Well its quite unexpected to see this big of a change within only a three months period. I would have expected not to see any quantitative indications of the mess brewing up only by summer.
Just curious why you would think this? Markets react fairly quickly to major events...
The GDP is the result of what markets (not the stock market, but actual markets for goods and services) do, if markets react quickly so does the GDP. And markets were reacting to tariff threats and other issues early in the term, Atlanta Fed GDPNow Q1 projection rapidly turned from strongly positive to negative in February, IIRC.
It feels like this was the natural progression of stuffing trillions of dollars into the economy, along with ZIRP, and the free ride has ended. Tariffs will magnify the problem.
The whole bullwhip effect never occurred, prices never returned to pre-covid levels, as everyone claimed they would. So now we have years of stacking inflation that happened because of bloating the money supply, then ZIRP goes away, throw the tariff fears/uncertainty on top, and here we are. I have very little to no faith this administration will help the situation. Playing a game of chicken with the other global superpower is a losing proposition.
This problem has been years in the making, big ships don't turn on a dime.
No, but Trump is trying to turn the US ship in a dime, and like this aircraft carrier, we are about to drop a ton of money into the ocean...
https://www.nbcnews.com/news/us-news/us-navy-lost-67-million...
Trump’s been unusually active, so you’d expect to see direct impact in Q1 numbers.
> tariff day was less than a month ago.
Even desiring the current economic policy doesn’t mean uncertainty is beneficial. My mother for example was confused about when the tariffs took effect and therefore delayed a major purchase. The economy is simply the aggregate of many such choices.
I really think this is a huge elephant in the room that seems to be ignored.
The velocity of money is informative here, basically a dollar can only be part of so many transactions over a year. If rent is 1000$ and you get paid 4 days before rent is due you need to set aside 1000$. Bump that by 30% and now you need to set aside 1300$ and for those 4 days + however long it takes for the transaction to finish that extra 300$ isn’t part of the economy. Bank lending is a multiplier, but that runs into similar issues.
Then what do you call it when nobody has much money left, but it's declining in purchasing power no differently than if more money was being created?
It doesn’t really make sense to say that “nobody has it left” overall because money gets transferred in a transaction. So most people “not having money” could mean it’s someone else’s not gone.
However, money is only a signifier. It you mean the overall economy is declining long term, which is hasn’t been, that’s economic collapse. In such cases the amount of money in people’s bank accounts could remain constant but the their income declines alongside their spending.
As to what you’re experiencing, in 2024 people where still a shock even if prices weren’t increasing people seem to expect them to fall. Falling prices would be deflation which is a negative outside commodities.
Prices going up when the money in peoples' pockets is not.
>money is only a signifier.
I agree, signifies how rich or poor you are, as an individual or a nation.
Not the numeric amount, but what it will buy instead.
>that’s economic collapse. In such cases the amount of money in people’s bank accounts could remain constant
That would be true sooner or later even for those who rapidly decline to zero, think about those to which it would not have happened otherwise. Not to mention so many citizens not having a viable bank account to begin with these days.
By that definition those unfortunates would be suffering much worse than an "economic collapse", and there is great likelihood they would be overlooked until it is too late because everyone else has it so much worse-than-before themselves. Trump is not even as honest as Nixon, there's going to be a lot more businesses and families ruined before this is over. In times of triage for survival, only so many can be saved, and it can be kind of a crap shoot.
>Falling prices would be deflation
Got it. So rising prices are inflation.
IOW whatever it is beyond your control that makes it more difficult or impossible to afford what you once could. Or what was once almost within reach but can no longer be sure it's even on the horizon any more.
Got it. Not really the amount of money in "circulation", but what people are actually able to buy with it. Especially compared to what it was "before inflation".
People generally always figured this anyway, lots of them are not easy to fool.
Regardless of any fancy equations.
For the US you are really describing income inequality. Most individuals got fucked over a few are doing wildly better than ever. On net the overall economic output has been going up overall and per person since the country was founded, it’s simply not ending up in regular people’s hands.
Don’t forget the inherent march of technology where indoor plumbing > radio > TV > AC > cable > internet > cellphones > smartphones have all slowly been assumed to be something most people can afford. Similarly the standards for education, healthcare, homes, etc are rising faster than inflation because the standards keep rising. People aren’t buying modest 1bathroom 2 bedroom homes like they used to so yes those mini mansions cost more.
> deflation
Inflation becomes the new nominal.
If everyone has 2x as much money and things cost 2x as much forever that’s not deflation that’s just the new normal. For prices to fall you’d either need more economic output or less money in the economy.
Of course the extra money wasn’t evenly distributed, but again that’s income inequality…
No one who knows anything about economics or inflation claimed that prices would return to their pre-covid levels. However, inflation has gone way down from its peak.
I don't care if we blame the current economic policy, I don't like the current economic policy at all. I think the problem is much bigger than that.
I still would like to know where all that money went. I can't figure that out.
Obviously (real) wages did take a hit like everywhere but have been recovering, too.
My working theory is that noticeable inflations makes people go crazy and trumps anything else. Completely closes people off to rational thought and that’s what sunk Biden. Despite awesome economic recovery given the circumstances.
> US post pandemic economic recovery has been astonishingly great measured against other major economies.
https://www.forbes.com/sites/eriksherman/2025/04/25/why-corp...
I get Covid was a mess in real time and it was used as a political pawn, which really sucks. Trillions of dollars went into the US economy, and most of the country feels broke.
I don’t care how the market did, fuck the market, it’s a bubble that’s been waiting to pop for years.
That's how inflation works.
> I don't care if we blame the current economic policy
You mean the previous one until January, that stopped the inflation, or the current one that is making a lot of it for the next months?
> I still would like to know where all that money went.
The money is cycling around people and companies. That's what money almost always do, the US was an exception until recently, but exceptions to that never last.
It is? Why have wages been so stagnant for so long? Isn't that one of the leading theories/reasons Trump was elected, people are completely strapped for cash. I had read recently that loans are being increasingly being paid late, credit card debt has grown massively, home prices and through the roof, and the job market is a disaster.
Where is all that money again?
Prices have basically only gone up on almost everything for the past 5 years. Going up slower does little good.
No, consumer prices trending downward is called deflation and the economy has been actively managed to try to prevent that for a very long time. Mild inflation has been the target and rule for a very long time, with the deviations being high inflation outside of a few major economic collapses. This is not a new trend of the last 5 years.
Prices on some things trend downward without inflation as the products become cheaper to manufacture and distribute due to process improvements and economy of scale.
Take, for instance, flat screen tvs. The first 42" flat screen TV, released in 1997, cost $18,750, or the equivalent of $37,201 in today's money.
https://www.wgal.com/article/evolution-of-tv-technology-pric...
The least expensive 42" (technically 43") tv available at Bestbuy today is on sale for $113.99, or the equivalent of $57.21 in 1997 money.
https://www.bestbuy.com/site/hisense-43-class-a6-series-led-...
Obviously this is not an apples to apple comparison, its a clarification that on some goods prices decrease regardless of inflation due to forces outside of the relative value of a dollar.