This is an absurd amount of new jobs. By absurd, I mean that this is leaps and bounds beyond what was predicted. It also means that the Fed isn't going to taper off rate hikes anytime soon. I know that there were some who were predicting that rate hikes were going to stop in 2023, but I'm doubting that if we keep getting numbers like this.
Agreed, and good thing too. Regardless of what you want to say about recession or not, the US is really well positioned for the next decade relative to other countries.
This is a sentiment that I'm happy to hear others share. If cards are played right, the USA could experience growth not seen since post-WWII.
Inflation is high, but the USD is crushing every other currency. American businesses are fed up with shutdowns and shipping delays from Asia, and are willing to pay the price premium for domestic goods. And the federal government is doing (I think) a good job at pushing industries to capitalize on the global weakness.
Unless forced to manufacture here (like say defense and space industry), the low salaries elsewhere and already existing vertical and horizontal integration make for an insurmountable advantage forever.
This is exactly what's happening. Companies realize that they don't have any influence or visibility into overseas production in places like China. That labor savings doesn't mean much when you're not allowed to actually make things, or when your goods get stuck in shipping for months on end.
Its still blessed land - wildly fertile and rich with resources. Any real security threat is an ocean away. It doesn’t even need to venture out much now to secure energy.
People talk about moving to New Zealand in an apocalypse, but honestly you’d do very well in the US if the rest of the world was going to hell.
It's going to be a critical one too. Not that any really haven't been.
International-Relations-wise the US is positioned to retain her monopolar status and then cement it for the century by 2030. The two greatest competitors to her rule were Russia and China. All other powers are strong allies of the US and have no reason to change that.
As we've seen, McCain's quip turned out to be true, the bear is nothing but a mafia in a run-down gas-station. The only other real competitor is China, and without Taiwan's fabs, China can't compete this century. Whole new fields of industry must be created for the dragon to take a shot for a bipolar world.
That the US managed to convince Taiwan to lessen it's grip on that security guarantee (with the Texas fabs okayed recently) shows how much Taiwan thinks the US can win any conflict with the mainland. They aren't scared in the least.
Russia's ongoing disaster only strengthens that feeling, as any invasion, already an operation on never heard of scale, would involve the actual US military. That Russia somehow allows NATO to fight openly against her with the airgap of a Ukrainian finger on the trigger shows how outmatched the bear is. It's basically a weapons test for NATO at this point, much to Ukraine's detriment. China can only guess at how poorly the invasion would go and how bungled it would be. Combined with crushing blockades and sanctions, and she knows any move would kill her economy for decades. Their clock is not ticking, it ran out. The only question is if Beijing knows it.
So yes, I think it is good to be in the US or allied with her.
Isn't this the fun with averages? The "great resignation" probably also caused an earnings bump for a lot of people, right? I know it did much more than 5.2% in my case, leaving room for new jobs with subpar wages for a few other people and it would still average out to that number.
I do not see why this has to be true. Change in prices (inflation) is very different for different people or groups of people, because the goods and services they buy are very different.
At the poorest levels wages are slowest to increase due to inflation, and there aren't cheaper beans and rice to buy at the grocery store. At the mid levels, maybe a cost of living raise eats half the current inflation, and switching to cheaper brand items can make up the difference. At the highest levels some may see inflation beating raises, have inflation protected assets, and have disposable income so inflation maybe means not going out to eat as much or not getting a new car.
> At the poorest levels wages are slowest to increase due to inflation
Why would this always have to be true? For example, if the supply of labor sellers at the bottom decreases due to decreasing birthrates, immigration, or people who are no longer employable due to drug addiction. It seems conceivable to me that the lowest paying jobs would have to contend with decreasing supply of labor by increasing the pay.
Perhaps the increased pay then causes increased prices for goods/services which then cause sufficient decrease in aggregate demand that demand for the labor then starts decreasing so it pushes wages at the bottom back down , but I do no see why that has to be case.
> and there aren't cheaper beans and rice to buy at the grocery store
I mean, this is a question of policy. The US Federal Government mandates that crops be burned as fuel, which hugely pushes up the price of corn and in turn that pushes up the price of other things that could be grown using that land. We don't explicitly buy up and destroy crops anymore, or pay farmers not to grow them, but the food supply is being deliberately contracted as a matter of federal policy to keep farming profits high.
It seems bonkers to say that there's nothing we could do about rising food prices when we're literally paying to (from the perspective of the food supply) destroy food and keep it scarce.
Commodities inflation hits the poor more. They pay more on things like food and gas which have commodities predominantly as inputs. The richer people buy more stuff which has higher labor inputs.
At the same time though long-term commodities inflation is cyclical, while wage inflation tends to be sticky. If wage inflation actually causes raises in wages for working class people and isn't just contained to SWEs then long-term this is likely beneficial and would lower disparity in the long run. But this would take a decade of wage-price inflation. Short term it is a regressive tax.
