Everyone expected a recession. The Fed and White House found a way out.
Everyone expected a recession. The Fed and White House found a way out.
The economy’s strength and stability — defying even the most optimistic predictions — represents a remarkable development after seemingly endless crises
The economy’s strength and stability — defying many of the most optimistic predictions — represents a remarkable development after seemingly endless crises
As 2023 winds to a close, Powell and his colleagues are far from declaring victory on inflation. They routinely caution that their actions could be thwarted by any number of threats, from war in the Middle East to China’s economic slowdown. Americans are upset about high costs for rent, groceries and other basics, which aren’t going back to pre-pandemic levels. The White House, too, is quick to emphasize that much work remains.
Yet the economy is ending the year in a remarkably better position than almost anyone on Wall Street or in mainstream economics predicted, having bested just about all expectations time and again. Inflation has dropped to 3.1 percent, from a peak of 9.1. The unemployment rate is at a hot 3.7 percent, and the economy grew at a healthy clip in the most recent quarter. The Fed is probably finished hiking interest rates and is eyeing cuts next year. Financial markets are at or near all-time highs, and the S&P 500 could hit a new record this week, too.
Another narrative: employment was up and workers were gaining power. Out of nowhere, JP Morgan Chase chairperson started going to meetings and talking about a recession, over and over. Other businesses took his lead and started raising prices. After a while we're no closer to a recession, but we have lost a lot in standard of living.
When a handful of corporations control entire industries, capitalism stops working.
It's supposed to be a bunch of competitors trying to get as many sales as possible by having the lowest prices or highest quality.
But in the current economy, if a corporation raises their prices across the board, the rest raise their prices. The only times they lower prices, is straight to a loss to force small competitors out of business. The large corporations can deal without profits for six months, smaller companies go under and often have to sell to the giant corporations.
This cycle has been repeating for decades, it's not hard to notice it
The only solution is breaking up those giant corporations. Republicans sure as shit won't do it, but neither will the moderate wing of the Democratic party. It would cut into their donations too much.
If anything in the economy is "too big to fail" the solution is breaking them up, not bailing them out whenever necessary.
When a handful of corporations control entire industries... that is capitalism. Capitalism isn't some self-correcting system that benefits all, its a system that supports and benefits those who make the most profit possible. When companies have less competition and more control, they're better able to make money. And thus, are better at capitalism.
This isn't capitalism failing to function, this is capitalism working as intended. The "free-market" is an illusion created on hope and delusion.
Do you see excess stock? Profits are not particularly high after the two years of costs that COVID created. Trillions of dollars were printed during COVID while people were not working and products were not being manufactured/farmed/repaired/....
There simply was/is more money floating around then stuff being produced. Unless God herself comes down and drops food/shelter/iPods from heaven, costs won't come down. Failing that, it is up to us to produce these products otherwise nothing will change.
There's a rather long history of it taking a recession to stop inflation. That it didn't this time is a very big deal.
It’s pretty basic supply and demand. Inflation historically goes up in an economy when a lot of people want to buy stuff, and that stuff is in limited supply.
Workers had cash and stimulus money = higher demand
The pandemic fucked with good manufacturing, and transport = reduced supply
When there is less of something, and people have money, they’re willing to pay more to get their hands on the scarce thing. Companies pay more for chips, or to have first dibs on something from the port, and that increased cost is passed along to the consumer.
If it was merely an increase in costs, corporate profits should be neutral after they hike their prices to match. Same ratio going in and out.
What we actually saw was corporate profit margins going to record highs. Some sectors did see actual price increases--pandemic supply constraints, the Suez canal being blocked up by a shipping accident, and the war in Ukraine all did cause upward pressure on prices in some sectors. However, none of it could explain the data fully.
Even worse, those corporations saw 15-20% profit margins for the first time ever, and now their public stockholders expect them to keep doing it forever. This is insane. Big tech firms can see that kind of margin, but they're the exception. Not even banks see those margins on the regular. The belief that they can has driven many of the layoffs from otherwise profitable companies this year.
