I personally think we're in recession and the reason is datapoints outside of this GDP print, what companies are saying, and the fact I know people that have been laid off already. What I find pathetic is that saying we are in a recession is now a political stance.
I think we all know that if a Republican were President the entire narrative would shift, with most of the press saying we're in recession while Fox, etc would say unemployment is still low which is what matters.
How did we get to a point where actual data can be outright denied or absorbed based on your political viewpoint? It's really pathetic. People will go to the ends of the earth just to protect politicians. Worse, even if we're in recession it's pretty mild, so I don't even know why there is so much handwringing about it.
>How did we get to a point where actual data can be outright denied or absorbed based on your political viewpoint?
Because the actual data is sending mixed signals. People equate recessions with job losses, but job growth is still high and unemployment remains incredibly low. Businesses equate recessions with reduced demand for goods and and services, yet demand remains strong enough to push prices and profits to record levels.
GDP has long been criticized for being a poor metric for the economy. But it's always been correlated enough with overall economic sentiment that it was Good Enough. It looks like we've finally gotten ourselves into a situation where the edge case issues with GDP surface.
Lastly, not everyone feels recessions the same. I was one of those people who benefited from the financial crisis, because I kept my job and lived in an apartment, so my income was going up while my costs went down. That doesn't take away from the devastation it caused to other people.
They are not mixed signals, the data we use for signaling is flawed for the modern area
Take for example the U-3 unemployment number that you cite, what is missing from that is Workforce Participation, we have a pretty large drop-off in Work force participation which is leading to the false belief that employment is "fine", and the quote "mix signal" of being in a recession while still having lower unemployment.
Completely absent from most of these older metrics is the "gig-economy" which is really screwing with the data IMO.
Then you have U-6 Unemployment increasing while U-3 is dropping, I think U-3 is just a few months away from reversal and will start increasing soon
>>GDP has long been criticized for being a poor metric for the economy.
yes by MMT supporters that want to ignore the classic model of economics in favor of monetary manipulation for political purposes
>>>GDP has long been criticized for being a poor metric for the economy. But it's always been correlated enough with overall economic sentiment that it was Good Enough.
>> yes by MMT supporters that want to ignore the classic model of economics in favor of monetary manipulation for political purposes
Huh?
Discussing the utility of and then issues with GDP has been a staple of Macro courses for decades. E.g., [1], but I'm really serious: every single macro textbook for as long as macro textbooks have existed has had some version of the question "Discuss the strengths and weaknesses (i.e., problems) of using GDP data".
A reasonable definition of recession is "you can't find a job", but, not only are we in the middle of a labor shortage, traditional good-economic-times like unionization are ramping up, and people are successfully demanding raises (and some households are voluntarily moving to single incomes).
On the other hand, the stock market is down this year, so if that's your definition, things are dire.
Honestly, this seems like stagflation to me, which has been historically known for breaking the definition of "recession".
Neither side wants to say that out loud, because it implies a decade-plus economic funk.
That is actually a really poor definition of a recession. It overlooks many macroeconomic factors that can cause severe problems. "I can't improve my economic position" seems a lot closer, while still being a bad definition, and by that definition, we are deep in a recession.
MMT isn't against using GDP as a metric for the economy
The biggest actual policy disagreement between MMT and mainstream economics is how to achieve full employment. Mainstream economics primarily reaches for monetary policy (tweaking the interest rate), MMT primarily reaches for fiscal policy (create/spend money to give everyone a job).
I don't feel particularly strongly about one side versus the other, but we end up doing both anyways and our current model of changing the interest rate (i.e. recent rate hikes) out of lockstep with corresponding fiscal spending (i.e. Build Back Better) is inefficient when the two need to be kept in balance.
> we have a pretty large drop-off in Work force participation
No, we don't.
While the LFPR is still down from the point it was prior to the 2020 recession, it has been continuing to increase fairly consistently after it's sharp rebound from the trough of that recession.
> what is missing from that is Workforce Participation,
Sure, but the statement I made was job growth ways high AND unemployment remained low. The AND is important for the very reason you point out; U-3 is not a useful stand alone metric. Combining it with job growth data helps provide a better picture of the job market.
Employment still grew by 375,000 jobs last month. This was far above expectations.
>>GDP has long been criticized for being a poor metric for the economy.
> yes by MMT supporters that want to ignore the classic model of economics in favor of monetary manipulation for political purposes
It's been said that a cancer patient going through an expensive divorce is the best contributor to GDP.
You don't measure the health of a human by looking at their weight on a scale. When you go to the doctor for your annual checkup, they'll measure your BMI, blood pressure, body temperature, resting heart rate, and look at a few other indicators to get a very rough estimate of your overall health and how it compares to last year.
GDP is one indicator among many to measure the health of the economy. An important one, yes, but looking at GDP without also looking at employment figures, inflation data, the markets, etc. would be tremendously silly.
> Take for example the U-3 unemployment number that you cite, what is missing from that is Workforce Participation, we have a pretty large drop-off in Work force participation which is leading to the false belief that employment is "fine", and the quote "mix signal" of being in a recession while still having lower unemployment.
Everyone is still very desparate for employees, so I don't think Workforce Participation is low because there aren't enough jobs and people are discouraged from the work force. Baby boomers are currently aging out of the job market at a n accelerated rate, so that must be one of the reasons (U-6 doesn't include that though). I think the current drug disaster is another (a lot of people are simply unemployable), but I'm not sure how to measure that.
A decent measure is the number of unique individuals with a negative background check showing: violent, financial, or drug charges. The best metric I know of that approximates this is linked below; and it’s woefully undercounting.
Of course we have a large drop off of workforce participation. Baby Boomers are retiring en masse; they’re reaching retirement age, and many of those who are close were offered buyouts to leave early.
It’s not the result of decreased hiring due to economic slowdown. It’s the opposite entirely; this is a contributing factor to the labor shortage.
Fast food is reporting the same thing, McDonald's put out a report a few days ago, Yum! Brands is yet to report results for the quarter but similar results are expected. Target had a similar report to Walmart.
It is mostly discretionary spending that is down; Wal-Mart reported the largest fall in apparel iirc, but demand is demand. One would expect discretionary spending to fall first, and hopefully it stops there.
Again I apologize for not providing a direct citation due to my dumb mobile browser but these are days-old news stories and it should be easy to confirm
I know I've cut back on fast food because both product and service quality have declined dramatically, likely due to staffing shortages. Long wait times, cold food, and incorrect orders have pushed me to the point of staying away. It's a weird time, and it's hard to untangle all these additional factors. That said, I'm sure higher prices are having an impact as well.
Fast food is pricing itself out of the market. I think it's a great example of a sector that failed to innovate and is now incapable of providing a product worth buying at prices that are profitable.
McDonalds et al. probably should've been investing a lot more in automating their kitchens. The fact that a huge percent of locations -- and all drive-thrus -- still use humans for the ordering process is, similarly, inexcusable.
Unless the US massively increases its low-skilled immigration quotes, robotics firms will be the FAANG equivalents of the 2020s-2030s.
You can fit 3 generations in a single family home in an American suburb of a mid-sized city, and half the world's population would either (a) consider that a QoL improvement or at least (b) put up with it for a while to remit back home.
For all the doom and gloom in the USA, it's still an incredibly rich country.
To be clear: I'm not making a moral statement here. This is a statement of fact, not a statement of ethical preference.
Someone working low-paid hourly wage work can probably make $20K. A few siblings + their parents = 5 people = $100K. Stagger availability schedules so there's always someone home with the kids, and share vehicles.
Suburb of top-tier cities? No. Cheapest suburb of a midwestern city? Absolutely.
Again, not saying it's reasonable. Just that it's possible.
Commuting. It is possible to commute to the low wages places within major cities while living in less expensive areas. This may be difficult if public transportation makes that too expensive and a losing prospect.
Total household income. It is possible to accept a lower wage job if the rest of the family is making more. A spouse or older child can add to the family budget even if the primary breadwinner is making more.
Grants / subsidized housing of some sort. College students making a few extra dollars while living in the dorms where the major expenses are paid elsewhere.
Back to the older children and summer jobs. Getting a job to do something over the summer and get a bit of spending money of their own.
---
Yes, lower paying jobs within higher cost of living areas are going to be having trouble finding people to work there. This has been a thing for many years. Even in the before times, there were constantly places that had "help wanted" signs out and were paying minimum wage. The ones in higher cost areas of the city were more likely to close resulting in more expensive restraints that can be supported by the people who are living the higher cost of living.
> economic conditions dictate that within a few decade, there will be no restaurants in major cities.
No. Restaurants will continue to exist. Sit down in particular. In cases where you are paying for an experience; the economics will get worse, but they will continue to exist.
Fast food restaurants will even continue to exist. But the latter only with substantial automation. This has already happened at the front of the house -- kiosks and apps are the "happy path" ordering interfaces at every McD's in a major city. I'm merely projecting that the most cost-sensitive segment of the food services industry will push that automation into the kitchen, the checkout line, and a lot of the administrative work that happens at branches.
Not across the board. Demand for consumer discretionary spending outside of the home is up. People are tired of sitting at home. They don’t want to buy a TV and binge Netflix. They did that for 2 years. They’re going out to eat, going on vacation. Trying to get on a flight.
But demand for services and "experiences" is way up.
I think it's unrealistic to expect retail goods to maintain the same highs they had during the pandemic. For a big chunk of the last two years, people couldn't go to concerts, bars and restaurants operated at limited capacity, vacation destinations had travel restrictions in place, etc. This lead people to take the discretionary income they would normally spend on those things and put it into retail goods that improve their lives stuck at home. TVs, game consoles, what have you. Now that restrictions are essentially nonexistent in the US, people are returning to those pre-COVID activities.
The evidence does not suggest that demand for services and experiences is up. Demand for durable goods spiked when COVID checks went out, then returned to parity with demand for services and non-durable goods.
According to the fed, both of those have dropped over the last two years.
> This isn't true, major retailers have been reporting falling demand.
As OP said,
>> and services.
> Wal-Mart
WalMart's issue is that they have a massive inventory/demand mismatch. They already have the headwind of a shift from goods to services, and then on top of that they also massively mismanaged a shift in consumer preference within goods. I have a feeling that they are also feeling the squeeze from Amazon. Many households treat Prime as a fixed cost but the 20 minute drive out to Walmart is a real expense that can be substituted with Amazon purchases. Tonight's earnings will be interesting.
Compare to eg Visa [1].
I expect that the "last hoorah" spending of this summer will grind to a halt in the winter and by Q2 2023 we'll be able to see a massive decline in consumer spending during Q4 in particular.
But we aren't there yet, at least in aggregate, because consumers are spending like mad on services.
>I'd cite the WSJ but for some reason I can't paste the link in this box, just Google "falling demand Wal-Mart"
I'd rather not base my picture of the entire economy around a single retailer. What's going on with other retailers? Amazon, Best Buy, Target, etc? Have they more than picked up the slack that Wal Mart is seeing?
> I'd rather not base my picture of the entire economy around a single retailer
Or retailers in general. Retail spending is down because services spending is up -- people are going to the beach and buying plane tickets instead of buying TVs and patio furniture.
Regardless of whether we're in a recession, retailer numbers aren't a good indicator for the duration/depth/type. We spent all of 2020 hearing that demand was pulled forward. Well, it was pulled forward from somewhere, and now we are there.
> What's going on with other retailers?
Best Buy missed by a lot; sales down by over 10%; forecast was a 1% contraction.
Amazon tonight. Always complicated because of AWS, digital content, and now a substantial advertising business. If you want the retail details you have to go past the headline numbers.
Target in mid-August but expectations are similar.
My guess is that none of those companies will be hit has bad as Walmart because (1) Walmart was just particularly badly mismanaged, and (2) these other companies are just different in kind (particularly Amazon -- they could eg suffer retail losses while beating estimates on Advertising/Cloud)
>Or retailers in general. Retail spending is down because services spending is up -- people are going to the beach and buying plane tickets instead of buying TVs and patio furniture.
>Regardless of whether we're in a recession, retailer numbers aren't a good indicator for the duration/depth/type. We spent all of 2020 hearing that demand was pulled forward. Well, it was pulled forward from somewhere, and now we are there.
All fair points.
>Best Buy missed by a lot; sales down by over 10%; forecast was a 1% contraction.
Macro Econ 101: Unemployment is a lagging indicator. Always has been. Always will be. It's why it was silly for them to keep touting it as a measure of the economy's health.
We could even enter a prolonged, severe recession with low unemployment. How? Labor force participation. If it is low enough, there aren't jobs to cut.
Your last point is very valid, and much is a matter of perspective.
As far as mixed data... the only data throwing a contrary signal is unemployment, previously discussed. Inflation, rising interest rates, low consumer confidence, home prices turning over (speculative market areas currently), supply chain issues, and loss of wealth effect (markets have lost approximately $30 trillion this year), are all VERY recessionary.
to support your statement that unemployment is a lagging indicator -- very random observation of rural Carolinas annual horse roundup and sale. They keep and publish records of a traditional county horse auction there, and the 2006-2010 years are listed. You can see a big change in the prices among these relatively unconnected people and their auction, but it is lagging by two years versus the massive credit crunch that put so many high-leverage city companies out of business.
>Because the actual data is sending mixed signals. People equate recessions with job losses, but job growth is still high and unemployment remains incredibly low.
The data isn't mixed, people are just making an incorrect association.
Working more or longer isn't a good thing in its own right. In fact, it is bad it you are working more for less purchasing power.
employment growth has historically been associated with increased purchasing power, but the current situation is a deviation from this norm.
Talking about employment growth ignoring this fact is a bit of a bait and switch playing on this incorrect association.
