U.S. GDP Grew at a 5.2% Rate in the Third Quarter, Even Stronger Than Indicated
cnbc.com
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https://www.nber.org/system/files/working_papers/w21154/w211...
That is, businesses can’t find the needed local workers to expand, and workers lack access to good paying jobs. Remote work is helping, but still, the problem is estimated to have gotten much worse recently with the surge in home prices over the last 15 years.
TLDR: fix the housing problem, and the economy will be able to sustain higher growth.
Whatever the actual percentage, it makes intuitive sense a spatial misallocation of labor and capital will hurt economic growth.
The market will produce houses as cheap and small as people desire, the real limitation is regulation preventing this.
The libertarians and georgists are correct in this: reduce regulation and institute a land value tax and the problem will solve itself.
For this very reason, this stands exactly 0 chance of ever being passed, but it almost certainly a viable solution. It's not like people would just endlessly sit on vacant houses on a large scale.
Your policy would just result in houses being owned by richer people, and more people paying rent. It would reduce house prices, but only the riches people would be buying them and receiving the benefits.
It would fail in a similar way to rent-control. Sure, it makes things cheaper in the short term, but harms everyone in the long term.
But of course this is a fallacy because the value of a house is strictly finite. So we are stuck in an endless loop of bubbles. People buy houses on debt they can't afford until that debt eventually explodes at some point, and the housing market crashes. Then we start pumping it up again. This is also the reason housing prices (as well as education) have skyrocketed far ahead of inflation. The availability of exceptionally high amounts of debt, relative to what people have, seems to be a recurring theme in breaking economic systems on a micro scale. And perhaps we might see such happen on a rather macro scale as well, in the not so distant future.
Read “Progress and Poverty.” It explains in detail why the cycles you describe would be dampened by a LVT.
As for LVT, you can't expect me to go read a book to appreciate your argument. And I'm vastly more inclined to read than average. Owing to that I did at least check out the Wiki on the book. The excerpts section [1] seems to offer an argument that is either false or highly outdated. Any look at San Francisco, NYC, and other places will clearly show that the areas with the highest level of economic development also offer the highest wages, by an overwhelmingly wide margin.
What drives the prices up is not some conniving and far-sighted bourgeois, but rather economic development driving defacto unlimited levels of demand. In a place like San Francisco you can earn $70k for labor that would pay $30k in a less developed area. Because of this you will never have affordable housing, because that $40k delta would otherwise drive everybody over to hoover it up. This is the scenario literally everywhere in the world.
When you look at what few exceptions there are, they tend to not be exceptions. For instance Tokyo is often cited, yet it seems most people still have an obsolete image of Japain in their minds. They've gone through a 30 year period of stagflation, have a shrinking population, and a declining economy. So housing seems cheap in Tokyo by Western standards, but it's extremely expensive by Japanese standards which is where the overwhelming majority of the demand, and thus the price equilibrium, comes from.
[1] - https://en.wikipedia.org/wiki/Progress_and_Poverty#Excerpts
I agree with most of what you say about more developed areas having higher wages. But this is predicted in Progress and Poverty: as a society progresses in terms of increasing land value and increasing productivity (in wages and efficiency of land use) poverty arises because the rents tend to eat up all value so that wages become just enough to survive. The best way to reverse this is to tax the unimproved rents. This encourages housing development (efficient use of land) and discourages speculative land bubbles (since you lose money if you do not use the land or let others use it).
Here in Norway the the general rule is that you can't have more debt than 5x your income, with room for some exceptions. Kinda creates a ceiling for the prices of normal houses / apartments.
Btw curious: I often see sellers in the US preferring to sell to someone that pays cash vs a loan. Why does that matter? Here at least I don't care where the money comes from, I get paid the same.
But I guess things are just very different. As a buyer you wouldn't have a realtor here either, one for the seller is enough. Quite stringent rules on how the bidding process works, the seller needs to pay for an inspection before putting the house up for sale etc.
