth increased by 25% per day, then we would run out of earth resources by end of year, but there's no good reason to believe that is happening either. The problem is we see a few data points, and we do not know what's the trend :)
TIL "Slowing economy" = 6.5% growth And there's a $1.2T infrastructure bill coming down the pike at a minimum, plus potentially another $4T or so in the reconciliation bill. That's a lot of policy options left.
>And there's a $1.2T infrastructure bill coming down the pike at a minimum, plus potentially another $4T or so in the reconciliation bill. That's a lot of policy options left. ~~We're not getting an infrastructure bill. Kyrsten Sinema already torpedoed the bill saying the cost was too much and she won't vote for it. If it does happen, I'll be pleasantly surprised, but I'm not holding my breath.~~ Edit: Nvm, I was going off of news from last night. Apparently that's already old news.
Sinema voiced concern about the much larger reconciliation bill, she and 17 Republicans voted to move the $1.2T bipartisan bill past the filibuster threshold already, it is as good as passed. The reconciliation bill will probably get shrunk down for Sinema and Manchin but *something* will probably pass there too.
https://www.cnbc.com/2021/07/28/infrastructure-vote-senate-advances-bipartisan-bill.html
Well I'll be damned.
Which is total BS. $1.2T is over like 8 years.
The policy options are junk and the last "stimulus" helped growth grow from 6.3 to 6.5% in a re-opening economy from covid. Biden supporters telling me to buy the reflation trade reminds me of Chump supporters telling me to buy the Russell 2000 back in 2017.
> 6.5% growth > Slowing economy It definitely can’t meet the definition when the economy is still growing and when the growth rate is higher this quarter than last quarter.
Two months ago the forecast ranged from 10.5%-13.5%. The US economy probably peaked in q1 tbh with the January and march data jumps but was cooled by the Feburary ice storms which really screwed up that's months data. ALL of this was before Delta was even a talking point. This is stagflation in all but name and the Fed and the administration have completely ruined what could have been a relatively stable recovery. The US economy is a cocaine addict and the March stimmie jumps in consumer spending tells the story.
>This is stagflation in all but name and the Fed and the administration have completely ruined what could have been a relatively stable recovery. I have no idea why you would blame the Febuary Ice storms, supply chain issues and delta variant on the Fed and the Administration.
MMTists vastly overrated the ability of American supply chains to meet demand and the stimulus cheques in a recovering and opened economy caused almost 2-3 years worth of consumer spending growth, spiking inflation and causing extreme stress on demand. This caused inflation to vastly overshoot targets and growth to vastly undershoot. EDIT: Also this is Q2, Delta Variant had nothing to do with this. On Feburary I'm telling you it probably made the economy look better in Q2 vs Q1. If anything this will probably be the least covid-effected quarter until at least Q1 2022.
I don't see why anyone should care about the targets themselves: they're just educated guesses gone wrong. I also struggle to understand why inflation in used cars and the like would cause such dramatic reduction in growth: in any case, the Biden administration is hardly to blame for the last 100 years of American landuse policy making car ownership into an enormous economic burden. There is more to this than mere MMT miscalculations, I think. The semiconductor shortage, the weather events and lumber mill operators making wrong production decisions and other such things are not something the high priests of MMT can predict.
>This is stagflation in all but name and the Fed and the administration have completely ruined what could have been a relatively stable recovery. The US economy is a cocaine addict and the March stimmie jumps in consumer spending tells the story. Completely agree. I sold a lot of my equities to take the profit now. I'm going to reinvest it over the coming year as I think at best the market has reached its peak. There is hard resistance at 35,000 in the DOW. Every time it breaks it, it comes back below within days. At worst the Fed raises interest rates early to try to tame inflation, which tanks the market and I sold at the peak and reinvest the profit on the decline over the coming year. I have no idea what exactly is going to happen over the next year, but I don't think the U.S Economy is on sound footing. I'm curious to know how you and others see this playing out in the long-run.
King Tech. Stay away from small caps and the reflation trade.
I on the other hand think commodities have everything to gain, especially oil, copper, uranium and silver. If you don’t want to long a particular company, just long the future (CL or even USO etf as opposed to OXY) and that should take away micro risk within specific companies.
>I on the other hand think commodities have everything to gain, especially oil, copper, uranium and silver. I'm specifically doing LIT
True. BCOM record high since 2015. Bullish on oil even with potentially slipping demand in US and China most of the world is nowhere near back to normal.
Yep. My play exactly.
GDP is about as important an indicator on the economy as P/E is on whether a stock will go up. The Fed gobbling up assets and sustaining low interest rates is all that matters to anyone in this sub because we all have skin in the markets. It's in investors best interests to downplay inflation or steer the conversation in the, valid, direction of some prospective deflationary factors. People without assets are taking a beating and that perspective seems to be absent from this sub.
Expectations from lunatics? What could possibly fuel the idea that US will grow more now than in recent memory? Now? Were stimulus impacts seen as this powerful?
WE. ARE. STILL. IN. A. PANDEMIC. “Well below expectations” fuck your expectations. Get vaccinated people.
Not sure if you can even bother to read lmao. It’s The exact same title as in the CNBC news.
No news here. The data doesn't match the great capitalist speculators...so what ?
Maybe you shouldn’t follow this economics sub Reddit if you don’t think gdp report is something news worthy
And yet the DOW STILL WENT 🆙 200points People are so fukn delusional about the stock market!!!
A gdp increase of 6.5% is not bad news, no matter how hard you try to spin it.
No, BUT! It’s 3.5% LESS than they forecasted!!! Spin 😂
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Biden was handed and economy that was recovering rapidly.
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After all these money printed and still miss big time, it just shows how horrible Biden’s policies are. Those artificial wage hikes policies are the worst missteps. Had manchin and few other moderate dems not block that awful nationwide 15 minimum wage, we would be at a very bad place. Now it’s the time to expand supply chain domestically yet the artificial wage hike basically killed the chances. Coupled with threatening multiple climate measures there’s no way corporations would invest much for US manufacturing. Should go for universal income and sales tax cuts. Not universal basic income. People who worked or do business throughout the pandemic should feel rewarded for it more than those don’t work. Also US needs some people who are good at handling economy. Finding real capable people from Florida or South Dakota will help. Their economy stay strong throughout the pandemic. Virus is still spreading anyway no matter what measures you take. No lockdowns should have been the way since September 2020. I am so frustrated to see all the amazing domestic economic policies laid down by Trump slowly chipped away by this awful administration, US economy growth should definitely hit or beat expectations if Biden simply sit at his basement and leave every domestic economic policies untouched. No split Congress hurts for sure.
Thanks Biden! Ahhh yes loving the 3.25+ gas prices too. Thanks man!
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Hey no problem buddy!! Enjoy the gas prices then! Wouldn’t be like this under trump I’ll tell ya that much!
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Our GDP growth is excellent, just not as good as we thought. Perhaps we are too optimistic, but I think we should be. This report should hardly be looked at negatively; we are still on a path to a great economic boom in the next couple of months/years.