But the Fed is trying to go back to the conditions of the past 40 years where wage inflation has been capped at around 2% which will just squeeze the lower classes even more.
That article is using median pay as the data point.
It is possible the 0% to 20% or even 30% are experiencing gains, while 30% to 60% are not.
It is hard or impossible to find data by income/wealth decile, and the corresponding change in prices (inflation) of that income/wealth decile's basket of goods.'
For example, the people that work in retail/hotel/travel/etc sector that typically employs the lowest paid employees with the worst quality of life at work may very well be experiencing huge gains, although not all captured by wage data, such as better quality of life at work due to not having to work late weeknights or weekends, etc.
Perhaps individuals and families are having to do more work to try to climb out of an inflation hole. New jobs are good. 2nd, 3rd and 4th jobs in families to defeat that missing 4% is sub-optimal job growth due to a variety of trade-offs.
> By absurd, I mean that this is leaps and bounds beyond what was predicted.
More than double, yes.
> It also means that the Fed isn't going to taper off rate hikes anytime soon.
Well, maybe. But there's at least one more jobs report before the late September FOMC meeting, and it could be just as far off expectations in the other direction. Economic indicators have generally been wonky recently.
And jobs aren't the only factor in monetary policy. Strong jobs but monthly inflation tapering faster than expected could still lead to the Fed easing up on the brakes.
The Fed won't stop until they break the back of the labor market and unionization movements. The only lever they really have to pull to get wages until control is driving the economy into an iceberg. An actual NBER-approved recession is coming fairly soon (2023/2024) and something will blow up in the broader economy (CMBS?) and will be much worse than current economic conditions.
> The Fed won't stop until they break the back of the labor market and unionization movements
That's not the Fed’s goal. Yes, tight monetary policy generally weakens labor leverage, but the target is inflation. If inflation comes down and unionization continues (which is not implausible, if non-labor price drivers like oil keep dropping), the Fed will almost certainly back of the brake lever notwithstanding the continued labor organizing drives.
I think it is more than a bit simplistic to assume workers are demanding higher wages just because oil spiked a bit. And I just don't have the time right now to try to convince anyone that the Fed's numbers and targets actually bake in class warfare without saying the quiet part out loud.
> I think it is more than a bit simplistic to assume workers are demanding higher wages just because oil spiked a bit.
It would be, but I didn't even approximately do that. In fact, what I said depends on pretty much the opposite, the two being largely independent of each other.
I work at a college; more students than ever are working while going to school. They have jobs, but need something else because they can't afford the life they had just three or four years ago.
It is weird. Probably too weird for one word like recession to really convey much meaning.
There certainly are assets/markets out there that feel/seem over valued. While the globe is still reacting to the pandemic. Stuff was weird after 1918, too. I actually think the changes seen in 1918 were far greater than anything we’ve seen thus far. So maybe the modern economy is a little more stiff with waves (disruptions) taking much longer to cool. Thinking of all the supply chain messiness.
The word to be used is properly called greed. The last attempt to vacuum up money before debt pumped asset bubbles finally burst and the lack of actual economy is globally exposed.
There's no economy when things do not sell, after all. Assets that do not sell or produce have no actual long term value, besides the power play of resource denial.
Conveniently located housing for people would sort of indirectly produce if the economy still was industrial. Or perhaps R&D based. It isn't, therefore it doesn't.
So everything freezes and general populace are serfs, bound by unpayable debt instead of location.
Next step is actual serfdom contracts from corporations.
Econs say fiat currency is almost meaningless outside of when it’s actually being traded for goods and services. One way to express the value implied in currency is what a constant amount of it may be converted to across different goods. Or if speaking of difference currencies, how much a known constant good/service costs in the local currency and compare that across currencies. This is the basis for the Economists Big Mac index.
So yes, when capital as the aggregate of whatever asset gets hoarded away by few people there is inefficiency. An efficient market looks like every market participant (supply and demand side) having only that marginal amount of resource needed to make their marginal contribution towards the total output. It’s also in no market participants interest to run advertisements since they will sell all they produce and have enough resources to produce all that they can. Like producing construction nails or any other good or service that’s never graced an ad.
I would be interested in actual data on if this is an increasing trend or not. When I was in college (graduated in 2015) most of my friends still had a job; be it to pay for school or to fund their weekend drinking activities.
I think I should've been more specific in my first comment. Significantly more students are working full-time, with a non-significant amount indicating they are working at all.
I have data!
So at our institution, for the 2019-2020 academic year (most recent relevant data for comparison due to covid changes/temporary layoffs), 23% of our incoming students indicated working at least 36 hours a week, and an additional 52% indicated working between 5 and 35 hours a week.
