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At this point, I’m expecting both stagflation and a flat market for years to come. Odd that mortgage rate is above 6%, inflation is high, layoffs are happening

At this point, I’m expecting both stagflation and a flat market for years to come. Odd that mortgage rate is above 6%, inflation is high, layoffs are happening, and yet the White House is pretending it’s not a recession and won’t say the word.

Workaccount2 4y ago
The top 40% are unbelievably flush with cash and the job market is strong as ever (bloated tech companies don't count, their value was solely promises anyway). The fed is fighting to undo the QE it over did during the pandemic
- coldcode 4y ago
  I think it's unwinding the QE it did since 2008.
  - boole1854 4y ago
    They are nowhere near unwinding the QE since either the pandemic or 2008: https://fred.stlouisfed.org/series/WSHOSHO https://fred.stlouisfed.org/series/WSHOSHO Why would they even try to undo 14 years of asset purchases? Their goal is only to reduce the growth in nominal spending in the economy so that it grows at around 4% annually (yielding an inflation rate of 2%). The goal is not to return nominal spending back to where it was in 2008, which would involve nearly a 50% cut from current levels.
2OEH8eoCRo0 4y ago
Employment remains high on average.
jhickok 4y ago
I don't doubt that high interest rates will cause unemployment to rise, but saying "layoffs are happening" is a little disingenuous. We are still in the midst of one of the strongest labor markets in US history.
- datavirtue 4y ago
  Fact: economy is growing
- rdtwo 4y ago
  Employment is Lagging indicator. Almost always peaks right before a downturn
  - toomuchtodo 4y ago
    A million people left the labor force during COVID, either through death or retirement, not to mention parents who have reduced employment or left because of child care challenges. Very roughly, there’s a 300k worker shortage, and that will continue to grow year after year until 2034 where we get closer to a 900k worker shortage [1]. 10k Boomers retire each day. Can the Fed destroy demand/cool growth via the benchmark rate faster than workers leave the labor force (strengthening the labor market for those who remain)? ¯\_(ツ)_/¯ [1] https://www.youtube.com/watch?v=EXp8Z7_Y4Bw https://www.youtube.com/watch?v=EXp8Z7_Y4Bw
treis 4y ago
Inflation isn't high any more. July was 0% and August was 0.1%. The headline number looks at a 12 month window. Until the very high inflation months earlier this year drop out of that window the headline number will be high. But it does not look like prices are increasing much anymore. All of the long term trends still point to low inflation like they did before Covid. Slow population growth, technology, and boomers aging out are strong forces keeping inflation in check. IMHO we are going to go back to worrying about deflation in the next 12 months or so.
- prottog 4y ago
  > Inflation isn't high any more. The CPI was 255.7 in 2019 and estimated to be 294.4 for 2022. That's a 15% increase in three years in an index that's acknowledged to somewhat under-report inflation. CPI could flatline (zero MoM) for the next two years and we would still be at 3% annual inflation over five years, which is above the Fed's target, in addition to all the asset inflation we've had that the CPI doesn't really track. Absolutely nobody who pays real bills will feel like inflation has subsided. > IMHO we are going to go back to worrying about deflation in the next 12 months or so. There's a lot of money to be made in the STIRS markets if your prediction comes true.
  - treis 4y ago
    >That's a 15% increase in three years Which means it's high over the last three years. It doesn't mean it's high today.
    - prottog 4y ago
      You're right, but it's going to take either a while or actively lower prices before people will stop feeling like everything is more expensive than it should be. Psychology matters for the effects of inflation on the macro economy. I've definitely altered my purchasing behavior because things "feel" too expensive, and a few months of 0% MoM inflation isn't going to change that. Either in two years I'm going to finally get used to a cart of groceries costing $250, or prices come down sooner.
    - 4y ago
SantalBlush 4y ago
"Layoffs are happening" is not a metric, it's a truism. Layoffs are always happening somewhere, even in a growing economy. How prevalent are layoffs in the overall economy? You didn't even bother to check. Current mortgage rates have little to do with recession, if at all. Inflation is a problem, and it could absolutely lead to recession in the near future, but it hasn't yet. This is why the White House is "pretending" we're not in a recession.
fullshark 4y ago
They will admit it on November 9th