I don’t like the culture of huge debt either, but pretending solutions like this aren’t arbitrary is ridiculous. We have bankruptcy to prevent debt slavery (except for student loans in the US). We have LVT to prevent speculative bubbles, we just need to implement it.
Bankruptcy screws the lender whereas a land value tax continues a tax on land which the poorest who inherit land can’t pay.
If your debt was going to be cancelled after 7 years you’d of course not make a loan longer than that.
I agree no one would make a loan longer than 7 years under that policy, but I don’t think that would be good for anyone but the richest in society.
If their father gives them a piece of land, now they have to “pay to own” it, what about the recipients who are barely making it?
Agreed that income tax is bad, but not just for the poor; but also land tax is bad. Tariffs or some sort of luxury sales tax would be better. Also reducing the size and scope of govt, but that’s another can of worms. In any case, it’s been nice but I’ll leave the last word to you.
If you can’t afford the LVT, you can either rent the land or sell the land. Both are better for the economy than people sitting on idle land doing nothing of value. In this case I would focus on those barely making it who have no property, and whos taxes effectively make landholder’s assets more valuable through gov infrastructure spending.
Tariffs and luxury taxes have the same problems: they distort markets and in the case of tariffs, make goods more expensive which makes life harder for poorer people. Luxury taxes aren’t significant enough to be very useful, but could be useful in addition to LVT.
This is below the poverty level of $14,580. No-one should be taxed on income anywhere near that level. https://www.investopedia.com/terms/f/fpl.asp#:~:text=Key%20T....
Federal minimum wage is $15,080. I may be missing something, but I believe this means people on minimum wage are being taxed! https://www.monster.com/career-advice/article/state-minimum-....
Don’t misunderstand me. I completely agree with this and would prefer having the standard deduction even higher with higher taxes above it to compensate.
> Federal minimum wage is $15,080.
I know which is why I said “close to”. This also with the assumption that it’s always 40 hours a week and you never get sick or need time off (which would assuredly be unpaid).
Even working 36 hours per week, every week, at minimum wage (which is considered a full time job), would put you under the standard deduction.
And with increased population in these "WFH" areas, other services would spring up to feed the demand of the now locals working from home there.
The only real issue is the inability for small businesses to start near there for cheap, or for regulatory reasons. For example, you cannot run a corner store in residential areas.
Those are compatible problems. You need more workers to expand? Pay them. You'll get them. The jobs that can't (or won't) pay workers more will be the jobs that don't get filled. Those are the jobs that don't produce enough value to be worth paying decent money, and they are exactly the jobs we want to go unfilled.
American GDP growing 30x the rate of China's, incredible!
Copium and GDP for everyone!
Anyone look at PPP or is that metric too inconvenient?
Edit for the downvoters: China’s 2022 GDP based on PPP is $31.5 trillion vs the USA’s $23 trillion. That’s 37% bigger. Source: https://www.worldeconomics.com/Country-Size/China.aspx
China's GDP (PPP adjusted) is ~USD 33 trillion.
USA's GDP (PPP adjusted) is ~USD 27 trillion.
Those are economies' size measures.
it merely shows how much richer americans are compared to the chinese.
A drug is quite often an inelastic good - someone who is dying will, with very high probability, pay the maximum price they could afford for the drug.
https://twitter.com/GameofTrades_/status/1728820920649670923
You're still describing relatively rich people. Those price increases really hit everyone else hard.
Moreover those loans are small fry compared to leveraged investment.
Really?
Fed funds rate was about 2.5% in 2019, because Fed raised rates when Trump took office. Fed funds rate scraped zero in 2020 and 2021.
https://www.pewresearch.org/short-reads/2022/04/20/how-the-a...
Essentially, more people (as a %) are upper income today than ever.
Using dollars spent as a measure of happiness is unfortunately the best we can do (so far).
I’m also unconvinced that obesity is caused by “the economic policies that improve GDP”.