For the upcoming semester, 47% indicated they were working at least 36 hours a week, with an additional 30% indicating they worked 5 to 35 hours a week.
Part of me thinks that people are wishing for a recession because they can’t really understand the economy anymore. It has edged past rationality. There seems to be a yearning for a reset where traditional metrics make sense again.
From what I've seen, many many companies are still suffering from post-Covid rehiring problems. Airports, restaurants, almost all service industries are severely understaffed and continue to be so.
I wonder how many people have decided to permanently leave the workforce - I know a number of families where one parent stopped working during covid and has no plans to return.
This feels like it matches my anecdata as well. Some folks in positions where they have the choice to work or not work are staying on the sidelines. I know a school administrator who retired earlier than planned rather than deal with the madness, I know a college kid who just took the summer off rather than get a summer job, I know a speech therapist turned stay-at-home mom, etc.
Rather than a few years ago when people's decision calculus was "do I want to trade my time for $X/hr to do some work?" it feels like it's become "do I want to trade my time for $X/hr AND risk getting myself or family members seriously sick AND deal with unhinged people at a time of political strife?" And sure, the X in $X/hr has gone up, but apparently not enough to convince as many people to wait tables as in 2019.
If the conversation is about price of labor, then the ratio of aggregate labor sellers to labor buyers is the relevant metric to compare over the years.
For example, more old people or otherwise disabled people wanting to buy labor relative to people willing and able to supply it, compared to previous decades.
Prime age work force participation is still high. A lot of the people that left the labor force were retirement age people that saw their retirement money go up by 50% or more and didn't really see a reason to come back.
As someone who spent a decade burning and bleeding for the restaurant industry: Fucking great. If there's one sector that needs its entire economic plan blown up and rebooted, it's restaurants.
The fact that labor has seemingly collectively walked away from restaurants en masse has been one of the best things about the pandemic. Of course it's complicated (What about the ability for people to source food from restaurants, what about other economic factors that go into it, poor sad owners who invested all their money, went belly up, and now have to act like the labor they abused, "not all restaurants", etc) but the food service industry is one of the most vile, exploitative sectors out there and the schadenfreude over it getting a swift kick in the teeth has been massive.
Alternate theory: they havent opend the in-restaurant seating becuase they make more money keeping it closed and operating drive-through (and delivery) only.
The only real difference is cleaning staff on the in-restaurant seating and maybe one more employee for the register (though many seem to be slow enough to have one person doing double-duty).
Out here in the sticks everything is basically back to normal, though one restaurant that was already on the edge appears to be slowly folding.
As the other poster said, this matches my anecdata also. I will also add that I know multiple families who have decided to home school permanently, and that added extra incentive for the family to stay in the single income status.
Can we put to bed this belief that the Biden administration is simply gaslighting us when they push back against the utility of the "2 consecutive quarters of negative growth" benchmark for our current economic environment? Seems fairly obvious that we should be questioning how useful that metric is right now.
> What I mean: if an administration doesn't like a given metric, it should get its replacement metric identified and publicized in advance.
That's assuming that they had a previously existing problem with the metric. But why would they, it's always been a fairly reliable rubber stamp. Economic indicators give consistent bad news for an extended period of time, then months later 2 quarters of GDP numbers have been released and the metric says "yep, that was/this is a recession". But the metric now kind of falls on its face in this strange situation of quite a lot of bad economic indicators paired with a strong jobs market.
If we want to rigidly hold to the 2 quarters metric, then we're going to have to accept that "recession" means nothing larger about the economy than "2 consecutive quarters of negative GDP growth". It just becomes a short way of saying simply that.
> What I mean: if an administration doesn't like a given metric, it should get its replacement metric identified and publicized in advance.
The US definition of a recession was identified and publicized a very long time ago. The National Bureau of Economic Research has been putting dates on downturns since 1929 before there was such a thing as gross domestic product.
My understanding is that the world has two different agreed upon metrics. We have one definition that was a effectively a rule of thumb for the uneducated, unwashed masses. Then we have one that actual experts use when investigating actual policy that would affect those masses.
There are less silly ways to push back against the utility of established terminology. I enjoy Sean O'Malley as a combat athlete, but his insistence that he has an unblemished record is, at best, an amusing quirk of his public persona. Nobody but him takes that claim seriously, and I'd respect him more if I learned he doesn't either.
What is happening now looks like a reversal of the trend that saw a growing average GDP per Capita coupled with a shrinking median GDP per Capita. The economy is contacting, but the man on the street is seeing a bigger piece of it. Most would agree that's on balance good thing. But calling it not a recession avoids the awkward conversation of how we hid the opposite trend with an over reliance on GDP size.