> Because the actual data is sending mixed signals. People equate recessions with job losses, but job growth is still high and unemployment remains incredibly low.
The definition of "recession" doesn't depend on what other things people think happen during a recession.
No one would be making this argument if it had happened while Trump was in office.
> That's a nonfalsifiable statement that does nothing but show your own political bias.
It's political bias to notice that people behave politically?
Is it political bias to notice Republicans complain about the deficit when Democrats are in power or is it only political bias to notice that that Democrats complain about the deficit when Republicans are in power ?
Hey please consider changing this comment to substantively add to the discussion. Empty snark, no matter how good it feels, really isn't HNs style and doesn't promote healthy discourse.
Descriptions of economic conditions are obviously politicized. This was probably always true to an extent, but it really took off during the early Obama years.
That said... my wealth manager has been and still is waffling when I ask him if we are in a recession. It's NOT just political; I don't even know my wealth manager's politics and I have absolutely no doubt he puts fiduciary responsibilities first and makes fact-based assessments.
Unemployment is low and the trend is mostly flat. Housing is doing fine. Consumer balance sheets are strong. Are we entering a recession? I think so. But there are a lot of "but"s which really do impact how smart and impartial people are thinking about where and how to deploy capital.
When I ask my wealth manager "are we in a recession?", he basically says "We might be in a recession. We might not be in a recession. Either way, we should not invest as if this is a typical recession."
The fastest-growing (and largest) category of that debt was mortgage debt, which is probably a positive economic indicator if anything, though note that that's based on Q1 data. Household debt servicing costs as a percent of disposable income are still lower than at any point between 1980 (the earliest data available) and the start of the pandemic. https://fred.stlouisfed.org/series/TDSP
Also keep in mind that those debt figures are in nominal USD. One positive effect of inflation is that it reduces the real cost of paying off debt.
Is this a positive effect? I think it is for lower inflation rates, but above a certain threshold the borrowing can get out of hand, people will go and get more loans, which will drive prices higher. Eventually the bubble pops and people go underwater.
Hey, remember back in 2009 or so when everyone was cheering that we were "out of" the Great Recession, but everyone not part of Wall Street was still bleeding? I feel like this might wind up being a reverse of that; and the reason for this is that most economic data are aggregates that are missing the whole picture.
GDP numbers are back up? Great - except that's just higher because the handful of companies that can really capitalize on 0% interest rates are doing so. Everyone else is still down from 2007.
Unemployment is falling? Great - except that those people are leaving the labor force or taking lower-wage jobs than they had before.
There's all sorts of ways that the headline numbers can hide the discontent of a large group of people under the rug. And likewise this can happen in the opposite direction. The economy as a whole can be screwed over in ways that happen to give small business owners or the working class more negotiating leverage or a greater share of the pie.
> Hey, remember back in 2009 or so when everyone was cheering that we were "out of" the Great Recession, but everyone not part of Wall Street was still bleeding?
I also remember the whole expansion preceding the Great Recession, during which the bottom three quintiles all did worse, the second-to-top was basically flat, and most of the gains were in a narrow segment at the top of the top quintile.
“Recession“ vs “expansion“ (multidimensional as it is) is still not, and not intended to be, the same as any individual person’s, or even the median person’s, experience of the economy.
I've seen the word recession thrown around plenty in the press; who's avoiding saying it?
As pointed out by another commenter the NBER has never failed to declare a recession after two consecutive quarters of GDP reduction. This is a preliminary report, I would expect them to wait for the full report to actually declare it.
These things work a certain way. Whether that way is good or bad isn't relevant to this particular point, by expecting that way to change on a whim you're just being impatient.
> As pointed out by another commenter the NBER has never failed to declare a recession after two consecutive quarters of GDP reduction.
That isn't 100% accurate. There is 1 example from 1947 where we had two consecutive quarters of negative GDP, but positive jobs, positive industrial production and positive consumer spending and NBER doesn't consider it a recession.
2001 was the opposite. It was called a recession without consecutive 2 quarters of negative GDP growth. [1]
Because for better or worse, while some other countries have purely formulaic recession criteria, the US doesn't. This can swing either way - the US never experienced two consecutive quarters of negative real GDP growth during the 2001 recession, for example. No one is denying that real GDP has shrunk for two consecutive quarters, they're just correctly pointing out that that's not how the US government defines a recession.
My impression is that layoffs have been mostly isolated to tech at this point. I do know a couple of recruiters (outside of tech) who've been laid off lately, so that could be the canary. But my impression is that all of the quantitative labor market indicators we have are still strong - likely stronger than we've ever seen in a recession.
That's why it is important to have some verifiable agreed upon definitions. "Two quarters of negative growth" is something that anybody can understand and validate. Too simplistic? OK, make it more complex formula, whatever - but make it a formula, and make it fixed, so people can be sure neither Rs nor Ds can game it (at least not easily).
Instead what we're getting is "holistic criteria" which means pundits can argue on TV for hours (which they probably love to) and everybody gets to keep their partisan views and there's no objective meaning to any terms anymore. No wonder people have low confidence in "experts" and grasp at whatever they find on the internet to find some clarity.
People like certainty more than uncertainty, even if it's a bad certainty. That's why the have all these classifiers. It's easier to handle two situations "we're in a recession, we're not in a recession" than track about 50 economic parameters that are interwoven in a thousand complex ways. If you are a professional economist, you probably need to do the latter, but if you are a regular person, you probably have neither time nor capability to do it.
Low unemployment means there are plenty of jobs available. Those jobs are available because employers believe they can increase revenue by shelling out more money on headcount. So those employers believe there's still money to be made in the market.
That's an interesting take I'll have to give some more thought to. I don't think that it's clear that employers think the economy will grow in a way that yields more abundant and cheaper Goods. Maybe I'm Wrong and we'll see in GDP outpacing inflation from all of the new jobs. Maybe they just haven't had a chance to materialize in real GDP growth
GDP is an averaging function, that doesn't show the underlying distribution.
Poor people can be doing better while rich people are doing worse. Since economic activity is mostly about how the ultrawealthy are doing, there's always a recession when they're doing badly
> What I find pathetic is that saying we are in a recession is now a political stance.
This is such a weird information play. Recessions are defined after the fact by NBER. Always have. Always will be. There’s no set criteria.
Informally people cite the two quarters rule, but 2/5 past recessions (2000 and 2020) don’t follow that rule.
No one wants to communicate that nuance so we get mass confusion.
Sad to see that confusion even exists in HN.
What’s actually concerning to me is exactly that: every nuanced discussion in politics is now some gotcha where a reporter asks “yes or no” to a question that has a detailed answer.
I think most of the recession talk is trying to drum up fears of 2007-2009. If we are in a recession, it's a pretty mild one. But that won't stop people from pretending that the sky is falling in order to motivate voters.
Welcome to the average recession. They usually aren't that bad for people outside of a certain small sector that gets hit hard. This time it was the crypto bros.
The average american does not know the technical definition of what a recession is. They just know recessions are bad. Whether or not it's acknowledged we're officially in a recession can itself have negative economic impacts due to panic.
Also, Powell himself has been iffy about whether or not we're in a recession
> How did we get to a point where actual data can be outright denied or absorbed based on your political viewpoint? It's really pathetic. People will go to the ends of the earth just to protect politicians. Worse, even if we're in recession it's pretty mild, so I don't even know why there is so much handwringing about it.
That's because all politicians are liars and the media spin doctors will ensure that their lies gaslight the general public into believing them. The problem is, they can't deny the numbers and they know it, hence why they are beginning to change definitions.
Given the last administration brought the US into a recession 2 years ago with the same opposition, media and critics screaming at them, there is no more denying that this is a recession with these figures. The difference is, the current administration is trying to escape by changing definitions, which doesn't give much confidence in them and indicates that it may get even worse.
Now you see the same ones down-playing the inflation fears in November 2021 are trying to down play this recession very poorly with lots of damage control to save themselves and their careers. In reality we were no better off, and it looks like this is worse than the last administration.
And finally, the indicators for this with surging inflation was there since November 2021. Instead we have 'Stock market up 1% today on both this news and decades-high inflation.' [0] and later 'We are most certainly not in a recession.' [1]. Not only you have to look at it in the long term - not in 1 day, but you also don't wait for the figures to come out for you to then prepare for the worst. By then it is too late.
Hasn't the economy always been part of a political stance? The economy is one of the top 2/3 factors that people consider when voting, hence being important for re-election. It would be in the best interest of anyone trying to run for election to strategically paint a good/bad picture of the economy. This has been the case probably going back to the 1930s if I were to guess.
It certainly impacts people's votes, but when I go to a news site I don't think in the 70s, 80s, etc you'd find people trying so very hard to say a contracting economy is just a "transition" and not a recession. My point is mostly on what the press is doing in their reporting and trying to protect the current party in power ahead of the mid-terms. I know it would be the opposite if things were reversed, with Fox denying the economic reality. I just find it pretty pathetic. What would be the harm in reporting we are in a mild recession other than it runs counter to the White House?
The press is one of the most loathed things in the country and they always seem to dig their grave even deeper.
I see what you're saying as I reflect on the current landscape of media in general. To be fair I was born in the 90s, so no real idea of what the media landscape was pre-2000s basically. The media now is obviously much different, no internet back in the 70s, news sources were seemingly more trustworthy, there was maybe less political division?
To run a counterpoint though, recessions are self-reinforcing. I think what the Fed has tried to do with all its might is to keep the picture as rosy as possible. Once it is officially out there, companies start cutting budgets, people tighten their wallets anticipating harder times, and it just kind of goes in a few cycles like this.
I also find it pathetic. However the press is open to enterprising individuals. We don’t have to keep patronizing the same lousy news outlets. Who’s got the real scoop these days?
> How did we get to a point where actual data can be outright denied or absorbed based on your political viewpoint?
Our elites—I don’t mean that pejoratively, but descriptively—used to adhere to institutional values. When I joined a prominent NYC law firm 10 years ago nobody commented on the fact that it was named after someone who argued the pro-segregation other side of Brown v. Board. The institution, not only of the firm but the legal process itself-where even segregationists are entitled to their day in court—was a credo that transcended individual politics or individual notions of “justice” or “human rights.”
That flipped sometime in the last decade. Our institutions have been overtaken my millenarianism: https://en.wikipedia.org/wiki/Millenarianism. It’s a belief system that transcends institutional values—in the law, the media, everywhere.
Do you remember “The Resistance?” Where Clinton-supporting government employees pledged to work within the bureaucracy to defeat the agenda of the duly elected President—their boss? The craziness we’ve been seeing from conservatives lately is a reaction to that total abandonment of institutional values.
I don’t think there were any. My sincere belief is that the greatest strength of British society, and American society by extension, is that the institutionalism. People will jump off a bridge if a court orders them to, and so long as the proper procedures were followed.
That’s breaking down in America, and politics here is increasingly reminding me of politics on the subcontinent.
What distinguishes Americans, in my mind, is that they're rule followers. As long as the rules are followed, they will accept decisions that they disagree with, or even think are quite unjust. Folks on the subcontinent typically think in terms of right and wrong, or even lower than that, in terms of tribalism such as Hindus versus Muslims. I see Americans devolving into both those lesser forms of politics.
It's understandable that someone would reach that conclusion if all they observed was the J6 committee hearing videos. But on a day-to-day basis, people are behaving essentially the way they always have. People still call in zoning violations expecting issues to get resolved, and they still jaywalk. Nobody's asking for a bribe to install the cable.
We’re not there yet, but we are well on the way to becoming a third world country politically. Trump is a politician fit for a third world country. But we also had members of Congress recently abandon their institutional roles and get themselves arrested at protests. I think even Sanders had more dignity than that.
Like many thousands of people, Sanders was arrested at civil rights protests. I don't like Sanders, at all, but he certainly gained "dignity points" for that. The logic you're using to flatten things down isn't working; it's equating things that can't reasonably be equated.
> Conservatives started going crazy long before that. Keep in mind that there was no "The Resistance" before Trump was elected, and Trump being elected is absolutely mind bogglingly crazy.
When exactly was that? Republicans ran "Mittens" Romney in 2012 (and John McCain in 2008). Two men whose adherence to institutional norms is irreproachable. Yet, as Vice President, Joe Biden said that Romney would put Black people “back in chains.” That was after prominent Democrats spent years claiming Bush “stole” the 2000 and 2004 elections. https://freebeacon.com/elections/terry-mcauliffe-championed-...
Then Trump won in a fair election in 2016, and Republicans won the House by a million and a half votes. Democrats went completely ape-shit at the emergence of Trump, and the media, unelected bureaucrats, etc., all shredded institutional norms in response to him. Clinton claimed he was an “illegitimate President.” https://www.washingtonpost.com/politics/hillary-clinton-trum.... The rhetoric convinced half of Democrats that Putin had “tampered with vote tallies” to get Trump elected: https://twitter.com/sahilkapur/status/815256370958237696?s=2...
All the crazy stuff from conservatives--the election denialism, etc.--came in response to that.
> Further, Trump being elected happened nearly a decade after the emergence of the Tea Party, a batshit insane movement.
There's nothing "batshit insane" about the Tea Party. They're just the ideological wing of the party, just like the AOC/Sanders wing of the Democratic Party. The Tea Party did nothing outside of established procedures.
> Abandonment of institutional values? Like refusing to even try negotiating legislation with any resemblance of good faith to do good by the citizens of the country?
The parties obviously disagree about what's "good" for the country. “Not doing what Democrats want” isn’t a breach of political norms.
In the U.S., the primary lawmaking body is the House. Democrats lost that in 2010 by almost 6 million votes: https://en.wikipedia.org/wiki/2010_United_States_House_of_Re.... Republicans have no obligation to move forward on Obama's legislative priorities when they control the House, just as Democrats had no obligation to move forward on Trump's legislative priorities when they won control of the House in 2018.