When those objective metrics do map strongly to the subjective metrics, then it's awesome. But the problem is that in practice near to any objective metric can be completely and utterly gamed in, more or less, "honest" ways. Essentially, a government can find ways to increase it without increasing the things that it's supposed to represent. But you can't game how people themselves perceive things without outright lying and fraud.
The subjective metrics would also measure things objective metrics fail on hard. For instance war, as the aggressor or 'backer', is absolutely awesome for near to every economic metric. And national "defense" was one of the big winners in this GDP report. But do these wars provide a subjective quality of life improvement, or deterioration, for people? Basically I don't think the goal of the government should be to provide value to shareholders. That's the point of private industry and capitalism at large. The point of the government is to create a desirable state of life for people living within a country.
Subjective metrics are even easier to game though. Just dope everyone up, or tell them every other country is worse off, or.... And it's harder to prove lying or fraud because it's all subjective ideas, whereas when you have an objective number then at least if someone actually lies about the number that's provable.
> And national "defense" was one of the big winners in this GDP report. But do these wars provide a subjective quality of life improvement, or deterioration, for people?
The point of defense spending is so that you don't get invaded. Getting invaded tends to cause a major deterioration in quality of life.
It’s possible to call out externalized costs (eg greenhouse emissions, many plastics) and be optimistic about our ability, as a species, to produce more.
In some countries people seem totally disconnected and frustrated (France, Italy come to mind), in others people feel a personal responsibility to make their country a success (Scandinavian countries come to mind)
That to me seems a better indicator for the future
https://www.reuters.com/world/china/chinas-q3-gdp-grows-49-y...
There's a reason why Xi Jing Ping came begging for relief in APEC San Francisco. Which he got none.
He was trying to get American business to come back to China. Instead, not much deals happened. Furthermore, it was rumored that Goldman Sachs bought a seat at dinner with Xi, just to let him know that Goldman was selling huge amount of properties in China.
He was also protesting US giving arms to Taiwan. Nothing happened.
One country has the primary investment sector being real estate, where their top 2 companies are bankrupt. Another country has the primary investment sector being stock market, where their tech top company is worth 30 of the other country's top tech companies.
Easy to figure out which one was begging for money
I also wouldn't necessarily take current market values of companies to be their actual worth. A product from e.g. Apple and e.g. Xiaomi are 95% similar and more than likely sell roughly the same amount of e.g. phones. Apple's value is in its brand, not necessarily that the goods are vastly technologically superior, etc., nor its capabilities as a company to produce goods.
Xi thought China could win the political battle without losing the economic one. He assumed the alliance would split apart, and the US would be forced to back down. At that point China would be free to project it's power across most of Asia without interference from the West. Whether that's taking back Taiwan, or at least the entirety of the nine-dash line islands. The US or any other foreign vessel couldn't transit the South China sea without the OK from China.
He tried to pick off the members of the alliance one by one (the trade battle with Australia is a great example), but failed. Eventually the US and other nations said "enough is enough" and instituted sanctions on China. In addition private companies decided the political uncertainty was too high a risk. Combine that with the demographic bomb the country is facing, the debt-bomb from Chinese real estate and Xi realized he lost his gamble. The Chinese economy couldn't survive long enough under sanctions for China to win the political battle.
But to be honest, he burned too many bridges. The Chinese economy is struggling. The embargo on technology is going to hurt China way more than it hurts the West. He came to San Francisco in hopes of repairing enough of the relationship as to not entirely sink the Chinese economy.
To the topic of ‘Wolf Warriors’, the policy dropped as early as May 2021 so it's highly possible that the change itself is not economic related (https://thediplomat.com/2022/01/is-china-putting-wolf-warrio...). The targeted audience (of the foreign policy) may not be the West, but global south. There is a paper (I'm too lazy to find the link) claim that the ‘Wolf Warriors’ rhetoric used by China's diplomats in non-west country doesn't change much.
