Inflation and a recession are now here :(

[lawpoke87]

And now a recession appears like a real possibility. Tough times

US GDP unexpectedly contracted at a 1.4% annualized rate in Q1

U.S. economic activity likely decelerated to the slowest rate since mid-2020, with lingering supply chain constraints, inflation and disruptions amid Russia's war in Ukraine each weighing on growth.

finance.yahoo.com

 

[watu05]

Inflation gets controlled by raising interest rates which slows down demand. One should pick which one to complain about.

Trump's 4 years of unconstrained borrowing from China is responsible for about 1/3 of our national debt. That's a lot of demand to create, especially when Covid reduced the ability for supply to meet that demand.

This year’s budget deficit will drop by $1.5 trillion, the biggest decline in a single year, easing inflationary pressures by keeping the government from borrowing.

 

[URedskin54]

I’m perfectly happy to lay some blame at Trump’s feet for a second unnecessary stimulus and a mostly pointless tax cut, but what kind of hack do you have to be to pretend Biden is blameless?

 

[lawpoke87]

Inflation gets controlled by raising interest rates which slows down demand. One should pick which one to complain about.

Trump's 4 years of unconstrained borrowing from China is responsible for about 1/3 of our national debt. That's a lot of demand to create, especially when Covid reduced the ability for supply to meet that demand.

This year’s budget deficit will drop by $1.5 trillion, the biggest decline in a single year, easing inflationary pressures by keeping the government from borrowing.

The deficit is dropping from over $3T due to Covid spending ending. Spending which is causing some of the inflation we’re now seeing. Are you actually bragging about a federal deficit of well over $1T. You are correct in the context of not spending trillions and trillions will ease inflationary pressure. Keep in mind Biden wanted to spend a trillion more but Congress stopped him.

Here’s the problem my friend. We have a contracting (stagnant at best) economy. Raising interest rates while now necessary results in a very real risk of a recession. I called out the reckless spending well over a year ago and predicted exactly what has occurred. Those in charge ignored what most of us knew was coming and kept the spending train going. They own this.

 

[aTUfan]

our economic recovery begins with energy independence. Drill baby Drill!

 

[astonmartin708]

our economic recovery begins with energy independence. Drill baby Drill!

Blow baby blow and shine baby shine.

 

[astonmartin708]

The deficit is dropping from over $3T due to Covid spending ending. Spending which is causing some of the inflation we’re now seeing. Are you actually bragging about a federal deficit of well over $1T. You are correct in the context of not spending trillions and trillions will ease inflationary pressure. Keep in mind Biden wanted to spend a trillion more but Congress stopped him.

Here’s the problem my friend. We have a contracting (stagnant at best) economy. Raising interest rates while now necessary results in a very real risk of a recession. I called out the reckless spending well over a year ago and predicted exactly what has occurred. Those in charge ignored what most of us knew was coming and kept the spending train going. They own this.

This would have occurred spending or not. Imposing higher interest rates to cause contraction (or even full on recession) is the exact gameplan Reagan's admin used. Same one to a T.

 

[lawpoke87]

This would have occurred spending or not. Imposing higher interest rates to cause contraction (or even full on recession) is the exact gameplan Reagan's admin used. Same one to a T.

Your buddy WATU was the one who actually brought up spending (by Trump of course) being responsible for the inflation we’re seeing today. When our resident far left poster is blaming inflation on government spending it’s worth noting. Consensus on this board doesn’t occur very often. (They’re are obviously other contributing factors btw).

I’m not sure what game plan you’re referring too. When Reagan took office the Fed’s fund rate was 18%. The Fed raised them to 20% shortly after Reagan to office (they never went higher). Rates had been lowered to 12% by year end. This isn’t remotely what we’re about to see. Rates will be higher at the end of 2022 than today after multiple increases. They will be higher at the end of 2023 than they are today. There is no plan to increase rates once or even twice and then start lowering the same months later as occurred during the Reagan admin. In fact, eleven rate hikes are forecast over the next 18 months.

