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Record high credit card balances, record low personal savings, 40 year high inflation, rising interest rates and no sign of the fed stopping. Housing affordabil

Record high credit card balances, record low personal savings, 40 year high inflation, rising interest rates and no sign of the fed stopping. Housing affordability at its lowest point since the real estate bubble and crash of 07/08. You are on some very good copium if you believe the economy is in good shape.

noelsusman 4y ago
The economy is humming along just fine despite all of that.
- mberning 4y ago
  Many people feel fine right up until the point they get diagnosed with a terminal illness. The point being, this would be like going to the doctor and having high blood pressure, high cholesterol, high blood sugar, etc. etc. The patient can be up, walking around, feeling OK, but in reality they are headed for a nightmare.
  - noelsusman 4y ago
    So we agree we're not in an economic downturn then.
  - mplewis 4y ago
    The economy is not a human body.
    - charcircuit 4y ago
      It's an analogy
      - zopa 4y ago
        A bad one. What's the insight here? If a body were a nation-state, it'd be a totalitarian hellscape where life is cheap, individuals exist only to support the collective and some populations are invaders to be exterminated.
        utrack 4y ago
        I'd call it a complex system. It's entirely possible to have a component in a system that may disrupt the whole system in a whole new, unpredictable way. Just like some sort of asymptomatic tumor which breaks the whole body once it metastasizes.
        zopa 4y ago
        Yes, and as I don’t want metaphorical chemotherapy for the country I’d prefer we chose a different metaphor. An analogy shouldn’t just be some strained parallels, it should lead us in useful and not destructive directions.
        utrack 4y ago
        Oh, fair enough. Something surgical would be best :)
      - hirako2000 4y ago
        What is the relation between people's inability to notice having a brewing disease and business predicting turmoil in the future hence going for the diet?
    - edgyquant 4y ago
      Maybe not a human body; but it is /a/ body and it is true that those things are not a good condition to have for prolonged periods of time.
- alldayeveryday 4y ago
  which says a lot if the economy is disconnected from the prosperity and economic outlook of the majority of people. In such a case, a "good economy" is just a synonym for "elite are still doing well."
  - A4ET8a8uTh0 4y ago
    This, I think, seems to be the important thing that seems glossed over in news articles. At certain income, the economy is doing great. But that is within the group that, historically, has always done well. When you have enough money, a lot of pain can be made largely removed. Now, it is only anecdata. I am in IL. My household is above average in terms of income for US and my state. We are struggling ( not as much as so many other Americans, but I can't say I am comfortable say.. buying a new car or remodeling kitchen or even taking a vacation ) and it is not like we are throwing money at random indulgences and we did not even start school for our kid yet. By all metrics I should be in a comfortable enough position ( and I guess I am by comparison ), but to me outlook is choppy. And it is not just the boom/bust cycle. I am talking real systemic issues that will take both massive tax hikes and services reductions, but that would not be a popular message to take so no one talks about it. I remember working sub $20k job. I remember being bumped to $30k ( ~US median? ) and I can't even begin to imagine anyone having to live on that today. In short, I agree.
    - alldayeveryday 4y ago
      To your point about services reduction, I don't agree. I think more of a re-allocation of where capitol is going is the cure. We should increase or create new social programs that incentivize native births, home ownership, making it possible for most households to have just one person in the workforce, etc - and reduce the money that goes towards foreign wars, foreign agitation, welfare for nations across the world, etc. And I agree, tax hikes but targeted at the financial system which makes money in parasitic ways. In short, the economy needs to be optimized to the benefit of the lower and middle classes, the working class, and no longer to the 1%. This all probably requires heavy nationalization of banking and major industry. I dont see this as an evil and mistrust those that tell me to fear putting the power back in the hands of the people and away from the elite.
- rwalle 4y ago
  Sure, your subjective feeling is more accurate and convincing than concrete numbers.
  - SantalBlush 4y ago
    You should actually look at the concrete numbers. GDP and the unemployment rate are the two biggest economic indicators used in determining a recession, and these concrete numbers tell you that you're wrong.
  - noelsusman 4y ago
    It's the "we're in a downturn" crowd that is relying on vibes and feelings. GDP is growing. Unemployment is the lowest it's been in over 50 years. Real wages are growing for the bottom 50% of earners despite high inflation.