If you are intrested in the changes under Xi, Kevin Rudd has a series of deep analysis: https://viet-studies.net/kinhte/WorldAccordingtoXi_FA.pdf. Generally China's decision making process doesn't care too much about winning or competing or any particular goal especially in short term. They are based on long-term analisys of "what will happen inevitably" and back track from that conclusion. Many of these decisions make no sense from West's perspective under a cost-benefit analysis.
>"Xi’s ideological beliefs have committed China to the goal of building what Xi describes as a “fairer and more just” international system—one anchored in Chinese power rather than American power"
>"Xi has communicated to the party a crystal-clear message: China is much more powerful than it ever was, and he intends to use this power to change the course of history."
This being in the underlying goal (or as your put it - inevitability) of China being the predominant power in Asia.
>"But Xi is not completely secure. His Achilles’ heel is the economy"
And this comment reflecting the idea that he can only accomplish all this with a strong economy. And with the string of bad news coming out of China lately, one can't help but noticed Xi's much more conciliatory tone in the past few months compared with the image of a couple years back.
> one can't help but noticed Xi's much more conciliatory tone in the past few month
It maybe more relates to the fact that diplomas advocating for a more hawkish foreign policy being slowly wiped out from the power centre after mid 2021. Though a full swing policy change may only possible after the first plenary session of the 20th Central Committee (which was October 2022).
Xi never hides that he is just reading what was decided within the party for many of these foreign policies. SCMP has reported that during the Xi-Biden meeting for any issue not directly related to China, he will read the notes.
It doesn’t make sense from outside the party as I said so I think your feeling is probably why Kevin Rudd is lobbying in both U.S and Australia for better understanding the situation.
Also you can only go so far ideologically before stopped by the reality (or vice versa in realism because ideology is a larger part of our self-identity). A more ideological CCP only means they are more willing to afford the cost, push as far as they can, and retreat a little bit after over doing it. IMO cost-benefit analysis (or usually, who is the winner / the winning scenario) isn’t very helpful in such context because that’s not CCP’s calculation.
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"The U.S. economy grew at an even stronger pace then previously indicated in the third quarter, the product of better-than-expected business investment and stronger government spending.
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Government spending also helped boost the Q3 estimate, rising 5.5% for the July-through-September period. However, consumer spending saw a downward revision, now rising just 3.6%, compared with 4% in the initial estimate."
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Have to say the concept of annualized GDP growth rate is kinda gobshite. Why would you report that instead of YoY and QoQ rates is beyond me.
Pick a metric, report it consistently, it really doesn’t matter too much exactly which you choose.
(It is ironic you would compare to China because of course their GDP reports are made up. I’m sure they use non-annualised though!)
The good news is there are genuine, revolutionary innovations in the economy, namely AI. You can't explain away AI as a mirage propped up by government spending.
The entire stock market is held up by the magnificent 7, and these stocks in turn are held up investors' AI dreams.
I just can’t possibly see how AI is going to revolutionize the economy, unless you define the “economy” as the nasdaq, then yea, i guess so, but that’s a real simpleton view.
In a more AI maximal case it will solve new problems, the increase in GDP from this case is very large.
2023's number will probably come in better than Trump's pre-pandemic deficit.
The US can get away with it, for a bunch of reasons, but essentially because it is such a powerful economy and trustworthy counterparty, but it is a high level nonetheless.
For comparison, the "indebted EU"'s fraction is 83% at pixel time. UK, not in the EU anymore, struggling a bit with debt, it around 100%.
You absolutely can. Like, sure, it can generate crap quickly, but whether that translates into genuine productivity improvements is not really proven yet.
That is not a good example. Greece was growing 5% back in those days and it was growing fast enough to outpace the debt. In fact, most of the debt to GDP explosion happened after the austerity policies, because GDP crashed and debt stayed the same. Greece didn't really have a spending problem either but rather the problem is the rampant tax evasion, i.e. there was a collection problem. Once the arm chair experts of the Troika got their way, Greece went downhill faster than from the original debt crisis.
