Anything holistically accurate or likely in this doom and gloom economic prediction.

[SC Maintenance]

Well, according to posts here we were headed for a huge recession, stock market crash, etc.

I heavily discount most of what's said here. Including what I say

Soft landing is a slowing of the economy instead of a crash.

The example always given is 1994 / 1995 - where the fed raised then lowered rates and unemployment actually fell throughout the cycle, and real GDP never went negative. Real GDP went slightly negative in 2021 - but they threw that definition out sighting unemployment remained low. So if not unemployment, what is the definition of a soft landing?

Inflation has moderated and growth has remained remarkably strong.

Growth has been revised to 1.3%, and core inflation is 3.4% and rising. Fed revised their core target projection from 2.6 to 2.8% at last meeting (of course no talking head said a word). So I would say growth is not strong and inflation is not low, again by the definition of those that make these targets in the first place.

The strong labor market continues to put upward pressure on inflation; the path to 2% inflation is difficult and not a straight line. This is a sign of economic strength, not weakness.

While that is true, the business cycle prevails. So the entire definition of a soft landing is to apparently defeat the boom/bust cycles of our era.

Not saying the economy is bad, and I don't think we can have a recession when your printing 7% of GDP, but it looks like the labor market is softening and inflation is starting back up. So I wouldn't call that a soft landing, if it continues?

 

[JeffKeryk]

Not saying the economy is bad, and I don't think we can have a recession when your printing 7% of GDP, but it looks like the labor market is softening and inflation is starting back up. So I wouldn't call that a soft landing, if it continues?

There is no straight line. Recovery is like a big sailing ship on the stormy seas.
Recoveries are slow and uneven.
We did not get this way overnight and will not change overnight.

I suggest we compare the US economy to that of other major economies.

 

[SC Maintenance]

There is no straight line. Recovery is like a big sailing ship on the stormy seas.
Recoveries are slow and uneven.
We did not get this way overnight and will not change overnight.

I suggest we compare the US economy to that of other major economies.

Thats a good analogy and a good suggestion. Most of the world's large economies are already in recession.

A sailing ship is hard to turn. So you need not look at just the number, but the direction, and the rate of change of the direction (first and second derivatives). The trend is your friend, until it isn't.

Unemployment is still low, but its started rising.

We still have growth, but its slowing.

Inflation isn't high, but it seems to be rising.

Trends can change for sure. Saying its just a ship bobbing around at sea and will get heading the right direction shortly is hope. Better to use calculus and hedge accordingly.

 

[JeffKeryk]

Inflation isn't high, but it seems to be rising.

That's only true over the most recent time.

 

[SC Maintenance]

That's only true over the most recent time.
View attachment 226958

Not sure what your telling me? Either way - referencing these target numbers - I specifically stated " again by the definition of those that make these targets in the first place." I don't make the targets.

3.4% inflation rate is fine with me actually. The problem is its not fine for the US treasury. The historical yield of the 10 year is 2% over inflation. So that would imply the 10 year would need to be about 5.4%. So over time the treasury's book would turn over and go from an average of 2.5% to 5%, and interest on the debt at current levels would be $1.75T per year and rising. Not acceptable. Even if we could afford it, it would be crowding out, not to mention inflation would start rising again likley.

Of course the flip side is also true. If we end in a deflationary bust tax receipts plummet and we blow out the deficit that way (even more than now). So interest costs get much lower, but deficits get even higher.

Rock meet hard place.

My guess is they choose inflation. I would. But that is different than the current narrative.

 

[wwillson]

A quote from the article, which sounds like pure fear mongering to me:
"I think we're going to see the S&P go down 86% from the top, and the Nasdaq 92%. A hero stock like Nvidia, as good as it is, and it is a great company, [goes] down 98%. Boy, this is over," Dent stressed.

Pure fear mongering. It makes me wonder how Dent will benefit from a crash.

 

[JeffKeryk]

Pure fear mongering. It makes me wonder how Dent will benefit from a crash.

Not to mention he's flat out wrong.
The US economy is the envy of the world.

 

[GON]

The US economy is the envy of the world.

By what measurement?

Hopefully not by trade deficits, or ability to manufacture the equipment needed to the component level to provide National Defense.

Nations build wealth only one way over the long term- exporting more than they import.

 

[JeffKeryk]

By what measurement?

Hopefully not by trade deficits, or ability to manufacture the equipment needed to the component level to provide National Defense.

Nations build wealth only one way over the long term- exporting more than they import.

Current economy. WSJ

 

[SC Maintenance]

Nations build wealth only one way over the long term- exporting more than they import.

To export more than we import would mean the death of Bretton Woods / US reserve currency.

Our export is dollars. I know its a weird concept, but if you consider dollars a commodity then it makes sense.

