Economy close to tanking?

For those interested, it looks like they will avoid a shutdown.

House Republicans Defy Trump’s Call for Brinkmanship on Shutdown

Party leaders discuss three-month deal that is expected to be amenable to Democrats

WASHINGTON—House Republicans signaled Thursday they have no appetite for a government-shutdown battle right ahead of the November election, ignoring exhortations from former President Donald Trump to hold the line on an election-security bill opposed by Democrats.

GOP leaders are discussing a bill that would keep federal agencies funded until mid-December, an idea in line with what Democrats have said they would support. The new proposal under discussions being led by House Speaker Mike Johnson (R., La.) could get a vote early next week and then head to the Democratic-run Senate. It leaves out any election-related provisions, which Democrats had called a poison pill.

Congress needs to act by the Sept. 30 end of the fiscal year to prevent a partial government shutdown.

The revised approach would mark the latest in a series of humbling episodes for Republican leaders, who have repeatedly relied on Democrats this term to help pass spending legislation in the House due to deep divisions in the GOP ranks and their narrow majority.

Read more here:
https://www.wsj.com/politics/policy/...d=hp_lead_pos6

I have forgotten more about economics than you will ever know Blackman. Originally Posted by farmstud60

And here I thought you were the bovine expert vs economics. Buy pork bellies, sell oranges!

Lol. Does the Oracle of Omaha keep you on speed dial in case he has a question? That Missouri River has both healing and huge economic properties, that impart economic knowledge to all who drink from its healing shores.

What reason do you think the Fed used to do 50 basis point reduction??

And here I thought you were the bovine expert vs economics. Buy pork bellies, sell oranges!

Lol. Does the Oracle of Omaha keep you on speed dial in case he has a question? That Missouri River has both healing and huge economic properties, that impart economic knowledge to all who drink from its healing shores.

What reason do you think the Fed used to do 50 basis point reduction?? Originally Posted by eyecu2

Many think because the economy is starting to struggle more, with the huge revision downward of the jobs numbers.

Me too. The pure stupidity or blatant ignorance on display on this thread is beyond the pale.

I’m speechless. Originally Posted by txdot-guy

Many think because the economy is starting to struggle more, with the huge revision downward of the jobs numbers. Originally Posted by farmstud60

Are those many at all versed in monetary policy or economics or are just folks that watch NesMax and Fox and read from TownHall or other right wing outlets and think someone giving them political spin is actually informing them?

Are those many at all versed in monetary policy or economics or are just folks that watch NesMax and Fox and read from TownHall or other right wing outlets and think someone giving them political spin is actually informing them? Originally Posted by 1blackman1

Commodity news and brokers.


Do you have any other source for info besides the Marxist DNC propaganda main stream media?

Actual economists, bankers, corporate execs, etc.

What reason do you think the Fed used to do 50 basis point reduction?? Originally Posted by eyecu2

Good question, eye. Why don't you try answering it?

Could it be, as the OP suggested, that the Fed has access to data signaling the economy may be weaker than we think?

(Psst - You'll have to wait 3 weeks before they release the minutes of the Fed's Sept. 17-18 deliberations.)

Why are you guys insulting each other instead of speaking plain economics?

For what it's worth, Fed Governor Michelle Bowman voted for only a quarter-point instead of a half-point cut. In her dissent, she argued the economy is still strong and it's premature to claim victory in bringing inflation down to the Fed's target level of 2.0% or less.

https://www.federalreserve.gov/newse...n20240920a.htm

I will add this... Look at the stock market today to know what they think about this recent rate cut. It never lies... Originally Posted by Lucas McCain

Lol. Pray tell, Luke... how does one gauge whether the stock market is lying or telling the truth?

An experienced market watcher told me years ago - the market moves first, then finds reasons for it afterwards.

Newsflash - Fed rate cuts don't automatically goose stock prices. Look what happened back in 2008. The Fed cut rates all the way to zero. The S&P 500 index was down by 39% for the year. Was the market signaling disapproval of the rate cutting? Of course not!

Many think because the economy is starting to struggle more, with the huge revision downward of the jobs numbers. Originally Posted by farmstud60

Actually I need to apologize to farmstud. My original post was a bit knee jerk because I misunderstood the point he was trying to make.

