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FRED wants the implication to be AI related, but it seems pretty clear that all/most of this decline is related to their interest rate policies creating a raft

by tqi 2y ago

FRED wants the implication to be AI related, but it seems pretty clear that all/most of this decline is related to their interest rate policies creating a raft of bullshit companies funded by too many dollars chasing ever more far-fetched returns...

xk3 2y ago
I don't think this is FRED but rather Gergely making the implications but yes FRED is just a descriptive tool: https://www.nytimes.com/2024/12/06/business/economy/fred-economic-data-fandom.html https://www.nytimes.com/2024/12/06/business/economy/fred-eco...
suraci 2y ago
Almost every company that announced layoffs said, "We're 're-organizing' to focus on AI", but not "We're over-productive because of AI."
kennyloginz 2y ago
Does FRED editorialize? Do you have any links?
lazide 2y ago
Tax changes in Section 174 (both advantageous years ago, and terrible recently) also play a huge part. That interest rates started to rise right when the tax changes to make it less advantageous happened? 1-2 punch.
- ben_w 2y ago
  Article covers that, 174 is US, changes are worldwide.
  - lazide 2y ago
    The US is the largest software dev market by far, and these changes ripple out. Outsourced dev costs still get the same tax treatment for US companies, so while reducing the costs reduces the problem for US companies, it doesn’t change that the problem exists. This impacts all other markets.
jjeaff 2y ago
Returns are no longer the actual goal. The actual goal is the perception of far reaching future returns. The perception of those returns is much more valuable than the actual returns. Because the wealthy don't want profits and dividends that get taxed. They want ever increasing stock prices so they can continuously grow their asset base to borrow against so they can never sell said assets this triggering capital gains taxes.
- nwiswell 2y ago
  Companies with actual profits can, and do, simply buy back their own stock. Inflating market expectation of future cashflows is not the only way to realize asset appreciation.
- dyauspitr 2y ago
  The 10% interest they would have to pay on the loans is almost as much as the capital gains would be.
  - addicted 2y ago
    An ordinary person with decent credit would not pay 10% on a loan. A reasonably rich person with good credit is paying nowhere near that. And a very rich person with great credit and who will put their assets up as collateral is paying low single digits in interest, if even.
    - johnnyanmac 2y ago
      The feds interest rate is still 4.5% right now. And a lot of companies are preparing for a headwind (which also means very rich people don't want to put assets up). Despite people trying to pretend otherwise, we're not in a very flowing economy right now. But yes. If you're very ambitious and very rich, you can probably find a decent loan for your idea. This odd economic situation is ripe for uncontested disruption, but has an extremely high cost of entry (hence, being unconstested).
  - ozim 2y ago
    If capital gains tax is 15% that 5% on let’s say $1mil is $50k that is not „almost as much” if you can pay 10%. You are not getting rich by throwing $50k to trash.
deleted 2y ago
[deleted]
dragonwriter 2y ago
> FRED wants the implication to be AI related, Where is there any indication that FRED wants this?
- tqi 2y ago
  Wants is maybe too strong, but I've seen this chart in a couple of different substacks / editorials, which I assumed is the fed's press office shopping this story around because "AI taking jobs" is zeitgeist-y right now.
  - dragonwriter 2y ago
    It's more likely that it became popular to use in commentary because this chart from FRED (both the software dev postings on Indeed chart, and, in the comments, the comparison to the overall job postings on Indeed chart) got attention on a certain orange-tinted site that is popular with people in and around and commenting on the software development field a few months ago. https://news.ycombinator.com/item?id=41409006 https://news.ycombinator.com/item?id=41409006
cm2187 2y ago
And add to that many companies moving their IT department to low cost countries.

by tqi 2y ago

xk3 2y ago

I don't think this is FRED but rather Gergely making the implications but yes FRED is just a descriptive tool: https://www.nytimes.com/2024/12/06/business/economy/fred-economic-data-fandom.html https://www.nytimes.com/2024/12/06/business/economy/fred-eco...

suraci 2y ago

Almost every company that announced layoffs said, "We're 're-organizing' to focus on AI", but not "We're over-productive because of AI."

kennyloginz 2y ago

Does FRED editorialize? Do you have any links?

lazide 2y ago

Tax changes in Section 174 (both advantageous years ago, and terrible recently) also play a huge part. That interest rates started to rise right when the tax changes to make it less advantageous happened? 1-2 punch.

ben_w 2y ago
Article covers that, 174 is US, changes are worldwide.
- lazide 2y ago
  The US is the largest software dev market by far, and these changes ripple out. Outsourced dev costs still get the same tax treatment for US companies, so while reducing the costs reduces the problem for US companies, it doesn’t change that the problem exists. This impacts all other markets.

jjeaff 2y ago

Returns are no longer the actual goal. The actual goal is the perception of far reaching future returns. The perception of those returns is much more valuable than the actual returns. Because the wealthy don't want profits and dividends that get taxed. They want ever increasing stock prices so they can continuously grow their asset base to borrow against so they can never sell said assets this triggering capital gains taxes.

nwiswell 2y ago
Companies with actual profits can, and do, simply buy back their own stock. Inflating market expectation of future cashflows is not the only way to realize asset appreciation.
dyauspitr 2y ago
The 10% interest they would have to pay on the loans is almost as much as the capital gains would be.
- addicted 2y ago
  An ordinary person with decent credit would not pay 10% on a loan. A reasonably rich person with good credit is paying nowhere near that. And a very rich person with great credit and who will put their assets up as collateral is paying low single digits in interest, if even.
  - johnnyanmac 2y ago
    The feds interest rate is still 4.5% right now. And a lot of companies are preparing for a headwind (which also means very rich people don't want to put assets up). Despite people trying to pretend otherwise, we're not in a very flowing economy right now. But yes. If you're very ambitious and very rich, you can probably find a decent loan for your idea. This odd economic situation is ripe for uncontested disruption, but has an extremely high cost of entry (hence, being unconstested).
- ozim 2y ago
  If capital gains tax is 15% that 5% on let’s say $1mil is $50k that is not „almost as much” if you can pay 10%. You are not getting rich by throwing $50k to trash.

deleted 2y ago

[deleted]

dragonwriter 2y ago

> FRED wants the implication to be AI related, Where is there any indication that FRED wants this?

tqi 2y ago
Wants is maybe too strong, but I've seen this chart in a couple of different substacks / editorials, which I assumed is the fed's press office shopping this story around because "AI taking jobs" is zeitgeist-y right now.
- dragonwriter 2y ago
  It's more likely that it became popular to use in commentary because this chart from FRED (both the software dev postings on Indeed chart, and, in the comments, the comparison to the overall job postings on Indeed chart) got attention on a certain orange-tinted site that is popular with people in and around and commenting on the software development field a few months ago. https://news.ycombinator.com/item?id=41409006 https://news.ycombinator.com/item?id=41409006

cm2187 2y ago

And add to that many companies moving their IT department to low cost countries.