Comment by rich_sasha

Comment by rich_sasha 4 days ago

US real GDP is racing ahead: https://fred.stlouisfed.org/series/GDPC1 . Inflation is fine, even if you don't fully believe the official numbers: https://fred.stlouisfed.org/series/FPCPITOTLZGUSA . Unemployment is increasing but below long term mean: https://fred.stlouisfed.org/series/UNRATE . Interest rates are at a reasonably business-friendly level.

This is all the USofA. Elsewhere, China is allegedly also printing GDP growth like crazy. Europe is maybe a little stagnant but also not, on the whole, awful.

At the face of it, it's at least a C+ if not better. So if you'd claim it's terrible, there's some explaining to do.

didibus 4 days ago

> So if you'd claim it's terrible, there's some explaining to do

Here's the explaining:

  - Unemployment has increased.
  - Long-Term unemployment has increased.
  - Number of gig workers is at an all time high.
  - Layoffs have continued.
  - Personal household dept is at an all time high.
  - Polls show most people have financial anxiety and feel squeezed.
  - Inflation is not under control.
  - Buy now pay later usage is up as much as consumer spending is.
  - Income and wealth inequality are near records high.
  - GDP and consumer spending were also seen peaking before the last 5 recessions as well...

We're all talking predictions, I don't think either of us should pretend to know the future, but there are counterpoints and so the data does not all look rosy.

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rich_sasha 4 days ago

I'd say these are symptoms (and I'm not denying them) rather than causes. My point is that it's hard to find hard data that would say the economy is doing poorly. Even unemployment, which is your top line, seems... fine?
I just don't understand where the squeeze is coming from. Either companies figured out how to do more with less people, or they started the cycle with too many people, or they don't know what they are doing. Undoubtedly they are laying people off, especially in tech. But I he symptoms you list don't explain it to me.

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- didibus 4 days ago
  
  I don't think they're a symptom or a cause. Just indicators the economy may not be doing well.
  > Even unemployment, which is your top line, seems... fine
  My lines were in no particular order. The issue with unemployment data is it counts gig workers as "employed." What doesn't add up is that there are fewer job openings, mass layoffs, and rising long-term unemployment (people who can't find work past 6 months).
  > I just don't understand where the squeeze is coming from.
  Nobody really knows. It's hard to model the economy and identify cause and effect. But likely candidates are low competition, businesses with coercive leverage on pricing/pay since buyers and workers have no alternatives. Essentials like housing, health, and food have skyrocketed, and we haven't scaled them as demand grew. Companies have abandoned stakeholders, they only care about shareholders. They're squeezing record profits, sustained because buyers are supplementing with gig work, have all adults working, are taking on more debt (and there are more ways to get credit than before), or are abandoning their savings (YOLO).
  > Undoubtedly they are laying people off, especially in tech. But the symptoms you list don't explain it to me.
  My list wasn't about layoffs, just signals the economy may be doing poorly. One reason for layoffs is companies believe the economy is at risk. They're avoiding hyper-growth and cutting fat. In tech specifically, I think a lot of it is undoing the mess of Covid, such as ventures that didn't profit, hiring before knowing what to use people for, workers distributed across too many places. Even if one part is growing, redistributing is hard. Easier to lay off and rehire where needed. There's probably some offshoring too. But in general, cost-cutting happens when companies feel they need to be conservative.
  
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- nicoburns 4 days ago
  
  Cause wise, we probably shouldn't ignore the delayed hangover from covid. But also the longer term trends towards an economy that is extractive rather than productive, and increasingly unequal, neither of which are sustainable.
  
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- davidgay 4 days ago
  
  > Even unemployment, which is your top line, seems... fine?
  The unemployment one is interesting because if you look at that graph, the universal pre-2022 pattern is basically a spike of unemployment during recessions followed by a gradual drop.
  The recent pattern is a gradual increase.
  I'm not a big fan of "numerical only / shape of graphs" analyses, but this does seem strange. Of course, the 2020 Covid spike is also unusual, so...
  
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- chairmansteve 4 days ago
  
  They are laying people off so they can spend the money on AI data centers.
  
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marcosdumay 4 days ago

Yep. It's the "K" shaped economy making your numbers and the GPs real at the same time.
(Well, at least the GPs 1st number. The 2nd ends in 2024, and the 3rd has questionable precision after September.)

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no_wizard 4 days ago

I'm going to set aside GDP for a moment, which is hardly the full story but instead I want to zoom in on inflation.

The Federal Reserve of St. Louis is using the CPI numbers, as most government agencies do. I would contend those numbers in and of themselves lie. The ALICE index, which is based on more comprehensive data[0][1] and closer to what CPI used to represent before the major adjustments in the 1990s, tells a different story[2]

Inflation against the ALICE index is much higher than the 3% reported in by the Federal Reserve, running at a stark 5.9% YoY change. This honestly lines up much closer to the reality I see in my day to day life than the CPI numbers reported by the Federal Reserve do.

[0]: https://www.unitedforalice.org/methodology

[1]: I recommend downloading the PDF here: https://www.unitedforalice.org/Attachments/Methodology/ALICE...

[1]: https://www.unitedforalice.org/essentials-index

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TheOtherHobbes 4 days ago

It always takes 6 to 12 months for the graphs to match the reality on the ground. Because that's how long it takes most people to run out of money and credit.

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snowwrestler 4 days ago

U.S. tariffs created inflationary pressure that has so far been mostly absorbed by producers and retailers, but they can’t do that forever. In fact the Amazon CEO said a week ago that they will have to raise prices this year due to tariffs.

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