How is it not obvious to everyone that this is the end game? Increasing rates will rapidly increase debt, which increases inflation, which pushes increasing rates ...
Now, what about alternatives? If you don't like US numbers, can you get anyplace better on Earth? I'll wait. Meanwhile, there are forward-positive questions and topics - USA is about to jump in 2, count 'em, two very consequential areas, which are AI and space exploration, within this decade. Are you sure your better bets are against USA? Did you take the history lessons into account, or it's business as usual?
Did we take the same history lessons? Lots of what led to the fall of the Roman Empire has been happening in USA the past few decades. And then we have China literally opium-warring us with fentanyl and killing tens of thousands of US citizens each year. But yeah, count on the cool shiny AI and space exploration to save the US.
> 3.2% is absolutely peanuts to what it was some 3-4 decades ago.
But 3-4 decades ago governments, all institutions and economy as as whole were not so much in debt. https://fred.stlouisfed.org/series/GFDEGDQ188S . And this chart doesn't include all the "unfunded liabilities".
You can hike rates to curb the inflation only if it doesn't bankrupt everything and everyone.
And 3-4 decades ago boomers globally were ahead of most productive years of their lives, without the "baggage" of tons of kids and globalization had plenty of room ahead to increase productivity.
I don't want to waste time talking about nonsense like AI and "space exploration". The financial system is screwed. That's all I'm saying.
They will inevitably inflate away much of the debt. But, that hurts dollar savers more than debtors.
Some cash rich companies today are earning more on their deposits than they're paying on their bonds from a couple years ago.
https://www.bea.gov/sites/default/files/2023-11/gdp3q23_2nd....
"Real gross domestic product (GDP) increased at an annual rate of 5.2 percent in the third quarter of 2023 (table 1), according to the "second" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 2.1 percent."
What I can't believe is that serious people still take the BLS's CPI number seriously.
“ Corporate profits accelerated 4.3% during the period, up sharply from the 0.8% gain in the second quarter.”
Won’t anybody think of the corporations??
https://www.bea.gov/sites/default/files/2023-11/gdp3q23_2nd....
Doesnt really mean anything if rent is double and gas is 5$ a gal. It's actually even more insulting when the gov is telling you how good you have it.
I agree that these aren't the best times the country has ever seen, but, objectively speaking, things are pretty good. Just as an example, gas is $5 a gallon (it's actually $3.40). But, where is it cheaper? Belarus? Is that really where you want to live?
Why the fuck would we compare our lives to Belarus, Zimbabwe Ethiopia / etc. Let them sort their own problems. I can compare my country (Canada) to what it was 30 years ago and I do not like where we are going.
Another thing to consider: the entire wealth of Canada and the U.S. is predicated on a genocide. Yea, it turns out when you're not killing people and taking their land, it generally gets more expensive over time.
Get humanity to Mars? Sure, it's literally a rounding error on the scale of the money we completely squander. Fund a million startups? Sure, why not? A trillion bucks can offer a million dollars to a million startups, which is kind of mind boggling to even think about. One can think of near to any cause, and they could all be exceptionally well funded with all the money we waste on war and geopolitics. Because war has this amazing magic trick. It can take a trillion dollars and just make it disappear, like it never existed, with nothing to show for it. Houdini couldn't hold a candle to that sort of wizardry.
I do not want to. I do not live in "the rest of the world". And Canada has everything for people to live decent life and keep improving it. Our "servants" however keep fucking it up lately.
Regarding the times objectively being pretty good, it depends what objectives you're using. Measures of consumer sentiment, for example, are similar to the 2008 financial crisis.
I would think if your metrics all say the economy is good and people mostly say it's bad, then your metrics are probably broken.
I think you actually might not know how good you have it.
This is the kind of bullshit i'm talking about.
Try a search "cost of living basket of goods" for more info.
Worry not, despite unrealistic public expectations and wanton reductivism bred from saltiness regarding wealth's stubborn unwillingness to consistently grow without effort... We actually can measure a lot of useful things.
Worry not.