[1] https://www.bea.gov/news/2022/gross-domestic-product-second-...
[2] https://www.macrotrends.net/countries/USA/united-states/gdp-...
I mean, the Fed's goal right now is basically to slow wage growth so that average people are no longer bidding up the price of our limited supply.
Maybe somebody smarter than me can explain how these two correlate lol.
What would be an issue is the labor participation rate decreasing, which it is, but it may be unavoidable due to things like aging demographics. That means fewer workers supporting non workers, and hence less supply of labor to be distributed amongst everyone (assuming it is not offset by gains in automation).
I think this will be the government’s real problem, as there is no quick fix other than opening the immigration doors.
“Real average hourly earnings decreased 3.6 percent, seasonally adjusted, from June 2021 to June 2022. The change in real average hourly earnings combined with a decrease of 0.9 percent in the average workweek resulted in a 4.4-percent decrease in real average weekly earnings over this period” [1].
But it can be negative for higher income groups and positive for low income groups simultaneously.
Certainly not academic, but I also do not think national statistics captures the entire picture. The nominal wage is also not the entire wage, as quality of life at work can be going up which is also a type of wage.
People can be earning $40k per year, but having to do less work in prior years, for example. Or no longer having to work weekends or evenings or nights.
Either way, the desirable changes for labor sellers would be a reflection of the change in labor supply v labor demand.
Wages are increasing, that's one of the inflation drivers people are complaining about.
> What would be an issue is the labor participation rate decreasing, which it is
Not per FRED: https://fred.stlouisfed.org/series/CIVPART It's quite clearly still rebounding from the covid shock. I think you're trying to say that the long term trend is clearly downward. But the subject at hand is the immediate economic environment ("strong labor numbers", "hiring freeze", etc...).
And clearly there's nothing wrong instantaneously with either participation rate nor wages. Those numbers are in fact good, not bad.
Short version: "inflation" is not remotely the same thing as "recession", which seems to be the point you're trying to make. If your only evidence for an economic slowdown is prices and not production or consumption, you're likely confusing factors.
Clearly the truth is that the labor market remains strong. Most people are working. Most people have multiple choices in jobs. Most people are making more money (yes, in nominal dollars) than they were last year. Those are all signs of a healthy economy. They are not the only signs of a healthy economy, and there can be other aspects (like inflation) which are less desirable[1]
[1] Though probably 80% of the people who like to yell about it don't really understand it well. Inflation, by reducing the size of existing investments and debts (i.e. "stuff wealthier people have") relative to the economy as a whole (i.e. "wage levels for everyone"), acts naturally to reduce income and asset inequality. It's not entirely a bad thing.
And the other point, which you skipped, was that this was a digression anyway from the upthread discussion about whether or not the labor market indicators are "strong" or not. And they are: wages are tracking labor demand and growing at the same time participation is growing. That means the market is operating well (and, FWIW, that typical models would expect wage growth to continue to match inflation, as it generally does in functioning markets).
How can you equate these two? Couldn't strong labor numbers also be indicative of an economy in turmoil, forcing many people who no longer had to work back into a job to get by? I guess what I'm trying to say is, shouldn't we be taking a look at the data holistically instead of nabbing one good data point and using that to promote a narrative? Inflation, COL, real wages, unemployment, and many other factors all contribute to the overall picture. Why aren't we using all this data instead of focusing on unemployment only?
All of this all of it is just an attempt to measure if people "feel good" about how things are going, or feel bad; and the general consensus seems to be "things aren't great but they're not horrible ... yet".
The other thing to remember is that lots of economic reporting is 'standard spherical cow' type - inflation may be skyrocketing in the exact things that do not affect you - if you work from home in a house you own on a fixed mortgage, then perhaps the gas prices aren't directly affecting you.
If you're a independent trucker renting, then they hit much harder.
Nope? For most people Year/Year and also over the last quarter, real wages have gone up. It is only for the most highly compensated workers (top 10% or so) that wages have not kept up with pricing. [0]
My link shows that real factor income for all but the top 10% of earners is up which includes wages and capital income.
Your FRED link will have to contend with the fact that those most likely to be unemployed at the start of the pandemic are lower earners which is going to shift up the wages for 2020.
Because the other side of that is that there exists sufficient and growing demand for labor to accept the people wanting to sell their labor.
So in answer to your question, yes it continues to confuse me when people try to equate employment numbers with the overall economic status of a country. You don't take any number in isolation, you look at the data holistically, and sometimes you have numbers that seem to be at odds with one another. When that happens, it requires a deeper investigation to see what's truly happening instead of taking the number you like better and using that to promote your narrative.
[0]: https://www.statista.com/statistics/527418/sweden-monthly-un...
[1]: https://www.globalcitizensolutions.com/sweden-best-country-f...
[2]: https://www.bloomberg.com/news/articles/2022-07-28/swedish-e...
What do you think GDP actually measures?