No disagreement here. Certainly if I were a political advisor in the room where people were suggesting getting in the weeds with the press about the definition of a recession, I would have set my hair on fire. Whether there are valid points to be made or not, they're losing politically the moment the conversation begins.
Personally, I disregard any economic data from the last two years. Growth was so uneven from month to month because of lockdowns and covid waves that there’s no consistency at all.
I compare to 2019 numbers. Everything else is just noise honestly.
Maybe I'm delusional, but I think the Fed is raising rates just so they can lower them again.
Look at what happened to rates between 16-19. They slowly raised rates in little baby steps, but the moment the 2019 economy started to weeble-wobble, they cut rates almost in half. And when the economy fell over in 2020, they cut rates back down immediately.
It took them 3 years to raise rates from 0.13% to 1.70%, but less than a month to go from 1.60% to 0.05%
I saw this a couple weeks ago too. This could be the first time in around 40 years that they are able to raise interest rates higher than the previous peak before having to cut them.
> Look at what happened to rates between 16-19. They slowly raised rates in little baby steps, but the moment the 2019 economy started to weeble-wobble, they cut rates almost in half.
Yes, raising rates to control inflation during an expansion and then cutting them when the economy weakens is... pretty exactly the usual simplified distillation of “things are behaving as normal” monetary policy. As is greater caution in raising rates (which fights inflation but slows the economy, with the downside risk of triggering/magnifying recession) vs. cutting rates (which stimulates expansion but risks inflation.)
Not sure why you are pretending this totally conventional wisdom description is some kind of contrarian hot take.
The yield on a 1yr treasury was higher yesterday than on a 2yr, which suggests that the market certainly thinks cuts next year are more likely than not.
Just rip the bandaid and get rates up to 10-12% where they can effectively combat inflation. These half measures have done nothing to “shock” the magnet.
The jobs are going to be all over the map, literally. Some will pay well, others won’t.
I don’t know what is like where you are, but I see ads for entry level jobs at $15-$19/hour everywhere around me. That seems very good.
I’ll also note that it seems to me like those jobs aren’t being filled. There still seems to be some power in the worker’s position, though this is all anecdotal.
1:1 converted to Euro, assuming that is a full time job and you live in France or Germany where you might be able to find such a salary, you're almost certainly never owning a home with this job (since it's likely in a big city), and forget about savings. Sometimes even rent might be problematic. It's just above poverty, but still precarious. Quite a chunk below median even.
Big Mac adjusted it looks even worse. Meaning, you're not buying stuff either.
At least you probably won't go bankrupt from medical bills, for what that's worth.
So what are you comparing with? CoL is a far bit higher in many places in the US, safety nets are worse, employee protection is worse, many other things are straight-up worse at that income level in the US. How do you think the US can have a worse median than many European countries while paying far more for skilled labor?
Parent says 'very good'. If all you've got going for you as a country is a bit lower house prices / rent while living on virtual poverty, that's not 'very good'. I'm not saying Europe is great, it's comparing a 4 and a 5 on a scale of 10. Both are bad. It's just exemplifying that 'very good' is a gross overstatement, when the US requires far more financial self sufficiency while one is paid the same.
Why should we suddenly make a distinction when we haven't for literally the entire run of the statistic?
All I know is that minimum wage was $4.25 an hour when I started working and the best I was able to do in a full time job with no experience was $4.60, in the mid 90s. Compare that to today where minimum wage is $7.25 (lower than it should be, I know) but most places are having trouble filling entry-level, unskilled positions for under $13.
The fact is that full-time permanent jobs declined by 77k. The bulk of new job creation was in part-time, transient positions that for the most part don't pay enough to sustain people - especially with inflation rampant. The numbers look good, as long as you don't look too closely into the numbers - my point stands.
Don't you find it curious that the article fails to mention these details? I do.
The source being a tweet from clear right wing nutcase. Not gonna waste my time looking through his tweets to learn that he thinks there are "election fraud" in AZ.
I'm not a labor economist and know nothing about job reports. A quick read into the technical notes mentions that there are two separate surveys and the 528k number comes from the second establishment numbers (https://www.bls.gov/news.release/empsit.b.htm).
apparently the lesson the french researcher tweeting chorizo and calling it a star to raise awareness of appeal to experts is pretty well needed. Like in this thread, a random person on twitter with numbers and a likely bias is cited presumably just because the tweet happens to what the poster here wants to be true, not because the numbers are well explained.
Not really. Normal people don't care if we're in a recession or not. They care if they're employed, and maybe to a lesser extent if their purchasing power is decreasing. If I'm working and getting a big raise things are fine. If I'm unemployed or not getting a big raise then something needs to change.
the prices of stocks go up when interest rates go down...wall st controls the media, so the media is trying to persuade us that there is a recession so that the Fed will ease further
It is funny that we can have years and years of crazy increases in prices of land, healthcare, education, etc, but the minute wages at the bottom start going up faster than asset prices, the Fed is concerned about wage inflation and the government is getting ready to pass an "Inflation Reduction Act".
