Possibly, except all the other data points the opposite - initial jobless claims higher than expected, tax receipts well below expectations, ., lay off announcements everywhere, etc.
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^^^^ Yep.
But lots of people say everything is fine because Las Vegas, bars, restaurants, hotels, sporting events, shopping malls, airports, etc,… are very busy.
The storm clouds are on the horizon but people too occupied to realize what’s happening.
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I am generally an optimist. A recession is bad for me, probably as much or more than most.
Even the fed says mild recession. I am just trying to read the tea leaves and invest a little money. I will be happy to be proven wrong.
The ADP number is well known to be garbage. However if you buy it at all - they say banking and industrial employment dropped a lot, but leisure and hospitality where way up. Its one not very reliable data bit, but it does line up with the jobs number. Maybe people are lining their small amount of remaining savings up for a big summer party. Or maybe leisure and hospitality are just convinced they are since they did last year.
I might just sell in may and go away for the summer.
Even the fed says mild recession. I am just trying to read the tea leaves and invest a little money. I will be happy to be proven wrong.
The ADP number is well known to be garbage. However if you buy it at all - they say banking and industrial employment dropped a lot, but leisure and hospitality where way up. Its one not very reliable data bit, but it does line up with the jobs number. Maybe people are lining their small amount of remaining savings up for a big summer party. Or maybe leisure and hospitality are just convinced they are since they did last year.
I might just sell in may and go away for the summer.
Think the economic models take into account the economic impact of a world wide three year pandemic? I think this economy is being driven by abmormal circumstances and factors that no "model" can predict its true future patch.
Im not a gloom and doom person either, even in a downturn companies make money. I just keep doing what Im doing and is working out fine.
Ahhh... summer is getting here fast and some might read a "lame" market as something it is not. Summertime is traditionally "weak" during summertime for the reason you mention. Of course, there are those that say this year will be different due to the continued recovery from covid.
There is always someone saying something for media attention. Good solid companies rule and do well year round... and actually might be a good time to chose some during the summer lull. (but what the heck do I know!?!?!? *LOL*_)
I agree…it’s not like the pandemic came with instructions on how to deal with the aftermath. Everyone is winging it to large degree…
Models will always be wrong in the short term. No one, no computer system, no nothing can predict the future.
The science of Economics attempts to explain the past to consider the future.
You understand that the US Gross Domestic Product dwarfs other counties, by a country mile.
It would take the next 3 (China, Japan, Germany) combined to exceed the US GDP.
Heck, CA by itself was #4, bettering Germany in 2022.
There will always be business cycles and world events that rock the boat. And it's a big boat.
Doom and gloom? Conspiracy theories? Not for me.
The science of Economics attempts to explain the past to consider the future.
You understand that the US Gross Domestic Product dwarfs other counties, by a country mile.
It would take the next 3 (China, Japan, Germany) combined to exceed the US GDP.
Heck, CA by itself was #4, bettering Germany in 2022.
There will always be business cycles and world events that rock the boat. And it's a big boat.
Doom and gloom? Conspiracy theories? Not for me.
I hope your right. But tax receipts and initial jobless claims are not a model - there a number that gets counted.
I'm not sure there's a "Perfect Interest Rate " I suppose different situations determine different rates . The problem with the Federal Reserve is they either raise them to high or lower them to low . Heck ..... how long have we had 0% interest rates ?
I think the better word is what is a NORMAL interest rate and that would be in a range. My guess is somewhere from 3% to 5% give or take.
0% rates were indeed held way too long.
A historical look at the Fed Rates.
https://www.macrotrends.net/2015/fed-funds-rate-historical-chart
Fair enough. What's normal and why?
I am not saying I know the answer, but I am curious what answers people have.
As a capitalist, I lean towards lower rates to stimulate business; the buisness world runs on credit.
You get lower unemployment which leads to lower crime, alcohol use, etc. Society's ills, if you will.
Of course all this "benefit" is inflationairy.
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Lower Lows and Lower Highs since the 80's . I dont think our economy can handle high interest rates .
It’s a fine line on how to handle rates and inflation. Back when the economy was running on all cylinders during President Trump’s time the Fed could have started to raise rates. A 25 basis point hike every 3 or 4 months would not have killed the economy.
I have said many times that the Fed is usually late to respond. They get started late and they usually overshoot the target on the other side.
What is needed now is fiscal responsibility in DC. I doubt we will ever see it though.
0% rates distorts lots of things and artificially pumps up the markets / creates a false wealth effect / keeps zombie companies alive.
Lots of internet ballers are in for a rude awakening when credit markets freeze up and they learn the difference between real cash and artificial cash.
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If you were a capitalist you would want the market to set interest rates like they did for thousands of years, not the fed. Money is just like any other commodity and should be bought and sold via price discovery. The cost of money is manipulated by the fed. Its socialist not capitalist whether its zero or twenty percent.
If the fed didn't have $8T on their balance sheet the real interest rates would be much higher than they are today. Just look at the yield curve. I just bought a 17 week T-bill for 5 1/8. The 10 year is 3.5%. Usually you pay more to borrow for longer.
Money is a necessary component of capitalism. Capitalism requires money, by definition; money enables profit.
Remember Adam Smith taught us government needed to control things that were too big for the markets to manage; things the markets are not equipped for. Socialism speaks to social ownership of production.
In fact, capitalists pushed for the creation of the Fed because the monitary system needed to be centralized to enable greater wide commerce.
In capitalism, the government's role is to maintain an orderly environment that facilitates proper functioning of markets, among other roles and purposes.
Beyond the prime rate, the market set their rates, through loans, bonds, etc. The prime is the Feds (poor) tool to help manage inflation.
I think people tend to over simplify markets, capitalism, socialism, etc. Economies are extremely complex, and our's is huge.
With all due respect, this is rubbish.
Who were these capitalists calling for what we have now? Same ones calling for corporate welfare and special interest handouts I presume, not capitalists.
Yes we need money. The money supply needs to grow at approximately the rate of production.
Why does the fed get to decide exactly how much savers get paid for their money. Savers get prime minus. Borrowers get prime plus. The fed chooses prime. The market doesn't set the rate, they maybe set the handicap to some degree, except they don't even get to set that really because when the fed doesn't like it the shrinks or raises the money supply with their balance sheet raising the handicap based on supply size and/ or printing money out of thin air irrelevant of production size. See again the part about money needing to grow and shrink with supply of production.
Just like you got to make money as a citizen in the USSR, except the state told you what job and how much money. It was an illusion.
When a central agency directly manipulates the supply and cost of something everyone requires, that is the textbook definition of socialism.
And? We have a mixed system of government in the US.
And what?
Yes we have a mixed system of government. The road to my house was paid for by the taxpayer. Roads are socialist. I like roads.
The fed is socialist - a central agency decides. Its actually independent - not really part of the government, but that's been discussed here already. Still a central agency decides the amount and price of money. Textbook socialist.
All I am saying. Interest rates are manipulated by a central agency, just like a central agency planned for and funded my road.