I would prefer your way, but no banker will ever agree with us.

 

[GON]

Our export is dollars. I know its a weird concept, but if you consider dollars a commodity then it makes sense.

'

If that is accurate, never has there been a time than today that so many of the World's nations are working together to "get off" the USD.

Printing USD is not a way to support the continued usage of the USD worldwide. I suspect many nations holding the USD don't appreciate the devaluation of the USDs they are holding.

 

[buster]

Not to mention he's flat out wrong.
The US economy is the envy of the world.

Without a doubt. Issues, yes, but they all do.

https://www.reuters.com/markets/currencies/us-dollars-dominance-secure-brics-see-no-progress-de-dollarization-report-2024-06-25/

Understanding Government Liabilities – Pragmatic Capitalism

www.pragcap.com

Let’s Stop Talking About “Paying Off the National Debt” – Pragmatic Capitalism

www.pragcap.com

"The big picture message here is that the idea of “paying off the national debt” is a fallacy of composition. While there are reasonable arguments that the US government is too large and in need of some shrinkage, we would not want to shrink the government’s balance sheet by an unreasonably large amount because that would disrupt the asset side of the balance sheet in a way that would disrupt household assets. At the same time, we still need to be wary of over-expanding the government balance sheet relative to its private sector. Economists don’t really know what causes inflation and there is evidence that very high levels of government spending can contribute to higher inflation. So we need more balance in these discussions about government debt. While we wouldn’t want to pay off the national debt we also wouldn’t want to expand it irrationally as both of these scenarios have the potential to create outsized and unnecessary risks for the economy."

 

[SC Maintenance]

If that is accurate, never has there been a time than today that so many of the World's nations are working together to "get off" the USD.

Printing USD is not a way to support the continued usage of the USD worldwide. I suspect many nations holding the USD don't appreciate the devaluation of the USDs they are holding.

Fiat currencies fail - always - in the end. Its much like a house party - it rocks loudest just before the cops show up.

I used to dwell on it. Now I do not. If I am alive when the USD fails my skills will remain. I teach my children same.

 

[CKN]

I traveled throughout South America. Ecuador uses the U.S.dollar as it's currency. Argentina is talking about it. When I was in Argentina-you needed bills stacked 3" high just to buy a couple of Sodas and a candy bar-their currency is that devalued.

 

[GON]

Comments from Chuck Cowan- a mortgage broker/ real estate industry blogger:

"Evidence that they are gaming the economy right here.
"Retail Trade" is led by pharmaceuticals (ozempic)
"Construction" is led by government subsidized green projects.
"Finance and Insurance" is led by soaring premiums.
Seems we can’t trust anything the government reports."

 

[alarmguy]

Wow ten pages so far. Nice discussion, I say, enjoy life to some not as regular in here. Times have never been more easy than they are now and never will be again in your lifetime in just a few short years when all the USA borrowing blows up. After all, it cost $700 BILLION right now today just servicing the debt and no efforts to rein in the borrowing. That is the voters choice humans are defective, maybe worse than rats, they will consume and borrow until it all falls down.

 

[GON]

Another stat from Chuck Cowan.

I can't grasp the double-digit rate increases in homeowner rates for 2023. I am not recalling numerous nationwide MACRO claim exposure for 2022 except Hurrican Ian (third-costliest weather disaster on record worldwide per Wikipedia), but not sure how that equates to a ten percent increase across the USA. Maybe the rate hikes are simply a result in the increase of cost of goods and labor for every claim. Who knows, but I struggle understanding why such a large increase in homeowners' rates.

Change in the average U.S. home insurance premium by year
2018 --> 3.2%
2019 --> 2.5%
2020 --> 3.0%
2021 --> 3.8%
2022 --> 6.2%
2023 --> 11.3%
(Source: S&P Global & ResiClub)

 

[fdcg27]

Another stat from Chuck Cowan.

I can't grasp the double-digit rate increases in homeowner rates for 2023. I am not recalling numerous nationwide MACRO claim exposure for 2022 except Hurrican Ian (third-costliest weather disaster on record worldwide per Wikipedia), but not sure how that equates to a ten percent increase across the USA. Maybe the rate hikes are simply a result in the increase of cost of goods and labor for every claim. Who knows, but I struggle understanding why such a large increase in homeowners' rates.

Change in the average U.S. home insurance premium by year
2018 --> 3.2%
2019 --> 2.5%
2020 --> 3.0%
2021 --> 3.8%
2022 --> 6.2%
2023 --> 11.3%
(Source: S&P Global & ResiClub)

I wonder whether the story behind the story here involves the re-insurance market?
This might also go a long way in explaining major national insurers having abandoned certain states altogether.