deleted 4y ago
[deleted]
sidibe 4y ago
There are always some measurements by which the economy is currently a disaster, and you are definitely going to hear those from companies that need to or want to lay off employees or from opposition politicians. A lot of other measures are solid now, the main thing is rising rates will hurt companies that aren't very solid financially and give everyone else a nice excuse to let go of employees.
deepGem 4y ago
Yet unemployment is at the lowest levels. So the economy is doing just fine.
- edgyquant 4y ago
  Or rather it’s doing poorly this no one has the savings or means to skip out on jobs they don’t want .
kasey_junk 4y ago
This economy is baffling to basically every professional who looks at it. Just this week we saw a jobs number that absolutely rofl stomped the consensus expectations. At the same time the credit card number came in ism services business purchasing came in 35% over expectations and new orders were way over expectations as well. Businesses are out there doing something! You could watch in real-time as the markets all did a collective about face on what the narratives should be. I frankly don’t know if we are in a good economy or not, but there are lots and lots of indicators we are, so saying someone is on “copium” because they espouse that view says a lot more about your biases than theirs.
- yamtaddle 4y ago
  I listen to conservative AM radio a fair bit (because I'm not right in the head) and a local guy was really struggling with this the other day. "The jobs numbers, yeah, those are really good, but... um... economy bad? Can't possibly say it's good while a Democrat is President, but um, yeah, I was surprised at how good the job numbers were. But... it's still bad, somehow, because reasons. Inflation? Oh and we're definitely on the cusp of a recession, if not a depression, I'm just sure of it." The situation's super-weird and it's evidently hard for people used to being able to easily spin the narrative one way or another to adjust to whatever the hell this is. It's definitely not the case that all indicators look great, but damned if the economy's not still trucking along.
- utrack 4y ago
  That sounds like proper risk management then? If you don't know what's happening then it makes sense to play safe. The only problem is that those collective layoffs might actually slow economies down and exacerbate the issue at hand...
- evouga 4y ago
  It makes sense to me that the economy overall is doing well but that the tech sector specifically over invested during the pandemic and is now contracting.
  - kasey_junk 4y ago
pwinnski 4y ago
The only economic conditions that matter to any company is whether they will be able to continue earning money the way they have been. Since most of the companies doing 6-8% layoffs are concurrently reporting revenue growth, it isn't clear why they feel their future revenue is going to suddenly decline. It also isn't clear why, if they truly expect a decline, they'd continue to buy back shares or issue dividends. Seems like they'd want to keep that cash on hand, if they actually had concerns about the future, and weren't just using the social contagion as an excuse.
- rkangel 4y ago
  > The only economic conditions that matter to any company is whether they will be able to continue earning money the way they have been. This is clearly not true, although it is probably the most important thing. Interest rates matter if a company financed expansion using debt. Cost of capital matters if your plan is to grow through VC and you're not yet profitable. Changes in these areas can change a company whose books add up to one that doesn't.
  - idontpost 4y ago
    [dead]
  - pwinnski 4y ago
    > Interest rates matter if a company financed expansion using debt. I haven't personally seen companies taking out operating loans using adjustable rates. Have you? If rates are fixed, then a company's expansion plans may need to slow or stop, but that's not the same as the company contracting. > Cost of capital matters if your plan is to grow through VC and you're not yet profitable. Which does apply in Gitlab's case, I think, but does not apply in most of the cases we have been seeing of 6-8% layoffs made at profitable companies, many of which are concurrently doing expensive stock buybacks or issuing dividends. If your business model depends entirely on 0% interest rates, then a 7% layoff is probably not enough, you have a dead company walking. But 6-8% is what's popular, so that's what we get.
    - 4y ago
bryanlarsen 4y ago
> Record high credit card balances, record low personal savings, 40 year high inflation, rising interest rates and no sign of the fed stopping. Actually, those are all traditional signs that the economy is overheated. They're not signs that the economy is doing poorly, they're signs that the economy is doing too well.
coryfklein 4y ago