Corporations used world events as a cover for increasing prices. They had a once in a century opportunity to cover their actions and took it. To be honest, it usually is the case that prices don't just go up as a matter of greed. That's not what happened this time.
Yo ngl I cannot care one iota about the S&P 500 when food costs nearly double what it did before the pandemic and rents are skyrocketing.
Where I am, the $5 eggs are back down to $1.80, and the $6 milk is $2.89. Feels the same as before-times.
It's hard to find restaurant lunch under $15, which is around 50% more than 2019, and even the gyro counter added a default tip when they stopped accepting cash. That's sad, but I cook more now.
Here from Europe, a similar situation.
Some things are still expensive, but a lot of things have gotten better.
Moreover, salaries did increase, so I can't complain too much.
We are extremely fortunate to have so easily beaten this round of inflation.
2 years ago yogurt was 40 cents, today it’s 80. Bacon was $3 a pound, today the cheapest is $4.50 unless it’s on sale. Frozen pizzas were $4, $5 on the top end, now they’re $6-$15… for a frozen pizza. Ramen was 20 cents, today it’s 55. String cheese was $4, today it’s $7. A small bag of shredded cheese was $4, now it’s $8. Cereal was $3, today it’s $5 and you get less. Have you seen how expensive a bag or Doritos is? A small bag costs more than what a party size bag used to cost, and that’s true for all chips.
I have dozens of items that are out of reach today that were common fare 3 years ago. Milk and eggs have come back down, yes, but not the rest of it.
It's mostly the same here.
Grocery prices have definitely gone up overall in my part of the world, but outside of outliers (or outright liars), prices aren't double. But lots of people around here will claim their grocery bill is double what it was before covid. In general, I'm not willing to say any specific person's "twice as much" isn't true, I don't know their circumstances, but my experience and pretty much all the reports I've seen don't bear that out (again for my part of the world).
The egg thing was a prime example. People were going around saying "eggs are $10 now" but then when I'd look at the local grocers, it was only the premium brands' free range, organic, woman-owned, holistic, fair-trade type eggs that were anywhere close to that -- and it was always the type of person that you know never bought those types of eggs to begin with.
I have seen a lot of convenience and luxury grocery items that I used to buy have gone up around 50% or gone down the shrinkflation route. And for sure, there's been an uptick in temporary shortages and price spikes.
Restaurants around here are also like you mentioned. Prices have really gone up there. I don't eat fast food often, but a month ago I was traveling and decided to get fast food breakfast at one of my old favorites. A biscuit and a drink used to cost around $3, now it's nearly $8. Last year, I had a craving for Wendy's and it was similar, the food that used to cost me just over $4 back in the day is now a bit more than $11. But then again, eating out is a luxury in pretty close to all circumstances.
I feel you, but there's not much Biden can do about either thing.
Unfortunately, he will get the blame for it anyway.
I feel you, but there’s not much Biden can do about either thing
Weird the article is giving credit to Biden for inflation then...
It's just getting old that if something good happens, Biden gets credit. If something doesn't get fixed, then it's not his fault because he's just the president.
It's the type of stuff I'm used to only hearing from Republicans.
I mean. At the absolute bare minimum the White House should understand how this comes off to voters like the person your replying to.
All it does is highlight how voters aren't the concern, it's the wealthy who have already made huge increases in the wealth since 2019.
"Nothing will fundamentally change" he told the wealthy before he was elected. And credit where credit is due, Biden has kept that promise to them.
It's not just the stock market. There's a wide range of metrics which are showing an improvement, and they're comparing with what didn't happen, which was a recession.
What hasn't happened is a rollback of the Reagan-era change in distribution of wealth and income. That requires getting congress to act.
That falls on your local economy and state and local elected officials. Rent is always due to local officials and how the zone the city. Local and State Corporate taxes also play a role in higher prices. If I were you, I'd check the local city council schedule and speak on those concerns.