> Like the explosion of the use of the filibuster in 2009?
The explosion in the filibuster was done by Democrats at the end of Bush's last two years: https://www.senate.gov/legislative/cloture/clotureCounts.htm. It was double in 07-08 compared to 05-06. It was no higher in Obama's first two years than in Bush's last two years. The filibuster is a red herring in the last six years of Obama's term, because Democrats didn't control the House and couldn’t win a majority for their legislative agenda anyway.
Remember, the filibuster is a legislative rule that can be overturned by a simple majority vote of the Senate, which Democrats had from 2007 to 2014. They could have dropped the filibuster at any point during that 7-year span. They didn’t do it because it’s critical to their strategy.
> Like refusing to bring a Supreme Court justice nomination to a vote on the floor of the Senate?
This is the only thing that comes close to qualifying as a norm violation.
The history of allegations of vote rigging goes back to the 19th century; there were loud, public allegations regarding at least Kennedy, Clinton, Bush, and Obama before Trump. What was notable, of course, about Trump's rigging claims is that they were accompanied by an actual effort to overturn the election, something that has no precedent. That wasn't the "elites"; that was an outsider effort.
Election denialism clearly isn't a reaction to a rejection of institutional norms by elites, unless we're talking about elites during the time of Tilden.
I might agree with you about the filibuster, the Tea Party (bad, but not batshit), and the refusal to confirm Garland. But that doesn't help your argument, which is I think fatally broken.
> The history of allegations of vote rigging goes back to the 19th century; there were loud, public allegations regarding at least Kennedy, Clinton, Bush, and Obama before Trump.
When Terry McAuliffe became chairman of the DNC, he said that "Katherine Harris, Jeb Bush, Jim Baker, and the Supreme Court ... tampered with the results" of the 2000 election. At the 2004 DNC Convention, he said that Republicans "stole" the 2000 election: https://twitter.com/TeamYoungkin/status/1442488094301822980.
Comparably prominent figures on the Republican side were not saying similar things about Clinton or Obama. Unlike Hilary Clinton said about Trump, McCain and Romney never said Obama was an "illegitimate" President.
> What was notable, of course, about Trump's rigging claims is that they were accompanied by an actual effort to overturn the election, something that has no precedent. That wasn't the "elites"; that was an outsider effort.
Sure. Trump is worse than anything Democrats did from 2000-2018. Certainly individually, possibly in the aggregate.
> Election denialism clearly isn't a reaction to a rejection of institutional norms by elites, unless we're talking about elites during the time of Tilden.
Trump's ability to deny the legitimacy of the election and maintain the support of the same voters who nominated Mittens is absolutely a reaction to elites rejecting institutional norms. For two decades, CNN sanctioned Democrats' election lies instead of condemning them.
Then came 2016, when Democrat-voting federal employees declared war on Trump--the duly elected President--through the "Resistance." If you wanted to convince the American public that the "deep state" exists and that the rules have already been thrown out the window--to make it trivial to draw comparisons between DC and the Capitol from "The Hunger Games"--you could not have picked a better way to do it.
If the best argument you have is that Terry McAuliffe, someone not one Democrat in 10 has even heard of, occupying a role not one Democrat in 10 could coherently describe, claimed that the historically complicated and tendentious 2000 election was stolen, I feel I've made my case well.
Again: that case is that there is nothing new about claims that elections were stolen, but that there is clearly something new about a President literally attempting (in more than one way) to rig an election after losing.
As it happens, I agree with you (or at least, the professors who taught you this at Northwestern) about the 2000 election --- that is, that it was correctly decided. But not only did Terry McAuliffe believe 2000 was wrongly decided, so did almost half the Supreme Court. And despite all that, there was a peaceful transfer of power, and not a whisper from the Democratic party that any of the institutions of government be bent or subverted to "correct" the result.
You haven't provided any evidence to connect obstinate federal employees to Trump's attempt to overturn the 2020 election, and so I don't think I need to address that point. I don't agree with you about those obstinate employees (obstinate employees brought Nixon down, after all), but that doesn't matter.
The idea that the Democrats are somehow responsible for Trump's effort to literally rig the 2020 election is a strange hill to die on. I don't think many reasonable people would be sympathetic to the argument.
The references to “they” throughout the speech is usually to Romney and Walker, sometimes to Republicans generally: “Ladies and gentlemen, Governor Romney and Congressman Ryan are running on a theme that they announced at their announcement -- and I'm not being cynical about this -- this when I say they say, quote, we're running to restore the dreams and the greatness of this country. What they didn't tell you in that announcement.”
The immediately preceding text is: “Look at what they value and look at their budget and what they're proposing. Romney wants to let the -- he said in the first hundred days he's going to let the big banks once again write their own rules -- (audience murmurs) -- unchain Wall Street.”
This is part of the problem that the parent comment is referring to - putting all conservatives under the same umbrella. Tea party is different from most Trump voting working class. Conservatism in recent era has taken a very distinct shape and failure to understand this by elites have led to this very phenomenon the comment you replied to is referring to. How do you explain a non-negligible part of middle of America who voted for Obama voting for Trump?
As far as I am concerned, Tea Party acted in a capacity within the institution. The stuff we have seen under Trump including leaking secret military orders just to bring Trump down shows an absurd amount of collusion of institutional bureaucracy, media, corporate powers and security forces (such as FBI) which was unthinkable a decade ago and erodes the core values and credibilities of those institutions. For example, a decade ago FBI was a revered institution by conservatives who would go at length to support its over reaching acts and its the liberals who would question them. How did the table turn so bad that FBI is now actively being used as a force to silence opposition arresting anyone they like in the middle of night in their underwear while inviting media camera crews?
> How do you explain a non-negligible part of middle of America who voted for Obama voting for Trump?
The labor movement always had a socially reactionary underbelly. My hypothesis: it wasn't bad economic times that activated Obama-Trump voters. It was, rather, good economic times that triggered those voters to flip from labor-first to identity-first. The tension was always there. This is why the Tea Party fizzled and why Romney couldn't activate the switch -- reactionary blue collar folks knew intuitively that those movements weren't "on their side". But by 2016 a bombastic billionaire (also obviously not on their side) could be excused because the economy was good enough to at last put identity first.
I grew up in a suburb that flipped and my wife is from a mid-sized non-metro city that also flipped. Obama Trump voters are substantially all of our social circle.
A lot happened, but honestly, "youtube's algorithm and super effective conservative media" is probably the best explanation in over 1/2 of the roughly 3 dozen anecdotal cases. It's just pure identity.
Some blame Obama for outsourcing and the GFC, but that's mostly noise. First of all, the major factory that closed wasn't outsourced. It closed because the company was wildly mismanaged, and was not replaced with a foreign factory. Also, this happened five years before the GFC and Obama's election. Most of the folks in our circles remained employed throughout that GFC and all of them did very well from 2010 on-wards.
They're currently all doing very well financially; far better than the late 20s/early 30s city dwellers whose conversations I overhear in the coffee shop. Red America can afford single family homes with big yards, saves for retirement, and just generally lives a very comfortable life unimaginable in blue cities. With jobs in law enforcement, trucking, and in hospitals which don't require even an associate's degree. It's really the American dream -- graduate from high school, six weeks of training, and you're making enough to afford a house and kids and retirement within a couple years.
The resentment and utter hatred of liberals is visceral and real. Pretending it's economic is bullshit cover. Tell someone sharing a bedroom in NYC that their counterpart with less education, who works fewer hours, and lives in a SFH with a pool hates them because of the unfair economic spoils of the former.
Also, the economy was doing extremely well in 2016. Economics is now top-of-mind, but it didn't even come close to motivating them to vote for Trump in 2016. That was pure identity politics.
> Worse, even if we're in recession it's pretty mild, so I don't even know why there is so much handwringing about it.
Ideologies tend to deal in binaries. We are either in a recession and the sky is about to fall or everything is great. Jobless recoveries or full employment recessions don't fit into binary narratives.
lol that’s pretty funny. forgot he’s the type that just wants the govt to keep printing money despite the massive inflation. that’s the number one goal in his life.
and yes fox news is right leaning but atleast they’re open about it. and a 10% drop after a 2x increase isn’t that exciting
I like to believe that there is a bigger picture here. Oversimplification: An economic downturn when there is a rise in nationalist sentiment had given birth to people like hitler.
Maybe if the majority perceives that everything is fine, when it isn’t, might help prevent that?
> Real gross domestic product (GDP) decreased at an annual rate of 0.9 percent in the second quarter of 2022 (table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP decreased 1.6 percent.
That makes two back-to-back quarters of real GDP contraction. To some, this is a recession, but it's the NBER that puts the stamp on it. AFAIK, NBER has never failed to put the recession stamp on back-to-back drops in GDP.
It's worth noting that yield curve inversion predicted recession four months ago:
> The 2-year and 10-year Treasury yields inverted for the first time since 2019 on Thursday, sending a possible warning signal that a recession could be on the horizon.
It started inverting last year. The inversion steepened. It is now in a very deep inversion in the long end that is marching steadily to lower maturities.
This is something that everyone who is actually interested in the topic will have heard of because it's been mentioned repeatedly by the experts. And yet this thread is filled with confident statements by people who clearly have put zero effort into forming their opinion. Sad.
>yet this thread is filled with confident statements by people who clearly have put zero effort into forming their opinion.
It's funny when you read so many people on HN talk about others speaking outside of their areas of expertise when someone is talking about tech and then come to articles like this where a bunch of programmers try to sound like experts on the economy. Hubris is not in short supply.
On the other hand, we just went through a once per lifetime pandemic and a once per lifetime consumer stimulus package. Supply chains are wrecked and we're in a period during which international trading patterns could massively change. Meanwhile,
* China is still purusing zero COVID.
* There's a land war in Europe with Russia effectively cut off from the Western world.
* German manufacturing, once a workhorse, is being crushed by energy costs
* much of the developing world is swimming hard against the current just to stay alive.
I don't think we are in a situation analogous to 1947, of course, and I do think we are in or at least heading into a more-than-technical recession. But "irrelevant because that only happens after once in a lifetime extremely disruptive events" is a pretty... odd... take in 2022.
> On the other hand, we just went through a once per lifetime pandemic and a once per lifetime consumer stimulus package
And—relatedly—a once-in-ever declaration of a recession of less than one quarter, because of how uniquely sharp the decline in output, employment, and all the recession-relevant measures was, even though it quickly reversed direction due to stimulus and other policy responses.
So it's kind of weird people today pretending that the 2-consecutive-doen-quarter thing has always been an ironclad definition of a recession.
> German manufacturing, once a workhorse, is being crushed by energy costs
Hmm, maybe Germany can solve this the same way they "solved" ballooning Berliner rents: just pass a law saying how much energy should cost. Simple. They do love regulations over there.
Or just ask Gerhard Schröder and the rest of their former chancellors who were in bed with Russia, to blow their hot air through the pipes this winter. They have enough of it.
Good point, thanks for the clarification. Worth noting that the role of arbiter of recessions for NBER only came into being in the 1960s, long after that incident. And 1947 marked the first year the US produced a quarterly GDP report.
> Worth noting that the role of arbiter of recessions for NBER only came into being in the 1960s, long after that incident.
So? The NBER business cycle dating work covers back into the 19th century, even if some of it was done retrospectively. If anything, the fact that it applied it's methodology this way to times when there could not possibly have been any policy impact to its decisions just further undermines the idea that exceptions to the 2-consecutive-down-quarter rule are about current political convenience.
> And 1947 marked the first year the US produced a quarterly GDP report.
NBER was doing income and product reports before the government did, the government actually directly was motivated by NBER’s prior work in starting to do them.
I'm a little sanguine about the inverted yield curve as a real signal this time around, to be honest.
We're in an environment of very rapidly rising short-term interest rates, specifically as the Fed attempts to try to manage inflation; with back-to-back 75 bps increases. That tends to have a curve flattening effect as the yield curve is nominal; short term yields rise more than longer tenors if the market believes that inflation will decrease as real yields will be higher.
There have been predictions that the Fed would exhaust its capability to regulate the economy through monetary stimulus for years with the end result being inflation and recession. Anecdotally, over the course of my life the size of fiscal and monetary stimulus has only increased. During the 90s we would stimulate with a few points of interest reduction, then in the 2000s we had 08 leading into permanent QE through the 10's. The 2020's have seen stimulus activities far in excess of '08.
The Fed has no mandate to generate or maintain economic growth.
The two areas in which it does have a mandate are price stability and sustainable employment. Usually, recessions are accompanied by a loss of jobs, so that's where the Fed would intervene; that isn't happening thus far which is another reason why economists are split over what is really going on in the economy.
The unemployment rate is also extremely low by historical standards, even when taking into account the various measures of unemployment. There is also plenty of evidence that businesses are finding it unusually difficult to hire employees. The Fed is probably fine with the unemployment rate rising pretty significantly because they probably don't see the current rate as being sustainable.
The Fed lowers rates when lowering rates could plausibly help. The Fed has a dual mandate to control inflation and maximize employment. Employment remains incredibly strong while inflation is obviously too high which is the clearest possible signal to tighten. The Fed won't/can't react to changes in the stock market, supply chain or foreign policy. It's not just "loosen during recession, tighten during expansion".
Also, as the Biden administration is quick to point out, US industrial output is up.
So, people are accepting fewer, apparently better employment offers, manufacturing is being onshored, but (due to lower supply of foreign slave labor and exploitable US workers) profits are down, and inflation is up.
