American Economics Thread

jblas13

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US economic calendar today, retail sales up +0.7% MoM or ~8.7% annualized
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Inventories remain flat.
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Manufacturing in New York is declining.
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GDPNow, the Atlanta Fed's forecast for 3Q23 GDP is at 4.1% with a likely higher upwards revision to come later this afternoon considering the retail sales numbers.

 

Stierlitz

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Aug 15 (Reuters) - Wells Fargo Investment Institute raised its U.S. gross domestic product (GDP) growth forecast for the year on Tuesday, but said it expects the economy to “struggle to avoid” a recession early next year.

The institute now expects the U.S. economy to grow at 2.2% in 2023, compared to 1.1% forecast earlier.

It said the outlook beyond looks grim as it cut the 2024 GDP growth forecast to 0.7%, from 1.5% projected earlier.

“Parts of the economy already are in recession, and the spending and employment trends are weaker. Ultimately, we believe the economy will struggle to avoid a recession,” the Global investment strategy team at WFII said.

“Our expectations for firming inflation in the second half of 2023 and sustained weakening trends in the U.S. economy lead us to revise our U.S. economic forecasts to predict somewhat higher 2023 inflation and to shift the bottom of the economic cycle to early 2024,” it said.

It also raised its terminal rate forecast range for the U.S. Federal Reserve to 5.5% to 5.75%, as it expects the central bank to hike rates until disinflation “stalls too far from the Fed’s 2% goal”. (Reporting by Roshan Abraham in Bengaluru; Editing by Pooja Desai)
 

Quan8410

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US economic calendar today, retail sales up +0.7% MoM or ~8.7% annualized
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Inventories remain flat.
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Manufacturing in New York is declining.
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GDPNow, the Atlanta Fed's forecast for 3Q23 GDP is at 4.1% with a likely higher upwards revision to come later this afternoon considering the retail sales numbers.

Which means inflation is still intact and you will need another rate hike by Fed soon, maybe followed by another 1 or 2 until the economy completely goes into recession. And it will not be beautiful for China either.
 

KYli

Brigadier
Recession or no recession is just politics. Biden doesn't want a recession but he needs to knock down the inflation if he has any chance to get elected. The Fed is in a dilemma as any hint of halting interest rate hike would boost a resurgence of housing and stock market bubble. America actually needs a recession in order to pop the bubble.
 

jblas13

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Which means inflation is still intact and you will need another rate hike by Fed soon, maybe followed by another 1 or 2 until the economy completely goes into recession. And it will not be beautiful for China either.
You can have increases in demand without inflation if the growth is driven by increases in productivity. The July CPI MoM number was 0.2% so the real July retail sales growth was 0.5% MoM or 6.2% annualized (this is evidenced by the Atlanta's Fed economic nowcasting which reports real GDP growth as opposed to nominal growth).



In the US, arguably that's from AI/digital technologies diffusing into corporates of all stripes and/or the recent surge in public capital formation in infrastructure, chip manufacturing, etc. (see, ) It potentially (as zerohedge argues) is an improper seasonal adjustment from Amazon promotions pushing July retail sales away from August. Will just have to wait a few more months for more clarity lol.

A recession isn't happening in 3Q23.
 

Topazchen

Junior Member
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That is exactly what I described. Weakening the vassal to consolidate the control. At best US managed to defend what they already own. Therefore not a victory. At worst the vassal is going to far weaker than its optimal state, which is what will happen to German economy, unable to support US in its tech war against China.

As for Russia, it may be true US never wanted to accept Russia, but being intentional does not make it a sound decision. Russia is no longer a superpower, but it is a kingmaker, and you do not want Kissinger's nightmare to happen which is a Russia firmly under China against USA. Furthermore, the policy of antagonizing Russia in the early 2000's is made with assumption China is still in western camp. The premise of the decision is no longer valid.
You are all discussing the Wolfowitz doctrine, and that is what we are seeing at play by the US .

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U.S. STRATEGY PLAN CALLS FOR INSURING NO RIVALS DEVELOP​


By Patrick E. Tyler
  • March 8, 1992

In a broad new policy statement that is in its final drafting stage, the Defense Department asserts that America's political and military mission in the post-cold-war era will be to insure that no rival superpower is allowed to emerge in Western Europe, Asia or the territory of the former Soviet Union.

A 46-page document that has been circulating at the highest levels of the Pentagon for weeks, and which Defense Secretary Dick Cheney expects to release later this month, states that part of the American mission will be "convincing potential competitors that they need not aspire to a greater role or pursue a more aggressive posture to protect their legitimate interests."
The classified document makes the case for a world dominated by one superpower whose position can be perpetuated by constructive behavior and sufficient military might to deter any nation or group of nations from challenging American primacy. Rejecting Collective Approach

To perpetuate this role, the United States "must sufficiently account for the interests of the advanced industrial nations to discourage them from challenging our leadership or seeking to overturn the established political and economic order," the document states.

With its focus on this concept of benevolent domination by one power, the Pentagon document articulates the clearest rejection to date of collective internationalism, the strategy that emerged from World War II when the five victorious powers sought to form a United Nations that could mediate disputes and police outbreaks of violence.