This is definitely something I have noticed of late. A lot of people are convinced, or at least in their public persona are constantly saying that nothing positive can happen.
I don't think it's any one thing but here are a few ideas I've come up with:
Politics is a big one that can't be ignored. The numbers about the incredibly high levels of political polarization speak for themselves. People have convinced themselves that nothing good can happen when the other party is in power. Post Trump I think that has gotten even worse and people are now openly wishing ill on the whole country so that their party may benefit in the next election.
Related to politics is that a lot of pundits have become very wedded to their positions. Maybe this is just an economics twitter thing but the amount of obsession over what the FED is doing and the dissection of every report isn't healthy. It's hard enough to change your mind (and your trading positions) when things go against you. It's even harder when you are doing it in public and have taken a public position that the sky is always falling.
Moralizing. This is a hard one to describe but basically a lot of the more hard money, milton friedman, perma-bear types, are obsessed with the bill coming due. We sent out a few thousand dollars in stimulus checks to individuals (true), the debt is historically high (true), and now we deserve to have a recession. We deserve the pain, and not only do we deserve it we should welcome it. There is no free lunch!
Finally, though not the last idea but this is already too long... The current situation in the employment market hurts employers the most. The taco bell right down the street from me has had a sign outside for a year advertising starting wages of $17.50 and they still are drive through only because there are not enough employees. The grocery store right across the street from me has been having "on the spot interview" events for more than a year and it is still notably understaffed. The car washing place down the street has had a sign advertising starting wages of $19 an hour for months now. We have had multiple developer and manager positions at my office open for more than a year, but few bites.
Employers absolutely hate this and they have a huge pull in the media/government. They would love to undermine worker power in any way.
> Post Trump I think that has gotten even worse and people are now openly wishing ill on the whole country so that their party may benefit in the next election.
This has been a thing since Obama was elected. McConnell explicitly stated that the goal was to just block everything and make Obama a one-term president, and that's how they've played policy since then. Even things that would have been completely uncontroversial "routine business" even as recently as the bush years (just a few years prior) suddenly were dragged to a halt. Debt ceiling increases on money that had already been spent by prior bills (again, many passed during the Bush years), for example.
It all goes back to Gingrich and the Contract With America, and things have only gotten more polarized in the years since. They've been playing out the same script ever since. It just gets more and more polarized every time they lose an election... because it keeps working.
I'm just gonna stop paying attention to any fear predictions the hive mind makes at this point. Jobs getting cut, jobs increasing. No idea what's actually happening but I'm not gonna let myself get emotionally involved with whatever the current fears are.
This is good news and as others have noted, the United States could be in for a good decade of economic growth. To ensure progress however, we need to address two issues: immigration and housing.
Our immigration system needs to reformed to allow US college educated students the option to stay in the US. Current programs like the H1B are in need of serious reform and are too dominated by large firms gaming the system, rather than on individuals seeking a better life. Talented, young immigrants with ideas are the lifeblood and energy of US entrepreneurship and deserve a seat at the table.
Second, The US needs massive zoning reform. Local politicians representing the private interests of the property and home owner class should not have the power to ban new homes. These bans make it difficult if not impossible for younger people to live near well paying jobs. Zoning also sharply limits economic growth. Enrica Morettj estimated that zoning smothered US growth by 50% over 50 years:
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[ 4.2 ms ] story [ 202 ms ] threadInflation is high, but the USD is crushing every other currency. American businesses are fed up with shutdowns and shipping delays from Asia, and are willing to pay the price premium for domestic goods. And the federal government is doing (I think) a good job at pushing industries to capitalize on the global weakness.
Do you see industrial and manufacturing jobs as a major percentage here?
That is what a strong currency does.
Unless forced to manufacture here (like say defense and space industry), the low salaries elsewhere and already existing vertical and horizontal integration make for an insurmountable advantage forever.
This is exactly what's happening. Companies realize that they don't have any influence or visibility into overseas production in places like China. That labor savings doesn't mean much when you're not allowed to actually make things, or when your goods get stuck in shipping for months on end.
Its still blessed land - wildly fertile and rich with resources. Any real security threat is an ocean away. It doesn’t even need to venture out much now to secure energy.
People talk about moving to New Zealand in an apocalypse, but honestly you’d do very well in the US if the rest of the world was going to hell.
International-Relations-wise the US is positioned to retain her monopolar status and then cement it for the century by 2030. The two greatest competitors to her rule were Russia and China. All other powers are strong allies of the US and have no reason to change that.