Since unemplyoment is low, the Fed mandate seems pretty clear at this point. Interest rates should go up. The market will tank for a few years because inflation and paying workers screws with profits, then bounce back (in real terms) once corporate debt, etc unwinds, and productivity starts to rise again.
Rigid and weak corporations will be displaced by startups and existing companies that are able to adapt/innovate.
It's weird to me that Fox News's staunchly anti-China, pro-US manufacturing Fox News's viewership is so bent out of shape.
Aren't we experiencing exactly the effect Trump's tariffs were supposed to achieve?
Not to delve into politics, but I defy to you explain what the Trump administration actually intended the output of the tariffs on China to be. Trump very consistently said the tariffs were retaliatory for China "taking our money" with the trade deficit being his evidence. He sent separate negotiating teams in the form of Steven Mnuchin and Peter Navarro who were pushing two separate agendas neither of which aligned with Trump's nonsensical reasoning. As far as I can tell, the tariffs were pure PR as Trump did not care about or even understand the intricacy of that or any other policies he advocated. And FOX, of course, isn't really conservative news, it's Republican news.
In reality, there is a case for tariffs on China that has nothing to do with trade deficits. Biden can't just end them because it will make him look soft and let them off the hook for IP theft and other abuses. Really the president should not have this authority at all, Congress should be doing it.
The Fed learned under Volcker back in the early 80s that prioritizing killing inflation is the best way to ensure medium and long-term economic and employment growth, even if it causes lower growth or recession in the near-term. That’s likely the playbook Powell is operating under now.
Perhaps, but the Fed chair is a political appointment and the politicians learned a different lesson.
Carter appointed Volcker and put America on chemotherapy. He caught blame for both inflation and de-leveraging withdrawal symptoms. Reagan got to take America off chemotherapy and take credit in the popular conscience for both reduced inflation and the re-leveraging boom. The political lesson: putting America on chemotherapy is important but politically somewhere between "thankless" and "suicidal."
When Powell was confirmed, it was with this context in mind. Politicians were thinking "do I want to be the next Carter"? I am worried that they only confirmed Powell because they thought he would not be the next Volcker. Of course, now that he has been confirmed for the next 4 years, he has some freedom to diverge from expectations. We'll see.
In Volker time, federal debt (as a fraction of the GDP) was low, he could raise rates without crippling the budget with interest payments.
With today's federal debt level the fed is screwed: it cannot raise rates even close to inflation without busting the budget and cannot lower them (to fight a recession) without spiking inflation.
My bet is on long term rates-below-inflation period to deflate debts, similar to post-war period in the 1940s. And lots ofrhetoric. But it will be a painful ride.
The Fed does not have the mandate to do what is convenient for the budget. That's not their problem. Obviously this is naive and I'm sure the Fed is under all kinds of pressure, but the Fed is supposed to kill inflation by raising rates to whatever it takes, as long as they don't kill jobs at the same time. The government is supposed to figure something out themselves.
You could also just reduce the money supply by abolishing QE and introducing negative interest rates on liquid deposits and cash.
Then everyone can run a balanced budget and watch their debt melt away.
The reason why we have price controls aka the zero lower bound of interest is that we would rather become eternal debt slaves (money supply has always been growing exponentially even under a gold standard) than face nominal losses that force us to face an umcomfortable truth that from this point onwards you will never earn anything again from owning abundant physical capital and that you will have to work for your own money instead of making others work for it.
Until rates are above inflation (now around 8%) I would say the Fed is still pumping up the economy, but it's hard to see the Fed push up rates to that level like Volker did the last time the US had high inflation. The Fed set the federal funds rate at 20% in June of 1981 when inflation was about 15%. If the US has to finance much of its debt at 15% something will seriously break.
In 1974, President Ford had Whip Inflation Now buttons printed up, and 1981 was seven years later. So Volcker's dramatic raise was in that context. Whereas people are more used to a more moribund economy since 2008 with very low interest rates, inflation, and lots of QE, with the subprime bailout followed by the Covid stimulus. Actual non-negligible inflation and an actual interest rate is something people have started seeing more recently.
From what I recall there was a fairly long period pre Volker where there were very half hearted attempts to get inflation under control without going for the kill so to speak.
I think the Fed knowing that history will try to kill it dead first time, because if they don't they know they'll likely have to go even higher with interest rates at the second attempt and the higher they're forced to go the more danger there will be to US financing operations as you say.
> Doesn’t a Fed typically lower rates during a recession?
Recessions have weak employment (that's one of the most important factors NBER looks at to determine recession, among the key reasons they have declared two of the last three recessions without two consecutive down GDP quarters, and one of the key reasons the present two consecutive down GDP quarters is arguably not a recession.)
The Fed dual mandate relates to price stability and full employment (it doesn't independently consider recession per se.) It typically lowers rates in a recession to nudge back toward full employment.
Employment remaining strong and inflation remaining high, thought, it raises rates, even if some people think it may be a recession.
The real scary moment will be when you see the White House and Democrats re-define what stagflation is.
After all, this is a recession. Inflation is comically high - despite the incredibly massaged CPI number. The third and last criteria for stagflation is high unemployment, which it seems like we're heading into as soon as this last post-lockdown boom in consumer spending falls off a cliff.
Stagflation is very scary and it's going to be either the end of the USD, or further raising rates into a recession. Either way will produce untold suffering and cost hundreds of thousands of lives. And we're going full ESG and trying to make energy (and food) as expensive as possible. This is definitely a first and credit has to go to Western leaders because it really takes talent to self-destroy to this extent.
But you need to time the dip with this strategy, otherwise you're underwater in the meantime.
I think the question was, "How can I profit as things get worse?" Or, "What are good ways to protect myself as things go downhill?"
My recommendation? Reduce expenses. And think about investing in ways to reduce those expenses - Toilet paper is expensive, buying a bidet can save money after X uses. Meat can be expensive, see if a farmer in your area is willing to sell you the meat of a full cow at a discount for you to freeze and use over the course of X months.
Not "to some", two back-to-back negative GDP stats has been the definition of a recession for my entire life. Now suddenly it's questionable, because the current administration would like to shrug away its failures, and too many in the media are helping them do it.
This ad-hoc re-definition of language to suit political purposes is scary and Orwellian.
Your conspiracy theory is laughable, primarily because "the current administration" doesn't have any control over the "official" marking of recessions, which is done by the National Bureau of Economic Research, which is a private, independent non-profit.
The comment I am replying to is pretty clearly arguing that not calling the current situation a recession is due to the current administration not wanting to call it that:
> Now suddenly it's questionable, because the current administration would like to shrug away its failures, and too many in the media are helping them do it.
Whether or not I agree with the assessment of the current administration wanting to "shrug away its failures" has nothing to do with it. The parent comment was clearly arguing the theory, which is total bullshit on its face, that the reason it hasn't been officially designated a recession is because the administration doesn't want it to. The reason this theory is total bullshit is because it's pretty obvious the administration has no control over how the NBER marks recessions.
I think it's fair to designate theories which are total bullshit on their faces as "conspiracy theories".
Imagine for a moment that a recession was something quite rare, but extremely desirable and good. But outside of that difference, all of the current state of the word's definition would remain. Do you honestly believe the current administration wouldn't be parading out that we're in a recession, along with all of the usual media making front page news of it?
So we use the usual rule of thumb to claim it's a recession when it's a good thing, but instead try claim it's not a recession until a given think-tank says so when it's a bad thing.
The whole rationale for this line of argument is just bizarre.
If there is some desire to obfuscate what is actually going on in "the media", well, the media is doing a pretty shitty job of obfuscating it. All the major news outlets have the GDP report as top news stories on their sites. Some easy "liberal media" examples:
1. NYTimes: "G.D.P. Report Shows a Drop, Fanning Fears of a U.S. Recession - A key measure of economic output fell for the second straight quarter, raising fears that the United States could be entering a recession."
2. WaPo: "What causes a recession? The dominoes leading toward a new recession have started falling, so what happens next? There are two scenarios that could play out." And also "U.S. economy shrinks again in 2nd quarter, reviving recession fears", and perhaps very relevant to this discussion, "The 8 economists who decide if the U.S. is in a recession"
So the major news outlets are accurately (and loudly) reporting what is going on. I know in my lifetime it has pretty much always been argued that the official "start and end dates" of recessions are marked after the fact (e.g. I recall clearly the start date for the Great Recession was pushed earlier by the NBER after their research had concluded). But these news outlets certainly aren't hiding anything, nor even trying to dissemble - they're just reporting things as the current facts show.
But then some conspiracy theorists (and yes, I believe that term totally applies) are trying to argue that because news outlets aren't saying "we are officially in a recession" that it is "Orwellian".
If Trump was still the president, these headlines would be "we are in a recession" (which is in fact the case), not "fears of recession". Which we are, per the definition that existed so far. The media has no reason to wait for the NBER to make the exact same call they've made every single time in the past.
Ahh yes, every bit of news reporting that doesn't show the Democrats in the worst possible light, and Trump in the best possible light, is the result of "media bias", facts be damned.
The constant whining by Trump and his supporters over "the media is so mean to me" has long since passed Chicken Little proportions.
> Why does everything you personally don't agree with have to be a "conspiracy theory"?
This literally invented false historical facts (about the historical official definition of a recession) to support a claim of a political conspiracy (of the media doing Orwellian thought manipulation through language redefinition to support a favored political faction.)
By the definitions of "conspiracy" and "theory", this idea that Biden is secretly causing an independent agency do misrepresent economic data is, objectively, a conspiracy theory. If there is some proof it happened, then it would be called a conspiracy.
There is quite a trend toward calling things conspiracy theories these days, but there are more conspiracy theories being spread these days.
I think is is probably due to the well-documented conspiracies between the conservative (and some of the radical liberal) press and foreign propagandists to spread misinformation in the US, and conspiracy theories are an effective way to achieve that goal.
You'll get upvoted and I'll get downvoted because your political bias is the orthodoxy here, but the NBER has officially called a recession every single time we had 2 consecutive quarters of negative growth. It's unreasonable to expect anything else in this case.
If Trump was still president, the media would most definitely be calling this a recession. And they would be correct in doing so.
> the NBER has officially called a recession every single time we had 2 consecutive quarters of negative growth
Because the other indicators they look at (employment, consumption etc.) have been consistent with recession in those cases. They've also called recessions without two consecutive down quarters (either with an up quarter in between, or most recently with a single down quarter), because the other indicators were strongly indicating recession. Right now jobs are up.
Employment is strong, consumption is strong, the 1Q drop (not sure about 2Q because I haven't seeb details yet) was associated with a jump in imports as consumer purchases of imported goods shot up.
Honestly, there's probably a problem with the entire concept of “recession” as a binary label, but the same multidimensional set of factors that has allowed multiple recessions to be determined without two consecutive down quarters supports non-recession with two consecutive down quarters.
> two back-to-back negative GDP stats has been the definition of a recession for my entire life.
No, it hasn't, and two of the last three NBER-identified recessions have not met that definition. It has always been multidimensional, it's just that historically the other factors have always [0] pointed toward recession with two down quarters, and sometimes also without. Having strong employment, etc., despite two down quarters in GDP is a historical aberration.
[0] EDIT: as another poster notes, not always—the 1947 non-recession being an example
That definition was only ever a rule of thumb. The fact is, you can't define it. It's like setting a temperature that is officially "cold". The current economic indicators are almost completely unprecedented in the growth is weak, inflation is very high and yet employment remains historically strong. As much as GDP represents the broadest indicator of economic health, if you're looking for a headline to apply to the masses, it's going to be when we see broad-based negative wealth effects in which case inflation and employment/wages are the most important indicators and they're flying in opposite directions right now. Declaring that this is or isn't a recession is essentially irrelevant. It's officially cold when you feel cold.
In the US, the NBER is the institution that calls recessions. The NBER has never once failed to call two consecutive quarters of negative growth as a recession. It's a foregone conclusion at this point.
But wait, according to the mainstream media now, we shouldn't listen to the NBER either, they're all just a bunch of "white economists":
That wouldn't be the implication of a title like that and I suspect you know you're being disingenuous. It would mean that some of our most important decisions are being made by people from a single background that doesn't reflect the makeup of their stakeholders, the American public.
As a thought exercise, would you think it's not notable if the 8 person board was entirely female .. or entirely black?
I would absolutely think it was notable because if I saw “Women Economists” or “Black Economists” I would obviously be concerned the women or black economists are being treated badly.
It’s shocking that you somehow think race or gender can effect the categorization by economists of economic conditions. It’s fairly quantitative situation and I’m at a loss how different backgrounds would effect that analysis.
I mean in your mind ... if all the economists you saw in leadership positions in the US were black I suspect you would think that's notable. That was the thought exercise I was asking you to do.
That's not really a fair comparison. CNN sometimes plays up controversy for eyeballs, but Fox is an outright manipulator. Tucker Carlson is touting fascism and Sean Hannity was literally taking phone calls from the Oval Office asking what they wanted him to say on air. They are also being sued for libel for promoting baseless election fraud conspiracy theories. Saying they're equivalent is like saying a pigeon is like a squid because they both have a beak.
CNN is indeed way far left. But there are three major news networks - Fox, CNN and MSNBC. Of those, Fox is pretty far right, CNN is far left, and MSNBC is farther left than CNN.
All things being equal, more people working is a an increase in buying power. The decreased buying power of wages is only negative relative to the amount people being paid a wage. Which itself is a function of both employment opportunity and size of the labor force. The recent rise in inflation is definitely correlated with a rise in wages albeit at a slightly lower rate resulting in a roughly 1% lag in the past year. If you map out wages paid per GDP you can get an idea of how much of a share of economic growth has been going to workers and it's a been a pretty solid, steady decline since 1970:
So, that sucks, but it doesn't make a useful definition of recession. This is the result of massive, global macroeconomic forces. It's basically a slow reset of the post-WWII global order.