Inflation at its most basic level is an imbalance between money supply and goods/services. When you increase the money supply during a time of shortages in goods/services the result is inevitable.

 

[aTUfan]

biden, = carter2.0

 

[astonmartin708]

Your buddy WATU was the one who actually brought up spending (by Trump of course) being responsible for the inflation we’re seeing today. When our resident far left poster is blaming inflation on government spending it’s worth noting. Consensus on this board doesn’t occur very often. (They’re are obviously other contributing factors btw).

I’m not sure what game plan you’re referring too. When Reagan took office the Fed’s fund rate was 18%. The Fed raised them to 20% shortly after Reagan to office (they never went higher). Rates had been lowered to 12% by year end. This isn’t remotely what we’re about to see. Rates will be higher at the end of 2022 than today after multiple increases. They will be higher at the end of 2023 than they are today. There is no plan to increase rates once or even twice and then start lowering the same months later as occurred during the Reagan admin. In fact, eleven rate hikes are forecast over the next 18 months.

Inflation at its most basic level is an imbalance between money supply and goods/services. When you increase the money supply during a time of shortages in goods/services the result is inevitable.

You’re not wrong about the timing of the 1980-81 rate changes or their volumes… people just typically don’t like to attribute the rate increases to Carter’s fed, despite the fact that they were believed to be the major impacting factor on ending stagflation. The high and increasing rates did cause a recession during Reagan’s early administration though.

The fed fund rate went from 4.6% in 77 to 13% (ish) when Reagan took office. They then dropped the rate from a high of 17% down to 9% and it didn’t have the effect desired so they raised it back up to almost 20% twice. It wasn’t until 83 that it dropped below 10% again. Councidentally the this time period coincided with US recession and a rise in unemployment from 7% to 10%

The fed will continue to raise rates until inflation subsides and it is likely to result in a recession. The degree of economic contraction is the only thing in question. i also think that we will inevitably need to reestablish some of the energy efficiency measures that happened under Carter even if they are somewhat painful. The oil supply glut that resulted from the demand curtailment and supply increases post 1970’s really benefited Reagan’s later administration as oil became cheap.

Two to Three years from now rates will be insane and many will be unemployed. 6 years from now oil will be back in the doldrums and we’ll be enjoying a prolonged period of economic success. Plan accordingly.

 

[URedskin54]

Why

 

[aTUfan]

the new green deal will not solve cc, but it is killing our economy.

 

[lawpoke87]

Why? Because Biden is controlled by the extreme left wing of his party. The poor and middle class will continue to struggle to afford the necessities as inflation remains high. A recession is on the horizon. Millions will lose their jobs. Environmentalist will be happy though. As long as they don’t look at what China and India are doing.

 

[Gmoney4WW]

the new green deal will not solve cc, but it is killing our economy.

It's not even been up for a vote, how is it killing our economy.

 

[aTUfan]

you can't solve inflation by giving away taxpayer money, but you caan get re-elected.

 

[lawpoke87]

Joe finally has a plan to reduce inflation

 

[Gmoney4WW]

Joe finally has a plan to reduce inflation

View embedded media

Talk about addressing inflation without talking about anything that will address inflation.

 

[aTUfan]

tax and spend: that's the left's solution for everything.

 

[lawpoke87]

Talk about addressing inflation without talking about anything that will address inflation.

How did that tweet make it past Biden’s Misinformation Board?

 

[lawpoke87]

Washington Post with some insightful advice on how to deal with inflation….Move back in with your parents 😂😂😂😂😂😂

https://www.washingtonpost.com/business/2022/05/13/inflation-housing-moving-home/

 

[aTUfan]

easing inflation here, starts with inceasing our oil production.

 

[astonmartin708]

easing inflation here, starts with inceasing our oil production.

and reducing our consumption… but yes. That is true.

 

[aTUfan]

I doubt our consumption is more than in 2019, when we had plenty

 

[lawpoke87]

Consumption isn’t decreasing anytime soon absent another pandemic like event. Production needs to be increased if oil prices are to drop.