Plus, counterintuitively, rent is starting to fall in many major metro areas because we're finally seeing a notable uptick in inventory. The price of a dozen eggs is back in the neighborhood of where it was pre-Covid, and the price of a gallon of gas has wiped away almost all of its 2023 gains and is now back to roughly what it was before Russia invaded Ukraine. Not saying people across the board aren't struggling since the pandemic, because I'm sure they still feel it in a very real way, but prices are very obviously stabilizing across the board and the S&P is obviously responding to really solid underlying trends.
Cool. Now lower interest rates so I can at least dream about the prospect of owning a house again.
Oh no, they're only going to lower interest rates when the economy takes a shit again
that way out: pretend the stock market is the only thing that matters.
fuck these people
A recession is a specific problem; avoiding a recession does not mean that all economic woe is alleviated.
To throw out a shitty analogy, stating that a hurricane hasn't happened doesn't mean that there hasn't been any bad weather at all.
No, they're looking at a broad set of measures of economic well-being. The stock market is only one metric.
What they've done is pretty amazing, even if it doesn't roll back the Reagan redistribution in favor of the wealthy, which would require congressional action.
Who tf is downvoting you? You’re exactly right, to them the only thing that matters is the market, and we’re doing fine because the market is still breaking records.
a large contingent of internet facing humans have invested in one way or another in the market. the biggest swindle in history was when companies somehow pushed their entire retirement portfolios to this external hunk of lying shit.
tax every trade. you want to call it a market, lets fucking tax it like one. no 'dark markets', no secret trading.. 100% in public and taxing every fucking trade.
whats that? it would kill all the big players? ya dont say...
It might take another six months before it is felt across the board, but prices are noticeably lower than last year in Colorado.
That doesn't mean your wages are high enough for you to afford the lifestyle you want.
For a while gas in COS was absolutely bananaballs. It’s come down rather nicely again. Filling my Impreza was painful there for a minute.
Happy I can drive into CostCo without wait 15 minutes for the line for gas to stop blocking the entrance at the Barnes location. It was $2.19 this morning. It was $3.42 last year at this time ($5.41 in July 2022)
I mean - there are no guarantees. Everyone claiming we are out of the woods, but if inflation stays above 3% the fed isn’t going to lower rates very fast. We could see a recession hit.
Printing trillions of dollars isn’t a solution. The only reason it works is because we are the reserve currency of the world still because of oil sales. Once that changes, we are fucked.
So the inflated price should come down right? …right…
Damn when a pound of onions cost $2.50 I don’t really call this progress or “Finding a way out”
Ending inflation doesn't mean that prices come down. It means that they stop rising. (or, more realistically, go back to rising at 2% to 3% per year)
Deflation is when prices drop. It's bad; what happens is that it's more valuable to hold onto cash than to invest it in starting or expanding a business, so the economy as a whole craters like the US did in the Great Depression. You probably don't want that.
That assumes what we are experiencing is inflation. Inflation is part of the equation, but another big part is just corporations are pushing up prices and making record profits. That part can result in prices going down without causing issues.
At our local Wegmans a lb of onions is $0.90, $1.73, or $2.05, depending on if you want yellow, sweet, or red. It's the exact same price at all their stores elsewhere in the US. White onions are $1.49/lb at other major grocery stores. White and yellow onions are being reported at $1.79 and $1.29 per pound, retail. Where in the heck are you paying $2.50/lb?
This is why I shop at restaurant supply stores. 10 lbs. of onions for $5
At our local Wegmans a lb of onions is $0.90, $1.73, or $2.05, depending on if you want yellow, sweet, or red. It's the exact same price at all their stores elsewhere in the US. White onions are $1.49/lb at other major grocery stores. White and yellow onions are being reported at $1.79 and $1.29 per pound, retail. Where in the heck are you paying $2.50/lb?
It's all about gas prices, nothing more.
They DID find a way out! They threw every other American citizen under the bus so they could save themselves! Claps all around, we fucking did it, the FED and their cronies won't have to suffer the atrocity of skipping out on their daily caviar for budget reasons.
:) There is no economic problem in U.S. of A. :)