>All things being equal, more people working is a an increase in buying power.
This isnt an absolute. If you have 1 person working for $1/day and go to 2 people for $0.5/day, buying power hasn't changed.
You can have more people working, and people working longer, for less and less material goods.
I think any meaningful definition of economic growth/recession must address the fundamental question of is there more material goods and wellbeing in a country today than yesterday.
I agree that the allocation of those goods is a separate question entirely.
>This is the result of massive, global macroeconomic forces. It's basically a slow reset of the post-WWII global order.
I think that what we are seeing is the start of a realization that part of historic GDP growth was actually a fiction, in that more tangible goods were not produced.
This is why a small increase in wages sent inflation through the roof.
In theory, US real GDP per capita has gone up 33% since 2000[1]. This looks fine on paper as long as the growth is just accumulating in a bank account. Once people actually try to consume more, it becomes obvious that there isn't 33% more stuff to buy.
Nothing says Orwellian Dictatorship like change brought by a "30,000-strong petition", right? Nothing says Ministry of Truth more than "expanding the dictionary", based on "real world examples of use", eh?
(Hint: newspeak was not adding more to the language, was not based on real usage, and was not influenced by public petitions).
Or is this you redefining "Orwellian" and I've missed the joke?
Orwellian newspeak definitely expanded the dictionary in doubleplusungood ways, including redefining existing terms to mean the opposite ("WAR IS PEACE, SLAVERY IS FREEDOM" - words are violence, silence is violence, facts are misinformation, racism is only whites oppressing people of color), and by crushing any opposing wrongthink and oldspeak thoughtcrime, the Ministry could easily gather "real world examples of use" and fill petitions with doubleplusgoodspeak doublethink petitioners as desired, whether Orwell described that process or not.
But are we trending toward a Brave New World rather than Oceania?
Has that been the definition, or has that just been your understanding, which may have been wrong? Has there really been a redefinition?
I mean, if we just take Wikipedia as a gauge, they have defined it according to the NBER, dating back to 2008 [1].
A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.
There does appear to be a recent, ad-hoc redefinition edit battle going on [2][3], but it's to redefine it as you are saying here rather than accepting what has been there for over a decade... apparently for the purpose of using it as a political cudgel [4]. Maybe not so Orwellian, just a misconception.
Also from Wikipedia: While national definitions vary, two consecutive quarters of decline in a country's real gross domestic product is commonly used as a practical definition of a recession.
From the Oxford dictionary (recession): a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.
It's only now that we're seeing all this slimy lawyering about the definition of recession. "Well acksually, technically..."
We can accept that lots of people believe 2 consecutive quarters of GDB decline define a recession, while also admitting that the group that officially defines a recession in the US hasn't done any sort of Orwellian redefinition at all.
It appears, once again, the people trying to refine the word are accusing the people keeping the historical usage as the changers. It's projection all the way down.
The NBER has called a recession every single time we had two back-to-back quarters of negative growth. The news media is known to aggressively jump to conclusions to produce headlines. It's a notable exception that they are so cautious all of a sudden about what is really a foregone conclusion.
In those instances, were there also declines in real income, employment, industrial production, and wholesale-retail sales? In the current climate, are those things declining? Maybe the answer to those questions help explain the discrepancy.
I don't have the time to link the other stats, but they're not so rosy either, except employment. One good stat and several bad ones is still a recession.
I think that chart shows that things are going back to normal. The reason weekly earnings were at an all time high in q2 of 2020 is because the low wage earners all got laid off because of the pandemic. Now that things are going back to normal, the low wage earners are going back to work at approximately the same real wage (although nominally it's probably a bit higher because of inflation).
That's quite an interesting bias and probably accurate, but one issue you run into here is that wages now are lower than even Q3 2019 which is well before any of this kicked off. And the current trajectory is downward.
So it seems safe to say that real earnings are indeed decreasing, rather than regressing to some past mean.
In the USA, "officially" a group of 8 economists at the National Bureau of Economic Research decides when a recession starts. I suspect other countries have their own definitions.
"The NBER's definition emphasizes that a recession involves a significant decline in economic activity that is spread across the economy and lasts more than a few months. In our interpretation of this definition, we treat the three criteria—depth, diffusion, and duration—as somewhat interchangeable. That is, while each criterion needs to be met individually to some degree, extreme conditions revealed by one criterion may partially offset weaker indications from another. For example, in the case of the February 2020 peak in economic activity, the committee concluded that the subsequent drop in activity had been so great and so widely diffused throughout the economy that, even if it proved to be quite brief, the downturn should be classified as a recession." [1]
Planet Money (podcast on NPR) did an episode [2] a little while ago about it that I recommend listening to. They talk with one of the 8 economists. It was honestly refreshing hearing the economist talk about it, I got the impression that it was a more neutral take on the circumstances rather than pushing a narrative.
In other words, if it looks like a recession and quacks like a recession then it might be a recession.
And yes it much more complicated - especially it also depends on how much outside pressure NEBR has. I think there is a large pressure not to declare recession since we still have a high inflation and feds needs to continue raising rates.
the reason for the weirdness is that it doesn’t look like a recession in the labor market. Layoffs have been almost exclusively limited to tech, and within tech pre-profit or highly speculative (cryptoshovels) companies. This is important because in the US economic system labor power drives income drives inflation. (This isn’t true in all countries.)
When the employment outlook changes, and I expect it will, we will be in a traditional recession.
I was under impression that unemployment is a lagging indicator. The last thing employers want to do is let people go - they will try to cut here, cut there, stop hiring etc.
All I gather from their description is that they basically just get a "feel" for it. That's why so many people choose to follow the two negative quarter thing - it's objective and clearly defined, but maybe less accurate (particularly in cases like now where unemployment is still really low).
You're approaching it from the standpoint that it's an exact science, but it's more of a social science and you can't really pin down exact specifics, but only best guesses. Unfortunately (and I fell into this camp for a long time) many people see economics and see the mathematical models and assume that it must be scientific or precise, but the marketing campaign to legitimize economics unfortunately confused many of us into that misconception.
It's helpful to think of economics as a field under the branch of political science, which itself isn't very scientific.
I like to think of it as not really one or the other, but as both. It’s like a venn-diagram intersection of finance and sociology. Some elements of economics are purely quantifiable, and some elements are purely human.
Both of those are up to the consensus of the group of economists. They regularly talk about it with each other and compare with historical data mostly. Keep in mind economics is a social science, not exact science.
It would strike me more as "feeling it out", but they are not in a rush to announce it is or is not a recession until they have a better feel. Everyone seems to be rushing to call it a recession as early as possible. The economist I heard talking had a "wait and see" attitude on the podcast which was refreshing to hear.
I'd say listen to the economists that are actually apart of the group and form your own opinion. I didn't get that impression personally. Although I'm sure there is some impact.
Economics is a social science. It is probably the most data-driven of the set, but it is inescapably human, and therefore ultimately comes down to judgment.
"And it’s rare for there to be two consecutive quarters of negative GDP without a recession. In fact, George Washington University professor Tara Sinclair said the only time on record appears to have been 1947."
Great question! Not that I'm aware of (EDIT:
sseagull provided a good example in 1947). To be fair, I can't think of any time where we've seen 2 quarters of negative GDP growth while maintaining "full" employment and wage growth. This is an unusual recession if it is a recession.
This is a recession. During a recession, the economy tends to lose 10% of its employment or more. Usually this is from loss of jobs. This time, inflation has cut everyone's pay by between 10 and 30% depending on who you ask. The CPI says 10%, but a lot of necessities, like energy and food, are up a lot more.
I don't like GDP as a measure of how well our economy is doing.
We need a whole new measurement. A quality of life index, which measures the real cost of living, not in dollars, but in number of hours required to earn the necessities of life: shelter, food, water, and by extension, the things required to get those: transportation (to and from work, avg distance), certification (aka education), and medical insurance.
The Sahm Rule real time recession indicator, which has been a pretty accurate indicator of recessions since the '60s, is saying that we've come out of the pandemic-induced recession, and not yet started a new one.
Rocks when dropped will eventually fall. You can catch the rock and hold on to it, but will eventually put it down, you can do something crazy like build a wind machine that keeps the rock afloat, but entropy demands the machine go out one day and the rock will fall.
Best case is you catch the rock, and put it down gently so it doesn't break, but rock will go down.
In this analogy, political corruption is playing the role of gravity.
Covid could have been prevented by mechanisms that Trump removed. The US inexplicably kept juicing the economy with zero interest rates through the end of Obama and all of Trump. 2008 could have been prevented by depression-era regulations that were removed due to heavy lobbying and traceable payments to (bipartisan) politicians. Whatever bubbles pop next (crypto seems likely to be one of them) will probably have been fueled by that same deregulation.
This is beyond political corruption, it's human corruption. Inherent to the way people respond to incentives.
People inherently will try to put things to their benefit and to what incentives them. It takes a lot of structure to make the cost benefit of the incentives to outweigh the perceived benefits. It starts with something relatively good, but slightly pushed and snowballs from there. "I got stuff done that fed all these people! Surely making sure i get a little extra food is fair.....". Maybe someone notices and say "thats not fair", then why would the person go through a bunch of effort to make sure everyone is fed again and not just themselves? Altruism?
Every social structure ever created to stop this has failed in Human history, its reasonable to say every one that will ever get created will. They will be exposed to powerful forces of erosion and entropy. Maybe you can get a machine system that rules over humans that has different incentives or something, but any system that seeks to curb corruption will fall sooner or later. You can try to make in the system a desire to repair itself, but that in itself becomes an incentive and then we see purges.
You can build a tower to keep your rock up and defy gravity, but that tower WILL fall one day.
An analogy can only serve to clarify a concept. If I'm already aware of a concept, then the analogy is deceptive. It serves no logical purpose other then to deceive. It literally serves no other purpose. For some reason when humans hear an analogy there is a slight catharsis when the brain puts two puzzle pieces together and relates the analogy to the original concept. This catharsis serves to delude the brain into thinking the analogy serves as supporting evidence when it is in fact nothing.
Can you prove that the business cycle is inevitable? Why would an analogy prove anything?
I also literally said that there have been methods used to stop the business cycle. And yes these methods have been successful at completely impeding it... but at great cost. It's called communism.
So literally I've proved the statement wrong by showing the existence of a counter example. The proof hints at the possibility that there are other systems besides capitalism or communism that are undiscovered or not created yet that could impede the business cycle without the associated cost. Others could say that communism as defined by the manifesto was never really implemented or that the current examples of communism failed for different reasons OTHER then communism.
Either way, the cycle being inevitable is categorically false.
But we can stop lying about the definition of a recession. Biden admin changing the definition to avoid loss political points is about as nonsensical as blaming inflation squarely on Putin. The disinformation needs to stop.
I don't get why people are getting all riled up by this. Of course the White House will try to put a positive spin on things, the same would have been done by the Republican party (or any other political party in the world). As noted above the President can't technically change the definition of a recession anyway, it's another agency that does that. So much ado about nothing...
protip: everyone can perceive which ways the parties are different, when people refer to both sides they are referring to the ways they are the same, not the ways they are different
Yeah; but people get cranky when you point out that one side is propped up by foreign propagandists that have explicitly said they're trying to destabilize the US.
Is the "liberal media" mentioning it or doing wall to wall coverage on this non-scandal? I'm hearing this talking point from relatives so I assume it is getting the wall to wall treatment on right-wing partisan news.
I think the more harmful thing this extreme political shitfighting is doing is stopping just seriously getting on with doing everything possible to improve things.
"We're not actually in a recession." So what?! Just acknowledge things aren't good and get to fixing them, be honest with the public and have some bloody integrity for once.
The US (and UK, and Australia, etc) partisan political playground fighting is ridiculous and the media (inc. social media) spends far too much time supporting it.
If a placebo can cure an ailment caused by sentiment then should the patient be lied to? How much of a recession is consumer sentiment? And is lying always a bad thing?
That change isn't significant. Vaccines in the past have not had 100% effectiveness, and we all know that. There've been mumps outbreaks that were primarily among the vaccinated, despite that vaccine having a very high effectiveness. The reason they were primarily among the vaccinated? Vaccination rates were well over 90%, so even with a 90% rate of success the odds favored some getting the illness.
Cases were mild as the vaccine provided the expected protection. This is not new.
It's similar to global warming/climate change. Moving from the former to the latter wasn't some nefarious plot to move the goalposts. The former is an imprecise term which hadn't mattered very much until that imprecision began to be weaponized by those with an agenda.
Same thing with vaccines, the previous definition was inaccurate--but up until the covid vaccines, nobody pretended to be bothered by it. There hasn't been any notable effort to discredit flu vaccines because they don't offer permanent, or even particularly reliable immunity in the many years that they have existed. Along came the anti covid vaccine folks to weaponize the inaccurate definition--so, in response, the definition is updated to be more accurate.
How often do you get to a successful resolution of a dispute when you start from the position that one side's concerns are made up (pretended, imagined, etc)?
> There hasn't been any notable effort to discredit flu vaccines because they don't offer permanent, or even particularly reliable immunity in the many years that they have existed.
These are the reasons that I never opted to get the flu shot, and I never had my professional and social lives threatened as a result.
> How often do you get to a successful resolution of a dispute when you start from the position that one side's concerns are made up (pretended, imagined, etc)?
There are times when one side's concerns are nonsense. Brainwashed Russians believing Ukraine is overrun by Nazis. People who believe that the 2020 election was stolen. I choose not to gaslight myself into entertaining that nonsense and entertaining the notion that there's a successful resolution to be had.