As we've seen, McCain's quip turned out to be true, the bear is nothing but a mafia in a run-down gas-station. The only other real competitor is China, and without Taiwan's fabs, China can't compete this century. Whole new fields of industry must be created for the dragon to take a shot for a bipolar world.
That the US managed to convince Taiwan to lessen it's grip on that security guarantee (with the Texas fabs okayed recently) shows how much Taiwan thinks the US can win any conflict with the mainland. They aren't scared in the least.
Russia's ongoing disaster only strengthens that feeling, as any invasion, already an operation on never heard of scale, would involve the actual US military. That Russia somehow allows NATO to fight openly against her with the airgap of a Ukrainian finger on the trigger shows how outmatched the bear is. It's basically a weapons test for NATO at this point, much to Ukraine's detriment. China can only guess at how poorly the invasion would go and how bungled it would be. Combined with crushing blockades and sanctions, and she knows any move would kill her economy for decades. Their clock is not ticking, it ran out. The only question is if Beijing knows it.
So yes, I think it is good to be in the US or allied with her.
https://tradingeconomics.com/united-states/inflation-cpi
Perhaps people at the bottom are positive and people above are net negative, i.e. reduction of income/wealth gap.
Why would this always have to be true? For example, if the supply of labor sellers at the bottom decreases due to decreasing birthrates, immigration, or people who are no longer employable due to drug addiction. It seems conceivable to me that the lowest paying jobs would have to contend with decreasing supply of labor by increasing the pay.
Perhaps the increased pay then causes increased prices for goods/services which then cause sufficient decrease in aggregate demand that demand for the labor then starts decreasing so it pushes wages at the bottom back down , but I do no see why that has to be case.
I mean, this is a question of policy. The US Federal Government mandates that crops be burned as fuel, which hugely pushes up the price of corn and in turn that pushes up the price of other things that could be grown using that land. We don't explicitly buy up and destroy crops anymore, or pay farmers not to grow them, but the food supply is being deliberately contracted as a matter of federal policy to keep farming profits high.
It seems bonkers to say that there's nothing we could do about rising food prices when we're literally paying to (from the perspective of the food supply) destroy food and keep it scarce.
At the same time though long-term commodities inflation is cyclical, while wage inflation tends to be sticky. If wage inflation actually causes raises in wages for working class people and isn't just contained to SWEs then long-term this is likely beneficial and would lower disparity in the long run. But this would take a decade of wage-price inflation. Short term it is a regressive tax.
But the Fed is trying to go back to the conditions of the past 40 years where wage inflation has been capped at around 2% which will just squeeze the lower classes even more.
It is possible the 0% to 20% or even 30% are experiencing gains, while 30% to 60% are not.
It is hard or impossible to find data by income/wealth decile, and the corresponding change in prices (inflation) of that income/wealth decile's basket of goods.'
For example, the people that work in retail/hotel/travel/etc sector that typically employs the lowest paid employees with the worst quality of life at work may very well be experiencing huge gains, although not all captured by wage data, such as better quality of life at work due to not having to work late weeknights or weekends, etc.
It is a difficult thing to capture in numbers.
Perhaps individuals and families are having to do more work to try to climb out of an inflation hole. New jobs are good. 2nd, 3rd and 4th jobs in families to defeat that missing 4% is sub-optimal job growth due to a variety of trade-offs.
More than double, yes.
> It also means that the Fed isn't going to taper off rate hikes anytime soon.
Well, maybe. But there's at least one more jobs report before the late September FOMC meeting, and it could be just as far off expectations in the other direction. Economic indicators have generally been wonky recently.
And jobs aren't the only factor in monetary policy. Strong jobs but monthly inflation tapering faster than expected could still lead to the Fed easing up on the brakes.
That's not the Fed’s goal. Yes, tight monetary policy generally weakens labor leverage, but the target is inflation. If inflation comes down and unionization continues (which is not implausible, if non-labor price drivers like oil keep dropping), the Fed will almost certainly back of the brake lever notwithstanding the continued labor organizing drives.
It would be, but I didn't even approximately do that. In fact, what I said depends on pretty much the opposite, the two being largely independent of each other.
It's really a weird time.
There certainly are assets/markets out there that feel/seem over valued. While the globe is still reacting to the pandemic. Stuff was weird after 1918, too. I actually think the changes seen in 1918 were far greater than anything we’ve seen thus far. So maybe the modern economy is a little more stiff with waves (disruptions) taking much longer to cool. Thinking of all the supply chain messiness.
There's no economy when things do not sell, after all. Assets that do not sell or produce have no actual long term value, besides the power play of resource denial.
Conveniently located housing for people would sort of indirectly produce if the economy still was industrial. Or perhaps R&D based. It isn't, therefore it doesn't. So everything freezes and general populace are serfs, bound by unpayable debt instead of location.