Some of these were true perhaps 6 months ago. > Record high credit card balances Nope, it's back to normal. [0] > record low personal savings Well perhaps. If you take a hyper-zoomed-in-view of this chart [1] then I can see how you'd have this takeaway. But contextually this is in the period right after a 1-2 year period where rates were consistently 3-5x above the average. Consumers drawing down on personal savings right now is a natural release from all the savings during covid, and in fact is a positive economic indicator because it injects a lot of cash into markets and that goes straight to corporate balance sheets. Probably a good time to be hiring, not laying off. > 40 year high inflation 1. This is often good for companies and businesses, because it means that they get a free pass to essentially lower pay across the board for every single employee. While on the revenue side, since "everyone is raising prices" they get a free pass to adjust pricing UP to account for inflation, and then some! So in the end businesses are probably pretty happy with how inflation has played out this last year, particularly because... 2. The actual pain experienced from inflation is more connected to the area under the curve. If we had sustained 40-yr high inflation for several years, then yes that is truly disruptive to an economy. But an inverted "V" like peak (which is clearly what we have the last year [2]) means a single shock, but after that everything resettles. We're clearly in the resettling period, as current inflation as of December is only 6.5% and dropping quickly. That may feel painfully high for millenials accustomed to decades of near zero inflation, but merely newsworthy for another time and place. > rising interest rates and no sign of the fed stopping As I said in another comment, perhaps this is a reason for a small startup with a short runway and highly dependent on investor cash and bank credit to layoff employees, but Microsoft and Google? They're flush with cash and are not dependent on credit markets to survive. These layoffs are clearly about "showing fiscal responsibility" and "trimming fat", and not at all about a mathematical response to economic conditions. As it is, there are plenty of signs that the fed will be stopping soon. Already rate hikes have dropped from 50p to 25p, and markets are indicating a complete end to rate hikes some time later this year. > Housing affordability at its lowest point One would think that raising interest rates would mean the housing market would totally seize up, right? In fact nearly the opposite has happened. Construction, housing starts, and housing completions are an a contradictorily high point right now, particularly in one of the most affordable segments: multi-unit housing! These giant real estate companies are not worried at all about interest rates and are instead plowing ahead adding tons of supply to the market. Lenders are getting creative about how to get around high interest rates. Sellers often buy-down the buyer's interest rates. Adjustable rate mortgages actually make sense for once and are getting more popular. California is finally solving the NIMBY housing crisis and zoning high-density. Outlook in housing in general is pretty good right now. [0] https://tradingeconomics.com/united-states/consumer-credit https://tradingeconomics.com/united-states/consumer-credit [1] https://tradingeconomics.com/united-states/personal-savings https://tradingeconomics.com/united-states/personal-savings [2] https://tradingeconomics.com/united-states/inflation-cpi https://tradingeconomics.com/united-states/inflation-cpi
xnx 4y ago
Lowest unemployment rate in 50 years: https://fred.stlouisfed.org/series/UNRATE https://fred.stlouisfed.org/series/UNRATE
- Natsu 4y ago
  More people than ever worked two jobs last year: https://fred.stlouisfed.org/series/LNU02026631 https://fred.stlouisfed.org/series/LNU02026631
  - SantalBlush 4y ago
    I worked two jobs last year, and it was great. My employer was so desperate for workers that they didn't even care that I was working a second job. If you're suggesting people worked two jobs out of desperation, we need to see the evidence.
  - xnx 4y ago
    That's interesting. Thanks for sharing. (Eyeballing it) That seems to be a continuation of a trend since 2015. I wonder if that relates to the prevalence of rideshare, which also caught-on about that time? https://trends.google.com/trends/explore?date=all&geo=US&q=uber,lyft https://trends.google.com/trends/explore?date=all&geo=US&q=u...
    - Natsu 4y ago
      There is a trend, but there's a spike at the start of Covid and then again around 2021, which correspond with the worst of the economic problems.
ff317 4y ago
Right, this is the problem. The stock-market / macro-growth figures look good, but /personal/ finances and true cost-of-living look to be in trouble. If the "solution" is a bunch of layoffs, it's just going to compound the problem. The solution is all these companies that aren't actually dying need to raise wages to match all the recent inflation.
- mberning 4y ago
  I think that's the part that many naysayers don't appreciate. When the average family is already under incredible pressure it does not take much to trigger a deep recession. Even if one or two percent of people lose their job right now that is going to translate into a lot of missed debt service, foreclosures, etc.