Wow the scale on the historic chart on that page is just nuts! Looking at Q2 & Q3 of 2020 - it just dwarfs everything and nearly makes the chart unreadable for the scale of numbers that we usually think of as important - where a full percent is real and two percent is big. I mean it makes sense given the pandemic, but seeing the economy shrink at a 30% annual rate one quarter and then bounce right back by the same amount the next quarter is insane. I wonder the last time it changed that quickly.
The way that the White House, and by extension the administrative branch of the government has decided to redefine "recession" and imply that the economy is doing really well right now is actually scary.
These people do have huge levers that control our lives that they can pull. Their actions do have massive effects on the American economy, and by extension the economy of the rest of the world. The actions they're taking are legitimately horrifying.
I seriously don't think these people understand what the lives of normal people are actually like. The white house had the gall to put out a tweet bragging that gas prices had come down, and that this could be saving people $35/mo, and how much that is helping.
Gas if still $4.2 national average per gallon. That's HUGE, and the direct actions of the administration are to blame for this.
> and imply that the economy is doing really well right now is actually scary.
We're not seeing a decline in employment or spending. The really bad symptoms of a bad economy aren't there yet.
> Gas if still $4.2 national average per gallon. That's HUGE, and the direct actions of the administration are to blame for this.
Which direct actions? And frankly, gasoline prices do not amount to a signficant amount of spending by American families. Food and housing costs are also up and wages down (adjusted for inflation) which account for a lot more money that people actually spend than energy. However gasoline prices are also way down from a month ago, yet food/rent are still up.
It's been suggested the employment is because people are being forced to take on multiple jobs to make ends meet, not because there are more people getting jobs.
Gas affects the prices of nearly everything in the economy so I have no idea how you would conclude it's not a large portion of spending. I work in commodities and we are seeing massive price increases simply due to fuel & freight costs.
The government can stimulate employment by pumping money into its favored causes. So what you end up with is plenty of people employed but not producing things that people actually want. Unfortunately, we can't even imagine the wonders that people might have produced if their resources were instead allocated towards satisfying consumers.
There’s no official definition. It’s like saying you’re sick, you can be sick even if doctors can’t point to what’s wrong with you, and you aren’t necessarily sick even if you have a condition. The two quarters thing is just a really widely recognized rule of thumb. The idea that there’s some sort of official definition every economist agrees on is incorrect. The idea that there’s an organization that owns the word recession is also wrong.
“Every record has been destroyed or falsified, every book rewritten, every picture has been repainted, every statue and street building has been renamed, every date has been altered. And the process is continuing day by day and minute by minute. History has stopped. Nothing exists except an endless present in which the Party is always right.”
Good thing no one is rewriting definitions. “Recession” has no agreed upon definition, the federal government relies on the NBER to officially tell us if we’re in a recession. They haven’t said so yet.
Next thing they’ll go for the statistics bureau itself in order to massage the numbers closer to the source as possible, no need anymore of this Orwellian double-talk. At least that’s what they were doing in the ‘80s in the Eastern-European country while I was a kid, officially we had record maize and wheat production, in practice bread and cooking oil were rationed.
"Shell (SHEL.L) posted record results on Thursday, with a $11.5 billion second-quarter profit smashing the mark it set only three months ago, lifted by strong gas trading and a tripling of refining profit. The company also announced a $6 billion share buyback programme for the current quarter but did not raise its dividend of 25 cents per share. It said shareholder returns would remain 'in excess of 30% of cash flow from operating activities'."
What do you think this is the type of comment, which the administration also keeps making, actually means?
The subtext is: these companies are doing well, and that's a bad thing. How do you think that effects their desire to bring down costs for consumers?
And also: yeah, their profits are up, because due to the actions of the administration people are uncertain about their ability to buy this stuff in the future, and the futures cost goes up.
The question is: do you think this will accelerate us towards a a green energy future.
Her answer: yes, and that's a good thing for the following reasons.
BTW, a green energy future is one where these oil companies are out of business. The energy secretary is saying that she wants these companies to accelerate their own demise at a decreased profit, and how there eventual disappearance is a good thing.
Haven't the oil companies stated they feel its doing more right by their investor putting the money back to the shareholders than invest in a project that has a likelihood of getting shut down by the government?
they can't bc investors are scared af about what the future is. biden and his buddies been attacking oil and gas for years now then they wanna flip a switch and have everybody go back to investing in production. then 2 yrs from now they gonna go back to attacking it and straight up cancelling projects and refusing to permit shit and companies won't be able to pay off the assets.
it was a mistake to focus on attacking o&g when alternatives still aint ready yet.
yes lol but most of those just have to invest like 20% of their assets in esg or smth. esg is also more commonly exclude oil companies so they aren't the shareholders pushing that. it's kinda funny some of the big esg funds literally have energy companies as their top performing picks rn.
I’m sure both oil refinery executives and the executive branch of the us government wish that they did have that much control over gas prices. The reality is that gas prices are set by market mechanisms of an international commodity. Gas costs what it costs.
Correct, the last POTUS that did something to meaningfully impact gas/oil prices was Bush II when he invaded Iraq, and Obama a little bit when he decreased Iranian oil sanctions.
For better or worse, we don't live in anything resembling a command economy.
There is a regulatory aspect as well. The current regulatory environment is not encouraging an increase in refinery capacity, and that seems to be our current bottleneck.
This is not a value judgment as to whether this is right or wrong.
Should Joe Biden get some streamers and make a poster to show his support for oil refineries? He isn’t in charge of spending; that’s Congress. Maybe he should issue an executive order forcing oil refining capacity back online? Then you’d bitch about government overreach.
It's not lacking in integrity to point out your opponent's criticism is no longer valid, even if - especially when - that criticism was made in bad faith.
We could drill our away out of this problem, but we are not, because the the biden administration is being held hostage by the progressive left. And before you start calling me a republican, im not one, but this is just a really stupid idea because it's decisions like this that will cause republicans to be elected in 2022 and 2024 - the american public isnt going to take higher gas prices for the team to fight climate change at this point, they are going to vote people into office that will lower them. biden doesnt realize this because he is surrounded by people that think a like and are too rich to be unaffected by inflation, or he doesnt care -- either way, it
s a bad position
> Now, you could be excused for asking yourself: “Wait a second, I thought the U.S. had a bunch of oil in the Permian Basin in Texas and the Bakken Shale in North Dakota. Why the heck are we importing oil?” Turns out the answer is part chemistry and part economics.
> ...
> That’s because they take longer to process and need specialized refining equipment. This cheap, lower-quality crude comes from Canada, Venezuela and Russia, among other spots. Back in the late 1990s and early 2000s, it was the product U.S. refiners were buying.
> “A lot of refineries, especially in the Gulf Coast, made a very expensive bet to invest in this equipment that would allow them to save money on input costs by processing, you know, lower-quality crude,” said Richard Sweeney, an assistant professor of economics at Boston College.
---
We can't drill our way out of this because we can't refine the oil that we produce.
> Refiners who invested billions to turn a profit from processing cheap low-quality crude are paying unheard of premiums to find the heavy-sour grades they need. The mismatch is better news for such OPEC producers as Iraq and Saudi Arabia, who don’t produce much light-sweet, but pump plenty of the dirtier stuff.
> The U.S. was producing 11.185 million barrels of crude oil per day in 2021, compared with an average of 11.283 million barrels per day in 2020, according to data from the U.S. Energy Information Administration. The latest data shows that for the week of March 4, 2022, the U.S. is producing 11.6 million barrels per day.
> While there was a dip in oil production in February 2021 due to winter storms in Texas, said Mark Finley, a fellow in energy and global oil at Rice University in Houston, the U.S. remains the world’s biggest producer of crude oil.
> Approvals for companies to drill for oil and gas on U.S. public lands are on pace this year to reach their highest level since George W. Bush was president, underscoring President Joe Biden’s reluctance to more forcefully curb petroleum production in the face of industry and Republican resistance.
You can't look at the oil market in isolation like that. Saudi was dumping oil at that point, producing way more than necessary. So much so futures went negative. That is not the case today.
Which is not true either, as the dip we've seen over the past several weeks can attest. We've deeply tapped into our reserves (much more than expected as released yesterday) to achieve this. It seems like it might be short sighted and short lived.
Also if the president has no effect on gas prices why was ours groveling at the feet of the Saudi Prince?
Leaders have power through influence. Unless you are suggesting Biden has no influence, which in his specific case unfortunately might have some truth. But that's not generally the case with the president of the US.
Among other things, that profit owes to the fact that the price for their product was substantially higher at sale time than at the time when they bought their inputs. If your issue is that someone made a profit, then you want the market price to be lower.
I personally don't think mandating all actors to altruistically abstain from transacting at market price would be a sound policy, but that seems to be what liberals want.
I'm liberal and don't want central planning. It terrifies me that we are headed down that road at all; even seeing trial balloons for price controls. It always ends very, very badly and there's no reason to think this time would be different.
> The biggest spender, Johnson & Johnson, shelled out $17.5 billion on sales and marketing in 2013, compared with $8.2 billion for R&D. In the top 10, only Roche spent more on R&D than on sales and marketing.
That doesn't seem to contravene what was being said? The assertion was that the US (via higher prices) is what pays for the R&D. Not they they exclusively spend all the US profits on R&D. If the companies suddenly made 20 billion less, I'd expect the proportionate expense on Sales vs. R&D to stay roughly the same?
And mRNA tech came from Europe? (seems like it came from USA to me) And isn't Pfizer an American company? You're talking about the German company right? Would they have been able to do without Pfizer backing them?
Not just Europe—price controls (de jure or de facto, the latter via e.g. establishing a monopsony) are, as best I can tell, the main unifying factor in healthcare systems in the entire OECD except the US. Those systems differ a lot, but at some point and on some level, they all fall back on price controls, apparently to good effect.
Just looking through the OECD's datasets [0], I see a lot of health care quality and utilization measures missing for the US and many other OECD countries. How are you defining "good effect"?
I was able to find some incomplete data that suggests the US is pretty good on the metric of wait time, compared to many European countries and Canada:
I wrote a lot longer explanation but deleted it. Suffice it to say other systems are good enough that functionally no-one wishes they had the US system instead, and it'd sure be weird if every single other OECD state had been relying on price controls this long if they weren't having some beneficial effect.
My short-version argument would be—and I'm a little annoyed at having to explain this, because I've been explaining it to people on the Internet for 20 damn years, it's so not-hard to find this info that it's kinda difficult not to have been exposed to it, and it seems like it should be common knowledge at this point and like some folks are going way out of their way not to understand it—that the "good effect" is precisely that the US spends 50-100% more than any of these countries, per capita, and does not smoke the rest on practically every metric, instead doing a little better in some areas, a little worse in others, middle-of-the pack on others still. It sure as hell looks like we're paying a huge premium for similar outcomes, which also explains why there aren't a lot of people in other countries begging their governments to adopt a system like ours (a fact one has to explain when cherry-picking metrics to make the US look good—OK, so why aren't others rushing to copy us? At least some of them should be, if we actually do have an unambiguously better system).
The "good effect" is that other health care systems spend far less, and also don't bankrupt people over medical bills, while achieving roughly comparable results.
If I came to you and told you I had a process to produce a Tesla knock-off that produced a car a little better in some ways, a little worse in others, but pretty damn comparable, at 50-70% of what it costs Tesla to produce a car, and then showed you dozens of factories I'd already built that were demonstrably doing exactly that, you wouldn't ask me how I was defining "good effect" when I used that to describe the results of the One Weird Trick of my process. It's obvious.
Were you not aware of the vast differences in costs & accessibility between OECD healthcare systems? By which I mostly mean between the US and everyone else.
I am asking you to define "good effect" precisely because it seems to be subject to the kind of cherry picking you don't like.
I'm a median to upper-middle American, and I get great value from my healthcare. It's not obvious to me that a system that raises the experience for mean, or even the bottom end, of the distribution would be a good thing for me in many respects: emergency wait time, access to top percentile specialists, out of pocket costs, just to name a few. It also seems to me that you neglect to factor in that people of means, the world over, come to the US to access care from world leading treatments in many conditions. So they might not want American care in their country, but plenty surely want it for their own bodies.
Put simply: your "good effect" often smuggles in assumptions about which part of the curve to treat, and implicitly undervalues degradation of the status quo for others. You, as is the habit of liberals, would like to have a debate wherein your moral values about who deserves what and who should be deprived, is taken for granted. I'm sorry, it's not immediately obvious to me that a system where 10,000 people wait 6-12 months for lifesaving operations is better than one where 1,000 people can get the operation in a month and the other 9,000 might have to go into debt to do the same.
> It's not obvious to me that a system that raises the experience for mean, or even the bottom end, of the distribution would be a good thing for me in many respects
Ah—I usually assume the Rawlsian "Veil of Ignorance" POV when it comes public policy issues, personally, as I think is fairly common. Sure, if that's your perspective, literally nothing matters except how a policy affects you, personally, right now, so my analysis may not hold—but that's not an especially useful perspective from which to consider public policy when discussing it with strangers, and I'm not really sure why you'd even engage on this in public if the only thing you care about is whether a policy is good for you, right this second (circumstances are subject to change, after all)
At least you're up-front about it, rather than hiding it. I don't mind that when it's made explicit—I just also, again, don't get why you'd engage, and wonder whether you might have guessed in advance the sort of more-typical POV I was taking, so really could have understood what I meant by "good effect" without my needing to explain it. What were you trying to accomplish here?
Do you have anything other than unearned moral condescension? It is not my experience that clicking your tongue at people and badgering them to prioritize the collective over their own individual health outcomes in a healthcare policy is compelling.
So why would I engage? Because you seem to be advocating policies that would directly (and potentially negatively) affect my health outcomes, and your justification is "but you're just a statistic".