Next step is actual serfdom contracts from corporations.
So yes, when capital as the aggregate of whatever asset gets hoarded away by few people there is inefficiency. An efficient market looks like every market participant (supply and demand side) having only that marginal amount of resource needed to make their marginal contribution towards the total output. It’s also in no market participants interest to run advertisements since they will sell all they produce and have enough resources to produce all that they can. Like producing construction nails or any other good or service that’s never graced an ad.
I have data!
So at our institution, for the 2019-2020 academic year (most recent relevant data for comparison due to covid changes/temporary layoffs), 23% of our incoming students indicated working at least 36 hours a week, and an additional 52% indicated working between 5 and 35 hours a week.
For the upcoming semester, 47% indicated they were working at least 36 hours a week, with an additional 30% indicating they worked 5 to 35 hours a week.
I wonder how many people have decided to permanently leave the workforce - I know a number of families where one parent stopped working during covid and has no plans to return.
Rather than a few years ago when people's decision calculus was "do I want to trade my time for $X/hr to do some work?" it feels like it's become "do I want to trade my time for $X/hr AND risk getting myself or family members seriously sick AND deal with unhinged people at a time of political strife?" And sure, the X in $X/hr has gone up, but apparently not enough to convince as many people to wait tables as in 2019.
But I think controlling for demographic factors would take some work (look at the drop past 2000)
https://fred.stlouisfed.org/series/CIVPART
https://fred.stlouisfed.org/series/LNS11300060
For example, more old people or otherwise disabled people wanting to buy labor relative to people willing and able to supply it, compared to previous decades.
They always had plans to do it but never enough savings to take the leap.
The fact that labor has seemingly collectively walked away from restaurants en masse has been one of the best things about the pandemic. Of course it's complicated (What about the ability for people to source food from restaurants, what about other economic factors that go into it, poor sad owners who invested all their money, went belly up, and now have to act like the labor they abused, "not all restaurants", etc) but the food service industry is one of the most vile, exploitative sectors out there and the schadenfreude over it getting a swift kick in the teeth has been massive.
Out here in the sticks everything is basically back to normal, though one restaurant that was already on the edge appears to be slowly folding.
It’s seems quite advantageous to suddenly change the definition when it slaps you in the face.
I can only assume you must have responded to the wrong comment.
Maybe our indicator should be median rather than average, if we are really worried about the middle class.
What I mean: if an administration doesn't like a given metric, it should get its replacement metric identified and publicized in advance.
It sure looks a lot like gaslighting when the world has an agreed upon metric and you say "just ignore that; look over here."
That's assuming that they had a previously existing problem with the metric. But why would they, it's always been a fairly reliable rubber stamp. Economic indicators give consistent bad news for an extended period of time, then months later 2 quarters of GDP numbers have been released and the metric says "yep, that was/this is a recession". But the metric now kind of falls on its face in this strange situation of quite a lot of bad economic indicators paired with a strong jobs market.
If we want to rigidly hold to the 2 quarters metric, then we're going to have to accept that "recession" means nothing larger about the economy than "2 consecutive quarters of negative GDP growth". It just becomes a short way of saying simply that.
The US definition of a recession was identified and publicized a very long time ago. The National Bureau of Economic Research has been putting dates on downturns since 1929 before there was such a thing as gross domestic product.
What is happening now looks like a reversal of the trend that saw a growing average GDP per Capita coupled with a shrinking median GDP per Capita. The economy is contacting, but the man on the street is seeing a bigger piece of it. Most would agree that's on balance good thing. But calling it not a recession avoids the awkward conversation of how we hid the opposite trend with an over reliance on GDP size.
I compare to 2019 numbers. Everything else is just noise honestly.
Either way, this gives the FED the cover to continue raising rates through next year.
Anyone who thinks the FED will lower rates next year is delusional.
Literally nobody thinks that.
Look at what happened to rates between 16-19. They slowly raised rates in little baby steps, but the moment the 2019 economy started to weeble-wobble, they cut rates almost in half. And when the economy fell over in 2020, they cut rates back down immediately.
It took them 3 years to raise rates from 0.13% to 1.70%, but less than a month to go from 1.60% to 0.05%
https://www.macrotrends.net/2015/fed-funds-rate-historical-c...
Yes, raising rates to control inflation during an expansion and then cutting them when the economy weakens is... pretty exactly the usual simplified distillation of “things are behaving as normal” monetary policy. As is greater caution in raising rates (which fights inflation but slows the economy, with the downside risk of triggering/magnifying recession) vs. cutting rates (which stimulates expansion but risks inflation.)
Not sure why you are pretending this totally conventional wisdom description is some kind of contrarian hot take.
edit: link to data: https://home.treasury.gov/resource-center/data-chart-center/...
edit2: for the visidata users: vd 'https://home.treasury.gov/resource-center/data-chart-center/...'