Though the document is internal to the Pentagon and is not provided to Congress, its policy statements are developed in conjunction with the National Security Council and in consultation with the President or his senior national security advisers. Its drafting has been supervised by Paul D. Wolfowitz, the Pentagon's Under Secretary for Policy. Mr. Wolfowitz often represents the Pentagon on the Deputies Committee, which formulates policy in an interagency process dominated by the State and Defense departments.
The document was provided to The New York Times by an official who believes this post-cold-war strategy debate should be carried out in the public domain. It seems likely to provoke further debate in Congress and among America's allies about Washington's willingness to tolerate greater aspirations for regional leadership from a united Europe or from a more assertive Japan.

Together with its attachments on force levels required to insure America's predominant role, the policy draft is a detailed justification for the Bush Administration's "base force" proposal to support a 1.6-million-member military over the next five years, at a cost of about $1.2 trillion. Many Democrats in Congress have criticized the proposal as unnecessarily expensive.

Implicitly, the document foresees building a world security arrangement that pre-empts Germany and Japan from pursuing a course of substantial rearmament, especially nuclear armament, in the future.

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In its opening paragraph, the policy document heralds the "less visible" victory at the end of the cold war, which it defines as "the integration of Germany and Japan into a U.S.-led system of collective security and the creation of a democratic 'zone of peace.' "

The continuation of this strategic goal explains the strong emphasis elsewhere in the document and in other Pentagon planning on using military force, if necessary, to prevent the proliferation of nuclear weapons and other weapons of mass destruction in such countries as North Korea, Iraq, some of the successor republics to the Soviet Union and in Europe.

Nuclear proliferation, if unchecked by superpower action, could tempt Germany, Japan and other industrial powers to acquire nuclear weapons to deter attack from regional foes. This could start them down the road to global competition with the United States and, in a crisis over national interests, military rivalry.

The policy draft appears to be adjusting the role of the American nuclear arsenal in the new era, saying, "Our nuclear forces also provide an important deterrent hedge against the possibility of a revitalized or unforeseen global threat, while at the same time helping to deter third party use of weapons of mass destruction through the threat of retaliation." U.N. Action Ignored

The document is conspicuously devoid of references to collective action through the United Nations, which provided the mandate for the allied assault on Iraqi forces in Kuwait and which may soon be asked to provide a new mandate to force President Saddam Hussein to comply with his cease-fire obligations.

The draft notes that coalitions "hold considerable promise for promoting collective action" as in the Persian Gulf war, but that "we should expect future coalitions to be ad hoc assemblies, often not lasting beyond the crisis being confronted, and in many cases carrying only general agreement over the objectives to be accomplished."

What is most important, it says, is "the sense that the world order is ultimately backed by the U.S." and "the United States should be postured to act independently when collective action cannot be orchestrated" or in a crisis that demands quick response.
Bush Administration officials have been saying publicly for some time that they were willing to work within the framework of the United Nations, but that they reserve the option to act unilaterally or through selective coalitions, if necessary, to protect vital American interests.

But this publicly stated strategy did not rule out an eventual leveling of American power as world security stabilizes and as other nations place greater emphasis on collective international action through the United Nations.

In contrast, the new draft sketches a world in which there is one dominant military power whose leaders "must maintain the mechanisms for deterring potential competitors from even aspiring to a larger regional or global role." Sent to Administrators

The document is known in Pentagon parlance as the Defense Planning Guidance, an internal Administration policy statement that is distributed to the military leaders and civilian Defense Department heads to instruct them on how to prepare their forces, budgets and strategy for the remainder of the decade. The policy guidance is typically prepared every two years, and the current draft will yield the first such document produced after the end of the cold war.

Senior Defense Department officials have said the document will be issued by Defense Secretary Cheney this month. According to a Feb. 18 memorandum from Mr. Wolfowitz's deputy, Dale A. Vesser, the policy guidance will be issued with a set of "illustrative" scenarios for possible future foreign conflicts that might draw United States military forces into combat.

These scenarios, issued separately to the military services on Feb. 4, were detailed in a New York Times article last month. They postulated regional wars against Iraq and North Korea, as well as a Russian assault on Lithuania and smaller military contingencies that United States forces might confront in the future.

These hypothetical conflicts, coupled with the policy guidance document, are meant to give military leaders specific information about the kinds of military threats they should be prepared to meet as they train and equip their forces. It is also intended to give them a coherent strategy framework in which to evaluate various force and training options. Fears of Proliferation
In assessing future threats, the document places great emphasis on how "the actual use of weapons of mass destruction, even in conflicts that otherwise do not directly engage U.S. interests, could spur further proliferation which in turn would threaten world order."

"The U.S. may be faced with the question of whether to take military steps to prevent the development or use of weapons of mass destruction," it states, noting that those steps could include pre-empting an impending attack with nuclear, chemical or biological weapons "or punishing the attackers or threatening punishment of aggressors through a variety of means," including attacks on the plants that manufacture such weapons.