> The net profit margin of S&P 500 companies, which include energy giants such as Chevron and Exxon Mobil, in the first quarter has been running at 12.3% based on estimates and earnings reported so far, according to FactSet. That’s down from a peak of 13.1% in the second quarter of last year, but above the pre-COVID-19 level of about 11%.
As with food, they've realized the public will pay higher margins than they previously thought they could get away with.
>I personally don't think mandating all actors to altruistically abstain from transacting at market price would be a sound policy, but that seems to be what liberals want.
Ding Ding Ding!
The relevant question is why isn't there competition to drive the market price down.
If it appears that there is a monopoly or oligopoly extracting value from it's market position, the solution is diversification, not profit controls.
Profit controls just drive prices higher as companies strive to inflate their COGs
Wait until you hear about ESG which governs some trillions of dollars of assets. ESG is a way for politicians/elites to force ideology on the public without having to go through the electoral process and gaining public support. This power is exercised through the proxy of corporations. It is anything but democratic. It is totalitarian/authoritarian.
I am the last one to believe in these types of things but it is getting to a point where I feel like we're being boiled like a frog.
Climate/ESG initiatives have lost respect in my eyes, I'd like to support sensible things but this is how we'll get totalitarianism on our hands. Then there is the whole WEF agenda.
Direct actions like what? U.S. crude production is near all-time highs. Gas is expensive because ridiculous Americans will pay it and the oil companies figured that out. Shell just announced a $12 billion quarterly profit.
The only thing I want to see out of Biden on gas prices is a windfall tax on oil companies where the funds are dedicated to lithium exploration.
Direct actions like immediately cancelling the keystone XL pipeline.
Imagine you're a company which builds refining and extraction infrastructure. The government wants you to build more capacity to bring down the cost fuel, but 18 months ago. you watched them just straight up cancel a project which was already half finished.
Would you go for this? I wouldn't.
And you have a bunch of land lease contracts which allow you to extract oil. Without these contracts your business will collapse. The government has said that they won't give you any more until you use the ones you have. But again: they've spent the last 18 months cancelling projects, and talking about how we need to make a transition away from your business.
Do you trust that once you use up the remaining leases you have, that they're really going to give you more? I wouldn't trust that.
"Experts tell The Associated Press that the Keystone XL pipeline cancellation isn’t affecting what’s happening in the oil market today. It was never operational when it was shut down, and was not slated to go into service until 2023, according to a press release from TC Energy, the company constructing the project."
"Even if the Keystone XL pipeline had been completed, the amount of oil it was designed to transport would have been a drop in the bucket for U.S. demand, experts noted. The U.S. used nearly 20 million barrels of oil a day last year, while global consumption of oil was near 100 million barrels. The pipeline would have contributed less than 1% to the world supply of oil, according to AP reporting."
You are talking past parent. They are saying the cancellation is a signaling mechanism that gives them no confidence to build out new refineries and other infra that is required to lower prices.
Pandemic started in December 2019, gas prices started getting high in early 2021 after keystone was cancelled and the Biden admin began slow rolling drilling permits.
> If things returned to normal, then you can't really blame the pandemic.
We're still dealing with supply chain issues, and will for a while. The idea that you can turn the economy down 30% and back up 30% in less than a year with no lasting effects is silly.
> When this thread started the war in Ukraine was the issue.
Yes. Starting from an already-disrupted screwed-up economic baseline certainly doesn't help.
Simply put we were net oil exporters under Trump, all of the sudden we are back to begging the Saudis. Given the environmental retoric of this administration it isn't unreasonable to conclude that they had a hand in that.
What? Biden and other world government officials placed massive sanctions on Russia exports of oil. They seized hundreds of billions of dollars of their deposits at the federal reserve. Forget about the fact that his administration had already been driving up the price of fuel, this had a huge effect on the futures prices, driving them up to where they are now.
Their actions do have effects and sometimes a corrupt group of lifetime government grifters make bad decisions that have bad effects. The Orwellian framing is that nothing these people do could ever be wrong.
Open your eyes. The sanctions have done nothing to stop Russia, have driven up the cost of fuel (which benefits them, an energy exporter), and have dramatically heightened geopolitical tensions all over the world. We went from a situation where Russia was going to end up with a land bridge to Crimea, to a situation where Russia is likely going to end up controlling all of Ukraine, is substantially richer, and has driven a wedge between the US and India.
Russia has been putting out very cherry-picked data on their economy, which Western journalists have been taking at face value. They've been unable to make more PGMs, and their civilian sector is getting savaged.
Perun's Youtube channel has been a great deep-dive source into the war economy in general. If you're at all interested in how governments acquire arms, he's an indispensable watch.
TL;DW: The time for Russia to win the war was February, now it's a matter of how many people and how much wrecked steel and how much of Ukraine he wants to make into a wasteland before he says uncle.
EDIT: Because I can't reply, Good Times Bad Times is good too. They're a bit more high-level and wider scope than Perun, and I'd recommend them as well.
> a situation where Russia is likely going to end up controlling all of Ukraine
Not gonna happen. They might keep what they grabbed, especially if the West is going to continue dragging their feet and giving Ukrainians aid at the current "attrition war" rates, but they are at the peak of what they could achieve, at least at this round. The question now is - would they be able to keep it, not whether they can grab more.
9% is exceptionally high for some industries (eg, commodities or retail). For example, Wal-Mart is closer to 3%. Its not unusual to see targets of close to 4%.
I do agree with you that it isn't unexpected during a period of sanctions on a country that produces ~10% of the worldwide oil supply, though. Profits naturally will rise for the remaining players.
Oil is the textbook commodity and the expected profit margin on commodities is ~zero. That's the nature of a commodity: a good so interchangeable, with so many competing producers, that the profit margins are inevitably minimized.
The problem is that supply naturally reacts slowly and ~1/10th of the supply was removed from the global market. I've heard people act as if that's a small shift, but its really not small at all over the short term.
Not all commodities are equally recoverable at similar costs though, and in a world where we need more oil/copper/iron than can come out of the cheapest mine, there will be profit
The swing in the higher granularity data going to quarterly is .. impressive. Scary impressive. If its not a measurement artifact, its a real quirk of the situational pressures.
Seeing as initially, inflation was primarily driven by Covid-related supply chain issues, which itself would have been 'transitory', I think it was quite reasonable to call the resulting inflation 'transitory' as well. Crucially, inflation is in part also a social phenomenon, as far as I understand it: if I expect prices to rise, I have to try and price that in, resulting in rising prices. Therefore, the initial attempt of keeping people's inflation expectations in check might have done us all a favor, because it could have worked out.
The situation changed when a war broke out in Europe at the end of February, and I don't think it's fair to hold Yellen et al accountable for not taking that into account beforehand.
While I do believe supply chain issues had a lot to do with triggering, I cannot look past the invention of 1.5 trillion dollars that were injected into the economy, nor can I look past the hit to labor resulting from government policies around covid . The use of "temporary" or "transitory" was political damage control, the tail wagging the dog.
I view your comment as more of the kind of spin that we're seeing in the media right now; conveniently ignoring larger and more obvious sources of trouble, in order to deflect and downplay the seriousness of the situation.
But you DO look past the purpose of that injection of money, which was to protect jobs/economy. Whether it could have been implemented is one thing to be debated; to assume/pretend it had absolutely no positive effect, and that we would have been off than we are currently without it, seems disingenuous.
To the argument within my comment, the purpose of the money is of no consequence. It is merely fact that the money was injected. The moral consequences or beneficiary of that money don't have bearing on the fact that the money was injected, and would have negative long-term effect.
Right, and not injecting the money would have a negative long-term effect. I'm saying while it's difficult to be sure, it's at least reasonable to conclude that we traded a short term disaster for smaller long-term pain.
Maybe you disagree, but I don't get why people are acting like this is sinister.
Why are your kind so desperate to spin this situation into anything remotely positive? Is it buyer's remorse? Tribalism? Desperation?
We're in deep shit. A lot of people saw it coming, a lot of people ignored the warnings. A lot of people tried to spin this like it was no big deal "nothing to see here, all is well." It doesn't matter if this is a damned-if-you-do-damned-if-you-dont - we're in the shit now, and that's all that matters.
it would seem that you are basing aspects of argument on feelings, perceived individual benefit, and speculation. That's not a debate I'm interested in engaging in. I prefer to look at the facts as they are at present.
As an aside it's pretty bad form to accuse the person you're talking to be emotional. It's implies that your argument is logical and correct, and the other person's is incorrectly clouded.
Can you clarify what your argument about the stimulus is then?
As an aside it's pretty bad form to continue to try and draw a person into an argument they've repeatedly stated they're not attempting to make nor have interest in joining. Stop trying to make fetch happen.
I have no argument for, against, nor interest in engaging in the shaving of a yak that is bald. You're in a debate with a single participant.
I'm not trying to "draw" you into an argument, I'm responding to my best faith interpretations of your posts. That is not considered bad form. That you refuse to clarify and call me emotional is.
Does your explanation for inflation have zero impact from general social sentiment? i.e. - Purely due to the levers of monetary and labour policies?
If so, what is the explanation for inflation occurring in countries all over the globe, even those without monetary injections or business closures?
If not, and there is some level of impact from individuals thinking "it feels like there's about to be inflation, so I'm going to act like there's inflation now", wouldn't there be a net benefit to that kind of messaging?
Do you have evidence she was lying versus being wrong? A number of notable economists thought inflation was transitory. It’s hard to predict things like the effect the war in Ukraine would have and the effect the shipping industry doing its thing would have.
The lying is the present attempt to tell us we’re not in a recession.
And her failure to appreciate the scale of the price inflation problem was not just a case of being “wrong.” She was unable to see the worst inflation in 40 years when it was standing right in front of her.
You're changing your story now though. You now have new information that wasn't available at the time of the transitory comment. Information that would all but guarantee large inflation problems.
I believe they had numbers on how much money was injected into the economy from the money printer, they had numbers around how many people had exited the workforce and available jobs versus filled. These folks are supposed to be analytical, intelligent, skilled statisticians. Instead, we're getting politically-minded loosely-defined-economists that are ignoring the breadth of information in favor of a cozy narrative.
If it was caused by money injection into the U.S. economy then how do you explain inflation being a worldwide phenomenon? Quite a few experts believe a year ago that inflation was a result of imbalance in supply chains due to lockdowns. New information arises and a reevaluation of old ideas occurs. No evidence of lying as far as I can see.
But what if you're wrong? What if the monetary effects you think are important are not? What if the reason prices rise is due to a war, energy crisis, shipping crisis, and lockdowns in the largest manufacturing base in the world? Which, ya know, would definitely cause prices to rise?
Seems to me like you're just saying you're right and they're stupid without acknowledging the state of things
In January of 2007 President Bush said the economy was doing fine. Much later in the year the NBER said that the recession began in January. Was Bush lying or did he lack foresight? Determining when a recession began usually happens after the fact because of how “recession” is defined.
Austen Goolsbee? He was part of the Biden campaign and not a CEO. He seems like a good guy, but he’s a hack.
Most of the executives quoted said inflation was an issue, but that they thought they would be able to raise prices to match (ie we’re going to do our part to make it persistent).
Edit: A very important article. Basically the academic center-left consensus was 100% wrong, and everyone else was right.
The academic center-left consensus like the CEO of Citi?
>“Will inflation be transitory? There are many reasons that the peaks we’ll see at the moment will be. But what’s the longer-term trend? That, I think, everyone will be keenly watching. We think the jury is out.” — Jane Fraser, chief executive of Citigroup
Goolsbee is a world renowned economist with tenure at one of if not the most hawkish monetary institutions in the world. You don’t know what you’re talking about.
He’s on Squawk Box weekly spinning away. I’m perfectly familiar with him going back to the Obama years.
His role, in public at least, is to try to spin the D econ failure of the day in the way Wall Street might barely find plausible. Again, seems like a good and sharp person, but not an unbiased observer, and certainly not a CEO dealing with inflation issues in their business.
NBER tells us when the recession started only after months of being in a recession. Unless you can travel to the future, you have no way of knowing if we are officially in a recession now.
They lied when they blamed inflation on Putin's invasion, only one week into the invasion. At best Putin's invasion explained 5% of that number at that early stage, given the lead-lag in the CPI number and the predominant causal factors being supply chain issues from COVID and recent monetary and fiscal stimulus.
I’m not an economist. A number of respected economists believed a year ago that inflation was mostly supply chain issues and was transient. Now, with new information, opinions are changing. I believe the monetary stimulus mostly occurred the first year of the pandemic but maybe it’s continuing. I don’t know. Since inflation is a global phenomenon it seems reasonable to conclude that fiscal stimulus in the U.S. is not the cause.
I believe the statements regarding the Ukraine war were that it was going to increase inflation and not that the current level of inflation was due to the war. The statements I recall were of the form, “due to the war inflation will be exacerbated.”
The statement from Psaki in an early press conference was that the invasion explained the observed CPI number. She wasn't referring to inflation that was yet to come. She knowingly lied, probably rationalizing it as spin or a half-truth.
I remember when Palin ran for Vice President she had a day of interviews for local media types from various parts of the country. She did a number of consecutive interviews and in one made a dumb mistake conflating North Korea with South Korea. She was ridiculed by people for not knowing the difference. Now, I believe Palin is profoundly dumb and ignorant but she didn’t deserve to be attacked for making a mistake during a full day of interviews.
You mention one statement from the Press Secretary ascribe to it malice. Do you know she lied rather than was misinformed? Assume she is lying. Does this mean the whole administration lied? The discussion at hand is about Yellen (and by extension economists at NBER and other agencies). One statement by the Press Secretary is evidence of a lie by these people? I don’t think so.