A hurricane that kills 1000 people increases GDP for instance.
GDP per capita is what you're referring to?
Disasters are great for GDP as a metric on a medium term scale. Not so much for people or wellbeing. This is basic econ stuff.
https://mronline.org/2022/05/26/u-s-federal-reserve-says-its...
In any cases total wages (well, income) are equal to GDP so I don’t think anyone is against an overall rise (in real terms).
They get directly compared when getting a mortgage though - typically there's affordability criteria including the ratio of income to mortgage amount.
If you have decline in GDP, but no unemployment, it may be due to supply issues, increase in friction and other factors (i.e. decline also of potential GDP).
There is lots of leeway in there for defining a recession to be whatever you want to be. However, I think a GDP contraction of 1% (and decreasing) combined with robust job growth and increased spending would not classically qualify as a recession.
It's clear that the Fed is attempting to slow down the labor market and kill demand. Combine that with ongoing supply chain issues and it's not clear to me whether we are entering a recession or that there is transitory pain from war in Europe and sudden bumps in borrowing rates.
Additionally, with inflation at such a high level (9% or so), the last two quarter's real GDP growth estimates (-1.6% and -0.9%) are small percentages compared to the size of the error bars on the required inflation adjustment to compute the real GDP. Computing inflation is tricky and requires a lot of hand waving and boiling down different price changes across different sectors of the economy to get a single number, and if the calculation is off by even 1% (i.e. inflation is actually 8%), then the real GDP growth for last quarter would be positive at 0.1%.
This is also happening at the same time that the US dollar is getting increasingly valuable vs most foreign currencies, so measured in terms of foreign currency value the US real GDP is still increasing, which just compounds the weirdness.
Putting all of this together, I don't think the term "recession" is a good fit.
But again, what does it even matter? Seems like people are only arguing about this to score political points. If you think we're in a recession, you might be right. If you think this is transitory, you might be right. If it weren't an election year we might not be having this conversation at all.
[1] https://www.conference-board.org/topics/consumer-confidence
When was the last time the rule of thumb was overlooked?
And U6 unemployment is raising, suer U3 is not, but U3 is a terrible statistic in the first place.
Anyone saying the job market is "robust" is cherry-picking data
We are in a strong labor market in the sense that demand continues to outstrip supply (although this is weakening for higher paid workers in the top ~10-20%) but there has been a negative shock to supply from covid.
Another unusual thing is that even though real GDP is down, nominal GDP is still going up: https://fred.stlouisfed.org/series/GDP
I suspect that if gas prices had started coming down earlier it would've brought inflation down enough that real GDP for Q2 would've been slightly positive.
Put yourself in place of a 30 year old who has only known a world where you're a highly in-demand whatever "in tech". You've never seen a day since you graduated where you're not flooded by recruiter emails. You've never worked a job that isn't 30 minutes of work and then the rest of the day is posting "day in the life of a FAANG employee" Tiktoks or being a paid activist.
What's coming is nearly unimaginable. At some level you know it's theoretically possible, but before your eyes even accept that reality you're going to go through some painful stages, beginning with denial.
I don't fault anyone, especially anyone who graduated in '10 or later for this. I just hope they are preparing for this.
My sense would be that Google has such high $ earned / employee compared to other major tech employers it perhaps has less dead-weight.
In general: Code reviews are strict and long. Style and structure matters more than anywhere else I ever worked. Everything requires extensive testing. You better have a design doc / PRD, some tickets, good commenting, and unit tests.
People will happily point out and roast you for any potential bugs, race conditions, deadlocks, bad style, and sloppy work.
Mediocrity in this regard is not generally tolerated. The standard of development is much higher.
But yes, it's slow. If that's your measure of productivity, they'll fail.
Except it doesn't matter because the goal of a SWE at Google is mostly to keep the ship sailing.
I'm not sure if I am supposed to take these claims seriously or whether they are exaggerations to paint a picture. Obviously this caricature doesn't describe the vast majority of engineers at Google or other "FAANG" companies.
> I don't fault anyone, especially anyone who graduated in '10 or later for this. I just hope they are preparing for this.
The '20 post-covid labor market was weaker for graduates than in '08 [0] and hiring in tech is more challenging.
[0]: https://www.cnbc.com/2021/05/17/why-the-pandemic-might-be-wo...
They've been preparing for doom since they were weaned.
I feel we're about to enter into a situation very similar to the early 90s, and we'll see a wave of pro-austerity politics and a lot of talk about "tightening our belts" -- slashing employee rights and social programs and cutting all kinds of social spending -- which is really about re-instilling labour discipline.
I suspect here in Canada the temporary foreign worker program is about to have the floodgates opened. Employers, especially small businesses, are really not happy about having to pay more than minimum wage, and they're very unhappy about having their authority in the workplace undermined by workers with seemingly excessive bargaining power.
The situation in the US is obviously more complicated by their messed up immigration system.
"Formally"?