American Economics Thread

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HighGround

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The Federal Reserve's decision to cut this month was influenced by weaker data from the labor market, with a disappointing July jobs report followed by a Labor Department data revision that showed the U.S. added
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in the 12 months ended March 2024 than originally reported.

To be sure, the job market is far from the supercharged hiring during the pandemic, when employers sought to add workers while also struggling with labor market shortages, which caused wages to spike. But Powell noted that the current unemployment rate of 4.2% is historically low, and that while hiring is moderating, the labor market remains fairly solid.

"Anything in the low fours is really a good labor market," Powell said. "Participation is at high levels."

But in cutting interest rates by 0.50 percentage points, the Fed wants to ensure the labor market doesn't slow from here. "We believe, with an appropriate recalibration of our policy, that we can continue to see the economy growing and that will support the labor market," Powell noted.
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I don't really know what the point is tbh. Inflation is still a problem insofar that we're not at the 2% target yet, and ideally we probably want to be ~1% inflation for the forseeable future. 4.2% unemployment is strong, especially since the labor participation rate has been steadily creeping upwards.

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It's okay to have >5% unemployment. That's not a sign of a recession and it doesn't mean that it'll start a chain reaction either. In fact, higher unemployment might be "healthier" and more sustainable in a sense that it simply represent a slow churn of low-quality jobs to higher-quality jobs.

How can we even really determine if we're at "full employment" when so many companies are still fat from the Covid era easy money? IMO, this is kinda dumb move by the Fed. Holding rates steady or raising them was actually a good thing and allowing things to stabilize. Unsustainable companies were going bust, and better businesses were getting rewarded for their financial prudence.

If I were a cynical man I'd say that the Fed is just laying up a shot for Kamala Harris and Joe Biden, but I don't think that's what's going on. I think the Fed really is unhealthily obsessed with the wrong metrics. GDP and unemployment isn't the end-all, be-all. A recovering economy might even contract because in the long-term, that's what's healthy for everyone.
 
T

tygyg1111

Captain
Registered Member
FairAndUnbiased said:
You are misguided.

Falling personal savings is because the average consumer is so secure in their incredible wealth in non savings sources they can spend freely.

Failing trucking company and banks closing is due to the immense strength of the digital economy and online banking.

Depression being diagnosed is due to the incredibly responsive healthcare system and the luxury to focus on mental health because all physical health has been solved.
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Seems like sleepy might actually be:
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Sinnavuuty

Sinnavuuty

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Why Kamala Harris’ Price Control Plan Will Fail: Lessons from the Past and Real Drivers of Inflation

Reading the article, I remember a very funny reading I did years ago.

Do you know who was the first person to freeze prices?

Nebuchadnezzar of Babylon.

There is a book called "Forty Centuries of Wage and Price Controls: How Not to Fight Inflation", Nebuchadnezzar ordered all prices in Babylon to be frozen and anyone who disobeyed his order would be burned alive in boiling Olive oil. And people did die.

What happened may seem like a joke, but it is not, it is documented.

There was a shortage of olive oil in Babylon. Because the price of olive oil was much lower than it should have been.
 
horse

horse

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Okay, I guess I should comment on the above video that I posted, it took a while, and I would like to state three points.

1. This is a business story, very similar to other stories that we have perhaps heard about or seen in the past. This is still an economics story, the nitty gritty, like a real economics story. A business, an industry, changes in the world, costs of doing business, competition, like it had everything, a very good economics video.


2. How to help out the Louisiana shrimping industry, you know like that Forrest Gump stupid as stupid guy who used to own a shrimping boat, the narrator and some so-called expert, says that they should be aware of factory farming of shrimp from foreign places, that there are environmental concerns and human right abuses. They want to support Louisiana shrimp by shunning foreign shrimp due to those concerns.

That is not economics, that is a value judgement. And, we do not even know if those allegations are true. Sounds like they are getting beat, and will say anything.


3. That is why these activists, always will lose these economics fights. Making a value judgement is not economics. It is like bringing a knife to a gun fight.

IMHO, these value judgements, when they intrude into the realm of economics, that is really just politics. Here is it too clear, the economics will win out in the long run.

Also, these activists and the dumb politicians who may back them, have no understanding of economics, which is like bringing a broken knife to a gun fight.

Guess that was the only bad part of the video, when they started making value judgements. However, given the trade war between the US and China, it was a mirror to the world at large at this precise moment so that makes it good as it is so relevant to today. And the excuses provided by the US government for it various restrictive actions, did not work for the most part in it war against Huawei 5G?

Why did the US government war against Huawei 5G did not work?

It was the same reason shown in the video, that two people or Karens complaining about environmental concerns and possible human rights abuses, like with those value judgements and the hope to raise awareness to the issue is going to turn around the fortunes of Forrest Gump shrimping boat and friends. Gwad daynum. That ain't gonna work.

We all know that intuitively. No further explanation needed. Even Forrest Gump knows in his gut that will be the case.

:D
 
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