It’s believable that Yellen and Biden and Pskai did lie because in politics you try to sway public perception and opinion. I don’t believe NBER has lied and to blame inflation on fiscal stimulus that largely occurred two years ago seems outright bad thinking. Especially to then blame the current administration for it. Inflation is going on all over the world. It’s not Biden’s fault. There’s a collection of reasons and mechanisms at play and Biden can only do so much.
It wasn't one statement. This was early in the invasion so I was glued to the press conferences. It was deliberate messaging delivered more than once. If there's transcripts you could grep search for inflation.
"I don’t believe NBER has lied and to blame inflation on fiscal stimulus that largely occurred two years ago seems outright bad thinking. Especially to then blame the current administration for it. Inflation is going on all over the world. It’s not Biden’s fault. There’s a collection of reasons and mechanisms at play and Biden can only do so much."
I'm not sure what you think you're arguing against. Never said that it's one hundred percent down to fiscal policy from two years ago (although both loose fiscal and monetary policy of Trump and Biden are undeniably a non-trivial part of it -- money supply and inflation are inextricably linked). I also wasn't saying it was mostly Biden's fault.
Ownership of products (especially software) is turning into a license that allows you to use the product as long as the manufacturer allows it (i.e., under certain conditions which of course are revocable or amendable at the corporation's whims).
I'm pretty sure that if they could get away with it (today), some companies would love to sell you a license to breathe the air inside their buildings. On account, of course, of that air being expensive to suck into the building and clean and pipe throughout said edifice, and they need to 'recover' the costs associated with that.
Kind of amazing how this administration isn’t getting the kind of ridicule that would be expected if the previous administration tried to deny a recession was happening according to the objective definition by including a subjective qualifier.
It's fairly obvious there are political bias in american media and always has been. If your party is hostile to increasing federal government or regulatory capture you will be under a microscope and even sacrifice some credibility to attack you, otherwise you can bumble around, redefine common terms, deflect and mislead and have the entirety of relevant and 'trusted' media sources run cover for you indefinitely.
Even just 15 years ago it was nowhere this overt or coordinated. The turning point seems to be shortly after JournoList and CabalList started when different independent media organizations began to collude to push a unified "narrative" rather than the truth.
There are many people, including me, that are happy with Trump's Supreme Court nominees. As originalists and textualists they are more likely to do their job of keeping the other branches of government to the bounds of the their Constitutional power. Biden's nominee also claims to be an originalist and a textualist. So, I really don't see the point of your complaint. Unless your complaint is that 3 judges were nominated by the red team so they must be red team loyal. Loyalty to a party is not a desirable attribute of a Supreme Court justice. Reducing party loyalty is the reason for lifetime appointment. Once a judge is appointed they have no reason to rule along their nominating party lines.
We'll see when a fourth amendment case comes across their docket how true they are to the constitution and limiting government. I'm not holding my breath.
In fairness, the "free from government" party has direct ties to foreign powers that are openly trying to drive us to a civil war.
Taking away bodily autonomy is just a minor skirmish; and the means justify the ends, after all.
Wait till next year when the sodomy and birth control laws start to pass, along with the plans to erect border checkpoints within the US to prevent people from entering and leaving certain states.
Those are enabled by existing supreme court rulings. They've already taken up a case for next year that will allow state legislatures (that are already controlled via gerrymandering, and often elected by a minority) to just ignore vote tallies and appoint whoever they want.
I'm curious to see who the military sides with during the inevitable 2024 coup. Last time, they made it clear they would remove Trump by force if needed. Presumably they're not becoming more loyal to him, given that he's out of office, but it will be dicey when they have to choose between ending democracy in the US or overriding the supreme court and also the house or senate.
They are basing it off facts. The NBER is the one who defines a recessions. They haven't done so (that I'm aware of) as of right now.
It might be that it will eventually be the case, but the arbitrator of this hasn't ruled on it.
Calling it a recession officially now would be the alternate fact.
Basically, it's like how someone can be guilty of something, but you still have to say "alleged" before referencing the crime.
Yes, you might have a million witnesses, but they aren't guilty until they are guilty.
And I'd much rather have a government that abides by these rules than not. Offhanded remarks based on willful disregard to order should not be encouraged.
That the definition of a recession has always been 2 quarters of negative GDP. The administration now believes there is nuance in the numbers, so what was the accepted definition in the past is no longer.
The fact the media on whole has decided it's ok to redefine a commonly accepted definition when the administration promotes it lends itself to the media being a mouthpiece for the administration.
I am willing to understand nuance and a changing definition, as I am sure there are parts of the economy people are learning to deal with. Gig workers, workers headed back from retirement and more. This doesn't even touch on the self fulfilling prophecy of hearing that the country is in a recession.
I am less willing to accept a change in a short timeframe and right before numbers are released.
I mean I hear you on "changing the definition" from the commonly accepted two quarters of declining GDP numbers- though that was never actually official, you are mistaken about that- the NBER is the "official" source and they declare it based on a range of factors that there is some subjectiveness to- its not a direct formula.
However, wouldn't you agree there is nuance here?
In Q4, GDP rose 6.9%, a number so big that we haven't seen that in decades- it appears around the early 1980s was the last time we saw those kinds of numbers. There has been a lot of whipsaw effects as we get out of covid- supply chains are all over the place, companies placing orders to get goods in to avoid snarls, only to now find that demand for goods, which boomed during the pandemic, has now eased as people have reverted to spending on going out and traveling, etc... There seems to be a lot of mismatch in supply and demand again.
The unemployment rate is at 3.6%- an astonishingly low number- these lows were last seen in the 1960s and 1970s.
On the flipside, inflation is high, gas prices are high and that hurts a lot of people- I live in a city, so this is mostly irrelevant and driven by forces out of anyone in the US govt's control.
There is evidence of some rockier times ahead, but when I think "recession" I think of a lot more pain than what we are currently experiencing.
>That the definition of a recession has always been 2 quarters of negative GDP.
Well, if you want to be specific, the NBER (which calls the game on what is a recession or not) defines it as "a significant decline in economic activity that is spread across the economy and that lasts more than a few months."
The "two quarters of declining real GDP" (GDP increased by 7.8% in nominal terms) is the pop-economics yardstick.
Are you aware we had a recession in 2001? And yet that managed to happen without having two consecutive quarters of negative GDP.
> This doesn't even touch on the self fulfilling prophecy of hearing that the country is in a recession.
That's not how recessions work. There is always people predicting a recession and always people predicting a turnaround or growth. It's quite simple, however, to engineer a recession when you raise interest rates for such a heavily indebted economy.
I am unsure the point you are making. My point was related to mindset and I should have clarified. If a group of people, normal non economic expert citizens, believe a recession is here they change their behavior. The media plays a part in amplifying it. At that point it doesn't matter what is happening at a macro economic level.
I am for introducing nuance to the judgement of a recession or not. I am not for doing it right before numbers are released the admin saying, "Well, there is nuance in the determination" before the numbers are released. At best all you are doing is introducing confusion to the non economic expert citizens and at worst you are attempting to gaslight people.
The news media is not nearly as objective as they claim to be. And, they exercise a considerable amount of discretion when it comes to either amplifying a potential controversy or downplaying it.
Yes, BBC isn't moderate just like NPR isn't moderate anymore. May be in the 20th century, BBC and NPR were neutral. But, that's clearly and indisputedly not true anymore. They're all left leaning.
There is a consideration that NBER isn't the issue. yes you are correct, they make a determination. I think the difference this time is that you have what was commonly accepted among normal people that 2 quarters negative meant recession. This time there is pushback against it.
I think the hang up is more political than technical. When the opposing party controls the white house there wouldn't be broad support for "let's wait and let NBER make a determination."
>”You beclown yourself by believing there is or has ever been an objective definition. There is not and has never been.”
Okay, consider myself beclowned then. So how did economists define all of the previous recessions on record? I know that ‘a recession’ is not a scientific measurement, it is a conventional definition.
But don’t you find it odd that the administration wants to jettison the conventional definition when it applies to the economy under their leadership? Right before the midterms, no less?
Their procedure is subjective, but there is still a standardized measure of convenience, no?
Just like there is an "official kilogram". We can say, "That's an objective measurement of weight on Earth" but it's not. It's the measurement of the standard kilogram in France. And that "objective" measure can change [1]. It doesn't mean there isn't a consensus on what a kilogram is.
Yellen was on Meet the Press last week explaining there is a difference between the "official" measure of a recession and the "two quarters of negative growth" heuristic. That's not to say that politicians can't, or won't, play wordsmith games.
The kilogram is a quite poor analogy. The GDP is not an objective indicator of recession for the exact reasons you see around you right now. Contraction of economic activity caused by supply bottlenecks doesn’t fit the pattern of recession. The labor situation is still white hot, prices are going up etc.
Are you saying there can't be a standardized definition of "recession"?
What your alluding to seems to indicate that the definition of "two quarters of negative GDP growth" is incorrect (according to Yellen). It doesn't mean there can't be a more accurate definition.
That's where the kg analogy fits. There was one definition that is now considered incorrect by consensus.
No, I’m saying there is not one, and defining it strictly as two quarters of gdp decline removes much of the utility of the business cycle dating process.
Yellen seems to disagree, although she said the two quarters definition is too blunt and the "official" definition, the one used by NBER, takes a much more broad picture of the economy.
"There's an organization called the National Bureau of Economic Research that looks at a broad range of data in deciding whether or not there is a recession. And most of the data that they look at right now continues to be strong. I would be amazed if the NBER would declare this period to be a recession, even if it happens to have two quarters of negative growth."[1]
I think maybe you're conflating "standardized fact" with "objective fact." A kilogram is a standardized fact, even though the objective weight of the object may change. We agree there isn't an objective definition of a recession; I'm saying that despite that, there is a standardized definition. And it isn't "two consecutive quarters of negative growth."
Get used to it. We're back to the status quo (of incompetent media). In fact, it was the same for the previous admin, just in a different way.
The System doesn't like outsiders. If you haven't paid your dues, sucked up, kissed the ring, etc. then you're marginalized. Put another way, how would it look if someone with no experience was decently effective? Say about as effective as the current highly experienced (politician) that's POTUS?
I'm no fan of Don T, but given humam nature and The System, he was doomed to "fail" no matter what. As in, perception is reality (and most people now have a bias that isn't going to change).
It's worth adding - especially for the down voters - that prior to leaving The Daily Show, Jon Stewart was the most trusted source for news for a fair percentage of the population. The channel for TDS was on...Comedy Central.
Believing in the mainstream media is the adult equivalent of believing in Santa Claus.
Government forcing people out of their jobs and then allowing them to come back into the work force is not job growth in the sense of anything meaningful. So no it probably hasn't been seen before, but it's irrelevant, if I took your 10 dollars today and gave you back 8 dollars next week, your bank account isn't growing unless you only look at this weeks balance and choose to ignore the extremely recent past.
That doesn't make sense since employment is near capacity right now and the worker shortage is still very real. Mind you this is now long after all the covid benefits have dried up.
Employment is higher than it was before Covid and unemployment is down at around the same level. To put it in terms of your metaphor, the bank has given you back $10.10 or so for your $10.
But when you give back the $8, you just need to tell them that "bank account growth" only matters week to week. Boom, they're now $8 richer thanks to you!
According to many of Biden's economic advisers, it is.
For example:
"Of course economists have a technical definition of recession, which is two consecutive quarters of negative growth."
-- The head of Biden's National Economic Council, in a past life, apparently.
You can find many other examples in the past of his advisors defining a recession as two quarters of negative GDP. And you can find many examples in the past of the press defining a recession as two quarters of negative growth.
"two negative quarters in a row is a standard indicator for an economic recession."
seems so, although id argue the recession light came on in the cockpit sometime around late 2020...we just chose to ignore it. doubling down on 2010s speculative monetary policy of near negative interest is just wishful thinking, but directing relief grants to multibillion dollar industries was bad comedy.
its really hard to imagine how the fed assumed 'free money' was a sober policy to drive one of the worlds largest economies on. the best we can hope for now is the student and automotive credit bubbles dont burst under the strain of half-percentage-point increases, which i suspect will continue throughout 2023 as inflation crests 15%.
That is the result from the rate of inflation changes being so steep. As it is, the interest rate is being adjusted at the fastest reasonable (and predictable) rate. There were more than a few people shocked with the first 0.75% increase... not so many this past time.
For addressing inflation, the fed's tools are rather blunt (adjusting interest rate). The issues of disrupted logistics and energy cost increases are ones that the fed has little direct control over. The monetary policy tools are being used to the greatest degree they can. The fiscal policy tools have been left rather idle as those require political will to use.
Returning to the reserve currency question - is there another currency that meets the requirements? Saying "the euro" is ok - and that represents the second largest reserve currency holdings, but, if you are pointing to inflation, it is hitting just as hard in Europe. The yen and the pound sterling have their own issues and China's currency has another set of issues.
The crystal ball gazing of "what about 15% inflation and reserve currency" misses out on what is happening to the rest of the world and what can and is being done to address inflation.
Personally, I think it would be great to understand the economy at a more basic level rather than what’s put out for the general public to consume in the often overly simplified terms.
For example, the condition of the economy vs the Fed raising rates will be interesting.
The Fed is trying to slow the economy but much of the inflation problem is supply side related.
I think we all know that if a Republican were President the entire narrative would shift, with most of the press saying we're in recession while Fox, etc would say unemployment is still low which is what matters.
How did we get to a point where actual data can be outright denied or absorbed based on your political viewpoint? It's really pathetic. People will go to the ends of the earth just to protect politicians. Worse, even if we're in recession it's pretty mild, so I don't even know why there is so much handwringing about it.