Workaccount2 4y ago

The top 40% are unbelievably flush with cash and the job market is strong as ever (bloated tech companies don't count, their value was solely promises anyway). The fed is fighting to undo the QE it over did during the pandemic

coldcode 4y ago
I think it's unwinding the QE it did since 2008.
- boole1854 4y ago
  They are nowhere near unwinding the QE since either the pandemic or 2008: https://fred.stlouisfed.org/series/WSHOSHO https://fred.stlouisfed.org/series/WSHOSHO Why would they even try to undo 14 years of asset purchases? Their goal is only to reduce the growth in nominal spending in the economy so that it grows at around 4% annually (yielding an inflation rate of 2%). The goal is not to return nominal spending back to where it was in 2008, which would involve nearly a 50% cut from current levels.

2OEH8eoCRo0 4y ago

Employment remains high on average.

jhickok 4y ago

I don't doubt that high interest rates will cause unemployment to rise, but saying "layoffs are happening" is a little disingenuous. We are still in the midst of one of the strongest labor markets in US history.

datavirtue 4y ago
Fact: economy is growing
rdtwo 4y ago
Employment is Lagging indicator. Almost always peaks right before a downturn
- toomuchtodo 4y ago
  A million people left the labor force during COVID, either through death or retirement, not to mention parents who have reduced employment or left because of child care challenges. Very roughly, there’s a 300k worker shortage, and that will continue to grow year after year until 2034 where we get closer to a 900k worker shortage [1]. 10k Boomers retire each day. Can the Fed destroy demand/cool growth via the benchmark rate faster than workers leave the labor force (strengthening the labor market for those who remain)? ¯\_(ツ)_/¯ [1] https://www.youtube.com/watch?v=EXp8Z7_Y4Bw https://www.youtube.com/watch?v=EXp8Z7_Y4Bw

treis 4y ago

Inflation isn't high any more. July was 0% and August was 0.1%. The headline number looks at a 12 month window. Until the very high inflation months earlier this year drop out of that window the headline number will be high. But it does not look like prices are increasing much anymore. All of the long term trends still point to low inflation like they did before Covid. Slow population growth, technology, and boomers aging out are strong forces keeping inflation in check. IMHO we are going to go back to worrying about deflation in the next 12 months or so.

prottog 4y ago
> Inflation isn't high any more. The CPI was 255.7 in 2019 and estimated to be 294.4 for 2022. That's a 15% increase in three years in an index that's acknowledged to somewhat under-report inflation. CPI could flatline (zero MoM) for the next two years and we would still be at 3% annual inflation over five years, which is above the Fed's target, in addition to all the asset inflation we've had that the CPI doesn't really track. Absolutely nobody who pays real bills will feel like inflation has subsided. > IMHO we are going to go back to worrying about deflation in the next 12 months or so. There's a lot of money to be made in the STIRS markets if your prediction comes true.
- treis 4y ago
  >That's a 15% increase in three years Which means it's high over the last three years. It doesn't mean it's high today.
  - prottog 4y ago
    You're right, but it's going to take either a while or actively lower prices before people will stop feeling like everything is more expensive than it should be. Psychology matters for the effects of inflation on the macro economy. I've definitely altered my purchasing behavior because things "feel" too expensive, and a few months of 0% MoM inflation isn't going to change that. Either in two years I'm going to finally get used to a cart of groceries costing $250, or prices come down sooner.
  - 4y ago

SantalBlush 4y ago

"Layoffs are happening" is not a metric, it's a truism. Layoffs are always happening somewhere, even in a growing economy. How prevalent are layoffs in the overall economy? You didn't even bother to check. Current mortgage rates have little to do with recession, if at all. Inflation is a problem, and it could absolutely lead to recession in the near future, but it hasn't yet. This is why the White House is "pretending" we're not in a recession.

fullshark 4y ago

They will admit it on November 9th