So are we in a recession yet? I was told we were in a recession 6 months ago.
Where’s the hard landing? Where’s @jack’s hyperinflation? When will doomers stop being easy marks?
https://www.marketplace.org/2023/05/25/decline-in-corporate-...
https://apnews.com/article/off-charts-earnings-shrinking-58f...
https://www.axios.com/2023/05/08/us-labor-shortage-older-wor...
https://www.businessinsider.com/baby-boomer-retirement-surge...
TLDR "Soft landing" accomplished (ie no material unemployment required to cool inflation to target).
https://www.axios.com/2023/06/15/fed-rate-hikes-economy-soft...
(commercial real estate and zombie enterprises still going to get hit hard with benchmark rate being held where it is, but that is a slow train wreck over the next 1-3 years as debt hits maturity walls)
Where we are right now is an unhealthy stasis with inflation well above 2%. And low unemployment due to a disabled workforce.
All they are doing is delaying the inevitable. If inflation is to go down anywhere near 2%, then the Fed has the raise rates.
https://www.nytimes.com/2014/12/21/upshot/of-kiwis-and-curre...
https://www.nytimes.com/2023/03/24/business/inflation-federa...
https://fivethirtyeight.com/features/why-the-feds-want-2-per...
https://seekingalpha.com/article/4531829-older-workers-propp...
> And high unemployment due to a disabled workforce
Wut? Please prove this assertion wrt the use of the word "high." [1] That's arguably a call for stronger social safety nets [2], not more disabled employment. At least a lot of these folks are able to be on Medicare ("Half of all persons with a disability were age 65 and over, nearly three times larger than the share for those with no disability.") and Social Security.
I agree that 2% is too low, but the only way to credibly change the number is prove they take the number seriously by getting back down to 2% before they increase it.
Inflation only serves to create profit for industry. The only inflation target I propose is 0%.
Just think about it, why don’t they consider a 0% inflation a stable economy? And why is 0% inflation a bad thing?
Low inflation is good for savers, but they'd rather have people invest money than sit on it. Inflation is a punishment for people who take their money out of the system.
The Fed aims for a gentle inflation to nudge people into buying stuff now rather than putting it off until tomorrow. The 2% figure is, very roughly, the amount of inflation that matches the expected systemic unemployment under Okun's Law. ("Laws" in economics are, of course, much less solid than they are in physics, but it does mean there's a model behind it and not just a guess.)
I would say, that’s a good thing actually, considering the state of the climate.
We've managed to subvert those limits in the past. Technologically, we could do that with climate change as well, though socially and politically that's much less feasible. That could well mean that we reach the limits of exponential growth sooner rather than later.
That raises an awful lot of questions that traditional economics is not prepared to answer. And a lot of people aren't going to like the answers.
Now would be a fabulous time to make that switch, since now is one of the few times where this shift in policy wouldn't result in a switch in practice.
Sorry, that meant to say “high employment due to a disabled workforce”. Text to speech error.
I don’t know opinion about the 2% rate, it’s just wet the Fed names for. They’ve said it over and over again that that’s the goal. And you can say it’s made up butt inflation at 4% is unsustainable when wages aren’t rising at the same rate. And when wages do you start to rise?
When workers organize and unionize, which they are not doing fast enough (imho) considering the leverage available to them (due to structural demographics previously mentioned).
That’s my point when inflation, rises and ploy is unionized, and we just go up. And then wages go up there’s less profit for the company so either there’s an economic downturn or there’s inflation again. So the people who control the economy are trying to balance this level between corporate profit and work or revolt. And that has been the so-called 2% sweet spot.
>Compared with historical averages, the rising import prices and profit parts replaced labor cost as the main counterpart to inflation over the past two years.
The paper is optimistic that labor costs will "catch up" as it always reacts more slowly but I honestly don't see much left in terms of negotiation power anymore and I think this new reality is seen as a rare opportunity to be cemented.
[Political dimension: Paradoxically, more votes will the go to (extreme) right wing parties which historically always endorsed "authoritarian corporatism" like in the case of Melloni in Italy, now. A more "socialist"/"solidarity"/"union" push would be understandable instead the sentiment is hijacked in a spectacular fashion by the "right" and the "left" is successfully discredited as upper middle class obsessing over "identity politics" and depicted as exuding an all permeating suspicion of the worker's class/lower classes in being susceptible to subliminal racism.]
[0]https://www.imf.org/en/Blogs/Articles/2023/06/26/europes-inf...
>Why doesn’t the Committee accept the two-quarter definition?
>The Committee’s procedure for identifying turning points differs from the two-quarter rule in several ways. First, we do not identify economic activity solely with real GDP, but use a range of indicators, notably employment. Second, we consider the depth of the decline in economic activity. Recall that our definition includes the phrase, “a significant decline in activity.”
"The GDP decrease in the euro area is the second consecutive quarterly contraction, which means that the euro area economy is in a technical recession."
https://ec.europa.eu/eurostat/statistics-explained/index.php...
All a bit confusing to the layman!