Global crude oil demand 2024 | Statista

In 2023, world oil demand exceeded 100 million bbl/d for the first time since the pandemic. Forecasts suggest global oil demand will grow even more in 2024.

www.statista.com

 

[Gmoney4WW]

I doubt our consumption is more than in 2019, when we had plenty

Oil imports 2019 9.1 million b/d
Oil imports 2021 8.47 million b/d

 

[astonmartin708]

Consumption isn’t decreasing anytime soon absent another pandemic like event. Production needs to be increased if oil prices are to drop.

Global crude oil demand 2024 | Statista

In 2023, world oil demand exceeded 100 million bbl/d for the first time since the pandemic. Forecasts suggest global oil demand will grow even more in 2024.

www.statista.com

There are ways to artificially decrease consumption which could help with the price shock. The only problem is that it would ask some people to adjust their lifestyle and they throw a fit when you ask them to do that.

Promoting carpool a few days a week. Encouraging federal work from home for those who can, lowering speed limits (ouch). There are tons of ways to begin to limit consumption, especially in this digital age. It would be quite a bit easier than in the 70’s. To me it’s better than gas lines and hyper inflation, but call me crazy.

The other way is to cause a recession where everyone’s spending contracts Which is what the fed will have to do if we don’t limit our consumption voluntarily, because oil production can’t rise fast enough to meet demand. (In the near term)

As much crap as he gets, it was partially Carter helping limit consumption in the 70’s that helped lead to the glut of the 80’s (and the subsequent honeymoon of industry). That’s not to say that increasing production didn’t play a significant role as well though.

Covid + Russian aggression limited global supply. To rebalance we need to increase domestic supply while also limiting domestic demand. Simple as that. Biden and the Dems will never promote it right before elections though.

 

[astonmartin708]

A 10-Point Plan to Cut Oil Use – Analysis - IEA

A 10-Point Plan to Cut Oil Use - Analysis and key findings. A report by the International Energy Agency.

www.iea.org

 

[aTUfan]

There should be a 10 point plan to INCREASE oil Production

 

[astonmartin708]

There should be a 10 point plan to INCREASE oil Production

The industry doesn't need a 10 point plan to increase oil production (the IEA is a pro-oil organization btw)

The market will increase supply to balance demand, but it will take time. In the meantime we can quicken the pace of balance by temporarily curtailing demand until the rate of supply increase can overtake what's necessary.

 

[aTUfan]

take time? if biden hadmt cut us production we would be just fine now.

aoc and her new green deal has done more harm to our country than jan 6.

 

[astonmartin708]

take time? if biden hadmt cut us production we would be just fine now.

aoc and her new green deal has done more harm to our country than jan 6.

 

[aTUfan]

joe's answer to the problem is to tax the rich, beg other countries for oil, more government freebies.

 

[lawpoke87]

Even Vox now agrees with me regarding stimulus and inflation

Biden’s American Rescue Plan worsened inflation. The question is how much.

But was it a minor contributor, or a major factor in the US’s inflation woes?

www.vox.com

 

[astonmartin708]

Even Vox now agrees with me regarding stimulus and inflation

Biden’s American Rescue Plan worsened inflation. The question is how much.

But was it a minor contributor, or a major factor in the US’s inflation woes?

www.vox.com

From the paper they reference in their article… please note the bolded text.

Conclusion​

The United States is experiencing higher rates of inflation than other advanced economies. In this Economic Letter we argue that, among other reasons explored by the literature, the sizable fiscal support measures aimed at counteracting the economic collapse due to the COVID-19 pandemic could explain about 3 percentage points of the recent rise in inflation. However, without these spending measures, the economy might have tipped into outright deflation and slower economic growth, the consequences of which would have been harder to manage.

 

[lawpoke87]

From the paper they reference in their article… please note the bolded text.