Noting that the 1968 Nuclear Nonproliferation Treaty is up for renewal in 1995, the document says, "should it fail, there could ensue a potentially radical destabilizing process" that would produce unspecified "critical challenges which the U.S. and concerned partners must be prepared to address."

cont'd
 

HighGround

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You are all discussing the Wolfowitz doctrine, and that is what we are seeing at play by the US .

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U.S. STRATEGY PLAN CALLS FOR INSURING NO RIVALS DEVELOP​


By Patrick E. Tyler
  • March 8, 1992

That's not really economics. I don't think it's really appropriate for the thread to be honest.

You can have increases in demand without inflation if the growth is driven by increases in productivity. The July CPI MoM number was 0.2% so the real July retail sales growth was 0.5% MoM or 6.2% annualized (this is evidenced by the Atlanta's Fed economic nowcasting which reports real GDP growth as opposed to nominal growth).

In the US, arguably that's from AI/digital technologies diffusing into corporates of all stripes and/or the recent surge in public capital formation in infrastructure, chip manufacturing, etc. (see, ) It potentially (as zerohedge argues) is an improper seasonal adjustment from Amazon promotions pushing July retail sales away from August. Will just have to wait a few more months for more clarity lol.

A recession isn't happening in 3Q23.

Not really. Consumer spending has largely stayed the same (growth did slow down, but that's natural), while inflation has continued to fall. Thus, the real GDP rose. That's all there is to it.

There have indeed been pretty sizeable public and private level investments in the last 2 years, but none of them have really kicked into action to the extent that it would have a significant impact on real GDP.
 

Topazchen

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Registered Member
The draft guidance warns that "both Cuba and North Korea seem to be entering periods of intense crisis -- primarily economic, but also political -- which may lead the governments involved to take actions that would otherwise seem irrational." It adds, "the same potential exists in China."

For the first time since the Defense Planning Guidance process was initiated to shape national security policy, the new draft states that the fragmentation of the former Soviet military establishment has eliminated the capacity for any successor power to wage global conventional war.
But the document qualifies its assessment, saying, "we do not dismiss the risks to stability in Europe from a nationalist backlash in Russia or effort to re-incorporate into Russia the newly independent republics of Ukraine, Belarus and possibly others."

It says that though U.S. nuclear targeting plans have changed "to account for welcome developments in states of the former Soviet Union," American strategic nuclear weapons will continue to target vital aspects of the former Soviet military establishment. The rationale for the continuation of this targeting policy is that the United States "must continue to hold at risk those assets and capabilities that current -- and future -- Russian leaders or other nuclear adversaries value most" because Russia will remain "the only power in the world with the capability of destroying the United States."

Until such time as the Russian nuclear arsenal has been rendered harmless, "we continue to face the possibility of robust strategic nuclear forces in the hands of those who might revert to closed, authoritarian, and hostile regimes," the document says. It calls for the "early introduction" of a global anti-missile system. Plan for Europe

In Europe, the Pentagon paper asserts that "a substantial American presence in Europe and continued cohesion within the Western alliance remain vital," but to avoid a competitive relationship from developing, "we must seek to prevent the emergence of European-only security arrangements which would undermine NATO."

The draft states that with the elimination of United States short-range nuclear weapons in Europe and similar weapons at sea, the United States should not contemplate any withdrawal of its nuclear-strike aircraft based in Europe and, in the event of a resurgent ......threat from Russia, "we should plan to defend against such a threat" farther forward on the territories of Eastern Europe "should there be an Alliance decision to do so."

This statement offers an explicit commitment to defend the former Warsaw Pact nations from Russia. It suggests that the United States could also consider extending to Eastern and Central European nations security commitments similar to those extended to Saudi Arabia, Kuwait and other Arab states along the Persian Gulf. And to help stabilize the economies and democratic development in Eastern Europe, the draft calls on the European Community to offer memberships to Eastern European countries as soon as possible.

In East Asia, the report says, the United States can draw down its forces further, but "we must maintain our status as a military power of the first magnitude in the area.

"This well enable the United States to continue to contribute to regional security and stability by acting as a balancing force and prevent the emergence of a vacuum or a regional hegemon." In addition, the draft warns that any precipitous withdrawal of United States military forces could provoke an unwanted response from Japan, and the document states, "we must also remain sensitive to the potentially destabilizing effects that enhanced roles on the part of our allies, particularly Japan but also possibly Korea, might produce."
In the event that peace negotiations between the two Koreas succeed, the draft recommends that the United States "should seek to maintain an alliance relationship with a unified democratic Korea."
 

jblas13

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Not really. Consumer spending has largely stayed the same (growth did slow down, but that's natural), while inflation has continued to fall. Thus, the real GDP rose. That's all there is to it.
consumer spending increasing in real terms is significant
There have indeed been pretty sizeable public and private level investments in the last 2 years, but none of them have really kicked into action to the extent that it would have a significant impact on real GDP.
Non-residential fixed investment drove nearly all of 2Q23 growth.
 

jblas13

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Registered Member
consumer spending increasing in real terms is significant
The consumer is more resilient than anyone else has thought, impervious to price levels, interest rates or anything else. It’s surprised everyone but that it’s sustained so long suggests the pandemic has caused structural increases in US productivity that are presently. Poorly understood.
 
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