If the question is the economy in more trouble than most people believe, indicated by a .5 vs .25 rate change, he could be correct.

The bls revised jobs numbers could certainly be a factor in the fed’s deliberations. I personally think that the job number revisions are more a counting of Immigrant labor in the bls questionnaire than an actual miscount.

The surveys they do reflect a lot of underground labor that’s not reported in the actual statistics.

We’ll see however. The economy is slowing but not yet headed to recession. I expect the fed to take us down another.25 point at the next meeting.

Actual economists, bankers, corporate execs, etc. Originally Posted by 1blackman1

So the educated idiots that are wrong more than they are right.


Actually the commodity market news takes those sources into account.

I suppose we'll see who's right, though I already know the answer. Hint, it ain’t Trump or NewsMax/Fox.

I suppose we'll see who's right, though I already know the answer. Hint, it ain’t Trump or NewsMax/Fox. Originally Posted by 1blackman1

Hint, you don't know what truth is if you believe ABC is a credible news organization.

I also know NewsMax, Fox, Townhall, etc aren’t even sources much less credible. If you believe them or spend one iota of time reading, watching or consuming their garbage you’re what is referred to as a low information “person”.

I wonder if the Fed cutting interest rates by .5% means the economy is worse than all the numbers the Biden administration is putting out there. Originally Posted by farmstud60

In my view, it's simply too early to tell, though I believe the risk of impending slowdown/recession with rising unemployment is significantly greater than the risk of a serious inflation resurgence.

Note that economists' records of forecasting the onset of recessions is very bad, to put it mildly. Many decades ago, the late John Kenneth Galbraith quipped (and not without justification!) that economic forecasters serve the purpose of making astrologers look prescient.

The reason I think a 50-bp cut was warranted is that the Fed kept the "higher for longer" narrative well beyond what should have been it's "sell-by date."

Look at the 2-year Treasury, which I and many others consider arguably the best proxy for expectations of the Fed funds target rate, inflation, and growth. The 2-year market "looks out" further than the market for shorter-term (3-month, 6-month, etc.) paper.

And take a look at how the 2-year yield has dropped sharply over the last few months.

https://fred.stlouisfed.org/series/DGS2

About 140 bps in 5 months. (That's a lot!)

Ultimately, the Fed funds target rate must converge toward real-world market rates, lest distortions continue for so long that something busts (such as large swaths of the CRE market, for instance.)

Also, the financial system does not function well over the long term if the yield curve does not have a nice, positive slope. To get to that point, short rates need to decline to levels significantly lower than the 10-year T-note (which, of course, is the primary guidepost for 30-year fixed-rate residential mortgages).

The reason I don't think inflation is that much of a risk going forward is that the spike of a couple of years ago was quite a bit different animal from the "Great Inflation" of the 1970s-early'80s, and was primarily a function of the spending binges of 2020-2022, which poured several trillion dollars of "excess savings" directly into household bank accounts, rather than open market operations and interest rate-targeting by the Fed. Of course, one should note here that the Fed openly stated during those years that it was standing by, ready to accommodate all those spending binges by monetizing the newly accumulated debt if necessary. And the big pile of "excess savings" (estimated by JPM analysts to be close to $2.3 trillion at the peak about three years ago) has been almost completely spent down; thus there isn't much "fuel" to drive inflation higher moving forward.

I expect the fed to take us down another.25 point at the next meeting. Originally Posted by txdot-guy

I agree. And, I suspect, at the December meeting as well. And the Feb 1st meeting, too, more than likely.

For anyone interested in reading more about the early 2020s inflation, I highly recommend John Cochrane's excellent book The Fiscal theory of the Price Level. Additionally, he has occasionally written columns for the WSJ and other publications.

https://en.wikipedia.org/wiki/John_H._Cochrane

https://en.wikipedia.org/wiki/Fiscal...he_price_level

A fair bit of hilarity ensued when Paul Krugman (who does not seem to like being criticized) opened fire on Cochrane with a bunch of insults a few years back after the latter wrote a piece musing about how the Great Krugtron was so very wrong about some fundamental things. Cochrane, who apparently "gives as good as he gets," replied with (among other things) comments that instead of being a serious empirical economist, Krugman speaks and writes like a rabidly partisan opinion columnist and seems hell-bent on being "the Rush Limbaugh of the left." (Ouch!!)