Conclusion​

The United States is experiencing higher rates of inflation than other advanced economies. In this Economic Letter we argue that, among other reasons explored by the literature, the sizable fiscal support measures aimed at counteracting the economic collapse due to the COVID-19 pandemic could explain about 3 percentage points of the recent rise in inflation. However, without these spending measures, the economy might have tipped into outright deflation and slower economic growth, the consequences of which would have been harder to manage.

There was zero doubt Vox wouldn’t add that disclaimer. It’s Vox . Even Vox uses the word “might”. With the supply shortages present in the system and the increasing demand at the time the stimulus was signed the risk of deflation was very small. Basic economics. The inflation and coming recession and pain we’re about to see from the same was a certainty as soon as the last stimulus was signed.

You have argued with me all along that the last stimulus didn’t significantly contribute to where we are today. Welcome to the light.

 

[astonmartin708]

There was zero doubt Vox would add that disclaimer. It’s Vox . Even Vox uses the word “might”. With the supply shortages present in the system and the increasing demand at the time the stimulus was signed the risk of deflation was very small. Basic economics. The inflation and coming recession and pain we’re about to see from the same was a certainty as soon as the last stimulus was signed.

You have argued with me all along that the last stimulus didn’t significantly contribute to where we are today. Welcome to the light.

Poke, it wasn’t Vox that made the disclaimer. It was the Federal Reserve Bank of San Francisco. I still don’t agree with that Fed reserve’s model that the stimulus had such a high impact on inflation growth, especially because they throw in quite a few disclaimers about the assumptions the model makes and how that might effect the model‘s function.

 

[lawpoke87]

Poke, it wasn’t Vox that made the disclaimer. It was the Federal Reserve Bank of San Francisco. I still don’t agree with that Fed reserve’s model that the stimulus had such a high impact on inflation growth, especially because they throw in quite a few disclaimers about the assumptions the model makes and how that might effect the model‘s function.

Semantics. Doesn’t really matter whether a Vox writer made the statement or found the statement and decided to use it as a possible argument. The Fed has even more incentive to add that justification btw since they failed to act in a timely manner or even sound the alarm bells. In any event, the risks of deflation given the economic conditions at the time of the last stimulus were remote. Again….basic economics.

Many of us predicted exactly what we’re now seeing after the Admin decided to implement the final stimulus. Nice to see the Fed finally jump on board. Unfortunately, they are late to the party. The result will be a lot of pain for the poor and middle classes of this country.

Whether you agree with the Fed or not more and more economist are now stating what I’ve been preaching for almost two years. You don’t add a trillion of dollars to a economy experiencing labor and goods shortages. One of the worst economic policy decisions in our lifetime….and I called it from the outset.

 

[astonmartin708]

Semantics. Doesn’t really matter whether a Vox writer made the statement or found the statement and decided to use it as a possible argument. The Fed has even more incentive to add that justification btw since they failed to act in a timely manner or even sound the alarm bells. In any event, the risks of deflation given the economic conditions at the time of the last stimulus were remote. Again….basic economics.

Many of us predicted exactly what we’re now seeing after the Admin decided to implement the final stimulus. Nice to see the Fed finally jump on board. Unfortunately, they are late to the party. The result will be a lot of pain for the poor and middle classes of this country.

Whether you agree with the Fed or not more and more economist are now stating what I’ve been preaching for almost two years. You don’t add a trillion of dollars to a economy experiencing labor and goods shortages. One of the worst economic policy decisions in our lifetime….and I called it from the outset.

I predicted inflation in March 2020 when commodity production ranked as everyone stopped working… so who cares?

 

[lawpoke87]

 

[lawpoke87]

I predicted inflation in March 2020 when commodity production ranked as everyone stopped working… so who cares?

1). Don’t recall anyone arguing that a shortage of goods would result in inflationary pressures…except possibly the Biden Admin.

2). Shortages were a given when we shut down the country. The third stimulus during a time goods and labor shortages was a choice. A choice which many argued good policy and while others knew the economic consequences.