noelsusman 4y ago

The economy is humming along just fine despite all of that.

mberning 4y ago
Many people feel fine right up until the point they get diagnosed with a terminal illness. The point being, this would be like going to the doctor and having high blood pressure, high cholesterol, high blood sugar, etc. etc. The patient can be up, walking around, feeling OK, but in reality they are headed for a nightmare.
- noelsusman 4y ago
  So we agree we're not in an economic downturn then.
- mplewis 4y ago
  The economy is not a human body.
  - charcircuit 4y ago
    It's an analogy
    - zopa 4y ago
      A bad one. What's the insight here? If a body were a nation-state, it'd be a totalitarian hellscape where life is cheap, individuals exist only to support the collective and some populations are invaders to be exterminated.
      - utrack 4y ago
        I'd call it a complex system. It's entirely possible to have a component in a system that may disrupt the whole system in a whole new, unpredictable way. Just like some sort of asymptomatic tumor which breaks the whole body once it metastasizes.
        zopa 4y ago
        Yes, and as I don’t want metaphorical chemotherapy for the country I’d prefer we chose a different metaphor. An analogy shouldn’t just be some strained parallels, it should lead us in useful and not destructive directions.
        utrack 4y ago
        Oh, fair enough. Something surgical would be best :)
    - hirako2000 4y ago
      What is the relation between people's inability to notice having a brewing disease and business predicting turmoil in the future hence going for the diet?
  - edgyquant 4y ago
    Maybe not a human body; but it is /a/ body and it is true that those things are not a good condition to have for prolonged periods of time.
alldayeveryday 4y ago
which says a lot if the economy is disconnected from the prosperity and economic outlook of the majority of people. In such a case, a "good economy" is just a synonym for "elite are still doing well."
- A4ET8a8uTh0 4y ago
  This, I think, seems to be the important thing that seems glossed over in news articles. At certain income, the economy is doing great. But that is within the group that, historically, has always done well. When you have enough money, a lot of pain can be made largely removed. Now, it is only anecdata. I am in IL. My household is above average in terms of income for US and my state. We are struggling ( not as much as so many other Americans, but I can't say I am comfortable say.. buying a new car or remodeling kitchen or even taking a vacation ) and it is not like we are throwing money at random indulgences and we did not even start school for our kid yet. By all metrics I should be in a comfortable enough position ( and I guess I am by comparison ), but to me outlook is choppy. And it is not just the boom/bust cycle. I am talking real systemic issues that will take both massive tax hikes and services reductions, but that would not be a popular message to take so no one talks about it. I remember working sub $20k job. I remember being bumped to $30k ( ~US median? ) and I can't even begin to imagine anyone having to live on that today. In short, I agree.
  - alldayeveryday 4y ago
    To your point about services reduction, I don't agree. I think more of a re-allocation of where capitol is going is the cure. We should increase or create new social programs that incentivize native births, home ownership, making it possible for most households to have just one person in the workforce, etc - and reduce the money that goes towards foreign wars, foreign agitation, welfare for nations across the world, etc. And I agree, tax hikes but targeted at the financial system which makes money in parasitic ways. In short, the economy needs to be optimized to the benefit of the lower and middle classes, the working class, and no longer to the 1%. This all probably requires heavy nationalization of banking and major industry. I dont see this as an evil and mistrust those that tell me to fear putting the power back in the hands of the people and away from the elite.
rwalle 4y ago
Sure, your subjective feeling is more accurate and convincing than concrete numbers.
- SantalBlush 4y ago
  You should actually look at the concrete numbers. GDP and the unemployment rate are the two biggest economic indicators used in determining a recession, and these concrete numbers tell you that you're wrong.
- noelsusman 4y ago
  It's the "we're in a downturn" crowd that is relying on vibes and feelings. GDP is growing. Unemployment is the lowest it's been in over 50 years. Real wages are growing for the bottom 50% of earners despite high inflation.