That's quite a take based on a single lagged data point. Does this NFP number even fully capture the effect of their last 75bps hike?
But the fully-capitalized version does show up a lot.
I don’t know what is like where you are, but I see ads for entry level jobs at $15-$19/hour everywhere around me. That seems very good.
I’ll also note that it seems to me like those jobs aren’t being filled. There still seems to be some power in the worker’s position, though this is all anecdotal.
For reference, you'd earn the same in most of Europe and have far more security nets.
Big Mac adjusted it looks even worse. Meaning, you're not buying stuff either.
At least you probably won't go bankrupt from medical bills, for what that's worth.
Parent says 'very good'. If all you've got going for you as a country is a bit lower house prices / rent while living on virtual poverty, that's not 'very good'. I'm not saying Europe is great, it's comparing a 4 and a 5 on a scale of 10. Both are bad. It's just exemplifying that 'very good' is a gross overstatement, when the US requires far more financial self sufficiency while one is paid the same.
All I know is that minimum wage was $4.25 an hour when I started working and the best I was able to do in a full time job with no experience was $4.60, in the mid 90s. Compare that to today where minimum wage is $7.25 (lower than it should be, I know) but most places are having trouble filling entry-level, unskilled positions for under $13.
Household Survey Full Time -71,000 Part Time +384,000 Multiple Jobs +92,000
source: https://twitter.com/RobertLutherFL/status/155555070208416973...
You can nitpick it all you want but it's a consistent datapoint.
Don't you find it curious that the article fails to mention these details? I do.
I'm not a labor economist and know nothing about job reports. A quick read into the technical notes mentions that there are two separate surveys and the 528k number comes from the second establishment numbers (https://www.bls.gov/news.release/empsit.b.htm).
A recession would certainly give them a “look at that other mess” diversion that all too many loudmouths would gleefully parrot.
I don't think it's any one thing but here are a few ideas I've come up with:
Politics is a big one that can't be ignored. The numbers about the incredibly high levels of political polarization speak for themselves. People have convinced themselves that nothing good can happen when the other party is in power. Post Trump I think that has gotten even worse and people are now openly wishing ill on the whole country so that their party may benefit in the next election.
Related to politics is that a lot of pundits have become very wedded to their positions. Maybe this is just an economics twitter thing but the amount of obsession over what the FED is doing and the dissection of every report isn't healthy. It's hard enough to change your mind (and your trading positions) when things go against you. It's even harder when you are doing it in public and have taken a public position that the sky is always falling.
Moralizing. This is a hard one to describe but basically a lot of the more hard money, milton friedman, perma-bear types, are obsessed with the bill coming due. We sent out a few thousand dollars in stimulus checks to individuals (true), the debt is historically high (true), and now we deserve to have a recession. We deserve the pain, and not only do we deserve it we should welcome it. There is no free lunch!
Finally, though not the last idea but this is already too long... The current situation in the employment market hurts employers the most. The taco bell right down the street from me has had a sign outside for a year advertising starting wages of $17.50 and they still are drive through only because there are not enough employees. The grocery store right across the street from me has been having "on the spot interview" events for more than a year and it is still notably understaffed. The car washing place down the street has had a sign advertising starting wages of $19 an hour for months now. We have had multiple developer and manager positions at my office open for more than a year, but few bites. Employers absolutely hate this and they have a huge pull in the media/government. They would love to undermine worker power in any way.
This has been a thing since Obama was elected. McConnell explicitly stated that the goal was to just block everything and make Obama a one-term president, and that's how they've played policy since then. Even things that would have been completely uncontroversial "routine business" even as recently as the bush years (just a few years prior) suddenly were dragged to a halt. Debt ceiling increases on money that had already been spent by prior bills (again, many passed during the Bush years), for example.
It all goes back to Gingrich and the Contract With America, and things have only gotten more polarized in the years since. They've been playing out the same script ever since. It just gets more and more polarized every time they lose an election... because it keeps working.
This has been happening for a long time. theory seems to be based on recency bias.
Our immigration system needs to reformed to allow US college educated students the option to stay in the US. Current programs like the H1B are in need of serious reform and are too dominated by large firms gaming the system, rather than on individuals seeking a better life. Talented, young immigrants with ideas are the lifeblood and energy of US entrepreneurship and deserve a seat at the table.
Second, The US needs massive zoning reform. Local politicians representing the private interests of the property and home owner class should not have the power to ban new homes. These bans make it difficult if not impossible for younger people to live near well paying jobs. Zoning also sharply limits economic growth. Enrica Morettj estimated that zoning smothered US growth by 50% over 50 years:
https://www.nytimes.com/2017/09/06/opinion/housing-regulatio...