deleted 4y ago

[deleted]

sidibe 4y ago

There are always some measurements by which the economy is currently a disaster, and you are definitely going to hear those from companies that need to or want to lay off employees or from opposition politicians. A lot of other measures are solid now, the main thing is rising rates will hurt companies that aren't very solid financially and give everyone else a nice excuse to let go of employees.

deepGem 4y ago

Yet unemployment is at the lowest levels. So the economy is doing just fine.

edgyquant 4y ago
Or rather it’s doing poorly this no one has the savings or means to skip out on jobs they don’t want .

kasey_junk 4y ago

This economy is baffling to basically every professional who looks at it. Just this week we saw a jobs number that absolutely rofl stomped the consensus expectations. At the same time the credit card number came in ism services business purchasing came in 35% over expectations and new orders were way over expectations as well. Businesses are out there doing something! You could watch in real-time as the markets all did a collective about face on what the narratives should be. I frankly don’t know if we are in a good economy or not, but there are lots and lots of indicators we are, so saying someone is on “copium” because they espouse that view says a lot more about your biases than theirs.

yamtaddle 4y ago
I listen to conservative AM radio a fair bit (because I'm not right in the head) and a local guy was really struggling with this the other day. "The jobs numbers, yeah, those are really good, but... um... economy bad? Can't possibly say it's good while a Democrat is President, but um, yeah, I was surprised at how good the job numbers were. But... it's still bad, somehow, because reasons. Inflation? Oh and we're definitely on the cusp of a recession, if not a depression, I'm just sure of it." The situation's super-weird and it's evidently hard for people used to being able to easily spin the narrative one way or another to adjust to whatever the hell this is. It's definitely not the case that all indicators look great, but damned if the economy's not still trucking along.
utrack 4y ago
That sounds like proper risk management then? If you don't know what's happening then it makes sense to play safe. The only problem is that those collective layoffs might actually slow economies down and exacerbate the issue at hand...
evouga 4y ago
It makes sense to me that the economy overall is doing well but that the tech sector specifically over invested during the pandemic and is now contracting.
- kasey_junk 4y ago

pwinnski 4y ago

The only economic conditions that matter to any company is whether they will be able to continue earning money the way they have been. Since most of the companies doing 6-8% layoffs are concurrently reporting revenue growth, it isn't clear why they feel their future revenue is going to suddenly decline. It also isn't clear why, if they truly expect a decline, they'd continue to buy back shares or issue dividends. Seems like they'd want to keep that cash on hand, if they actually had concerns about the future, and weren't just using the social contagion as an excuse.

rkangel 4y ago
> The only economic conditions that matter to any company is whether they will be able to continue earning money the way they have been. This is clearly not true, although it is probably the most important thing. Interest rates matter if a company financed expansion using debt. Cost of capital matters if your plan is to grow through VC and you're not yet profitable. Changes in these areas can change a company whose books add up to one that doesn't.
- idontpost 4y ago
  [dead]
- pwinnski 4y ago
  > Interest rates matter if a company financed expansion using debt. I haven't personally seen companies taking out operating loans using adjustable rates. Have you? If rates are fixed, then a company's expansion plans may need to slow or stop, but that's not the same as the company contracting. > Cost of capital matters if your plan is to grow through VC and you're not yet profitable. Which does apply in Gitlab's case, I think, but does not apply in most of the cases we have been seeing of 6-8% layoffs made at profitable companies, many of which are concurrently doing expensive stock buybacks or issuing dividends. If your business model depends entirely on 0% interest rates, then a 7% layoff is probably not enough, you have a dead company walking. But 6-8% is what's popular, so that's what we get.
  - 4y ago

bryanlarsen 4y ago

> Record high credit card balances, record low personal savings, 40 year high inflation, rising interest rates and no sign of the fed stopping. Actually, those are all traditional signs that the economy is overheated. They're not signs that the economy is doing poorly, they're signs that the economy is doing too well.

coryfklein 4y ago

Some of these were true perhaps 6 months ago. > Record high credit card balances Nope, it's back to normal. [0] > record low personal savings Well perhaps. If you take a hyper-zoomed-in-view of this chart [1] then I can see how you'd have this takeaway. But contextually this is in the period right after a 1-2 year period where rates were consistently 3-5x above the average. Consumers drawing down on personal savings right now is a natural release from all the savings during covid, and in fact is a positive economic indicator because it injects a lot of cash into markets and that goes straight to corporate balance sheets. Probably a good time to be hiring, not laying off. > 40 year high inflation 1. This is often good for companies and businesses, because it means that they get a free pass to essentially lower pay across the board for every single employee. While on the revenue side, since "everyone is raising prices" they get a free pass to adjust pricing UP to account for inflation, and then some! So in the end businesses are probably pretty happy with how inflation has played out this last year, particularly because... 2. The actual pain experienced from inflation is more connected to the area under the curve. If we had sustained 40-yr high inflation for several years, then yes that is truly disruptive to an economy. But an inverted "V" like peak (which is clearly what we have the last year [2]) means a single shock, but after that everything resettles. We're clearly in the resettling period, as current inflation as of December is only 6.5% and dropping quickly. That may feel painfully high for millenials accustomed to decades of near zero inflation, but merely newsworthy for another time and place. > rising interest rates and no sign of the fed stopping As I said in another comment, perhaps this is a reason for a small startup with a short runway and highly dependent on investor cash and bank credit to layoff employees, but Microsoft and Google? They're flush with cash and are not dependent on credit markets to survive. These layoffs are clearly about "showing fiscal responsibility" and "trimming fat", and not at all about a mathematical response to economic conditions. As it is, there are plenty of signs that the fed will be stopping soon. Already rate hikes have dropped from 50p to 25p, and markets are indicating a complete end to rate hikes some time later this year. > Housing affordability at its lowest point One would think that raising interest rates would mean the housing market would totally seize up, right? In fact nearly the opposite has happened. Construction, housing starts, and housing completions are an a contradictorily high point right now, particularly in one of the most affordable segments: multi-unit housing! These giant real estate companies are not worried at all about interest rates and are instead plowing ahead adding tons of supply to the market. Lenders are getting creative about how to get around high interest rates. Sellers often buy-down the buyer's interest rates. Adjustable rate mortgages actually make sense for once and are getting more popular. California is finally solving the NIMBY housing crisis and zoning high-density. Outlook in housing in general is pretty good right now. [0] https://tradingeconomics.com/united-states/consumer-credit https://tradingeconomics.com/united-states/consumer-credit [1] https://tradingeconomics.com/united-states/personal-savings https://tradingeconomics.com/united-states/personal-savings [2] https://tradingeconomics.com/united-states/inflation-cpi https://tradingeconomics.com/united-states/inflation-cpi

xnx 4y ago

Lowest unemployment rate in 50 years: https://fred.stlouisfed.org/series/UNRATE https://fred.stlouisfed.org/series/UNRATE

Natsu 4y ago
More people than ever worked two jobs last year: https://fred.stlouisfed.org/series/LNU02026631 https://fred.stlouisfed.org/series/LNU02026631
- SantalBlush 4y ago
  I worked two jobs last year, and it was great. My employer was so desperate for workers that they didn't even care that I was working a second job. If you're suggesting people worked two jobs out of desperation, we need to see the evidence.
- xnx 4y ago
  That's interesting. Thanks for sharing. (Eyeballing it) That seems to be a continuation of a trend since 2015. I wonder if that relates to the prevalence of rideshare, which also caught-on about that time? https://trends.google.com/trends/explore?date=all&geo=US&q=uber,lyft https://trends.google.com/trends/explore?date=all&geo=US&q=u...
  - Natsu 4y ago
    There is a trend, but there's a spike at the start of Covid and then again around 2021, which correspond with the worst of the economic problems.

ff317 4y ago

Right, this is the problem. The stock-market / macro-growth figures look good, but /personal/ finances and true cost-of-living look to be in trouble. If the "solution" is a bunch of layoffs, it's just going to compound the problem. The solution is all these companies that aren't actually dying need to raise wages to match all the recent inflation.

mberning 4y ago
I think that's the part that many naysayers don't appreciate. When the average family is already under incredible pressure it does not take much to trigger a deep recession. Even if one or two percent of people lose their job right now that is going to translate into a lot of missed debt service, foreclosures, etc.