The Biden Economy

[finnbow]

Originally Posted by whell

For example, if the economy as a whole is "thriving", why is the Fed still saying they expect 2 additional interest rate hikes this year?

Why not just shout out "I have no understanding of economics whatsoever?" Interest rate hikes signal a thriving economy, indeed one that is thriving a bit too well (something all the other economic indicators show as well (to which the Fed is reacting).

[Dondilion]

Originally Posted by finnbow

Why not just shout out "I have no understanding of economics whatsoever?" Interest rate hikes signal a thriving economy, indeed one that is thriving a bit too well.

Not totally correct.

Interest rate hikes may indicate that there is a fear that the economy is in a bubble. That the fundamentals are not there.

[finnbow]

Originally Posted by Dondilion

Not totally correct.

Interest rate hikes may indicate that there is a fear that the economy is in a bubble. That the fundamentals are not there.

Perhaps, but that happens when there is "irrational exuberance" in the markets which is also not the case. We're neither in Whell's gloom-and-doom world nor in a world of irrational exuberance. Indeed we may be in a Goldilocks economy if the stability of the markets over the past year are any indicator.

[Dondilion]

Originally Posted by finnbow

Perhaps, but that happens when there is "irrational exuberance" in the markets which is also not the case. We're neither in Whell's gloom-and-doom world nor in a world of irrational exuberance. Indeed we may be in a Goldilocks economy if the stability of the markets over the past year are any indicator.

A Goldilocks economy: It has that look except for worrying inflation.

[finnbow]

Originally Posted by Dondilion

A Goldilocks economy: It has that look except for worrying inflation.

And it too is very much heading in the right direction, though still a bit higher than the long-term average of 3.28%.:

US Inflation Rate is at 4.05%, compared to 4.93% last month and 8.58% last year.

https://ycharts.com/indicators/us_inflation_rate

[whell]

Originally Posted by finnbow

Why not just shout out "I have no understanding of economics whatsoever?" Interest rate hikes signal a thriving economy, indeed one that is thriving a bit too well (something all the other economic indicators show as well (to which the Fed is reacting).

Why not just shout out "I've been programmed to respond"?

The Fed's interest rate hikes are a tool to combat inflation. Inflation is an economic indicator, but it is not always indicative of a thriving economy. If you lived through "stagflation" in the '70s, you know this is true. Or maybe you were a fan of the wisdom (or lack thereof) of President Ford's "WIN" buttons?

The inflation we're seeing today has multiple causes:

You've stated that one of those causes if the War in Ukraine and how that has impacted the availability of Russian oil on the global market. Yup, that played a role.

Remember the video on the news of all those container ships anchored off the coasts of the US? Those ships sort of became the poster child of the supply chain issues that were prompted by COVID-related shutdowns world-wide. Those supply chain issues have not been fully resolved and are still reflected in the cost of consumer goods.

Labor shortages have certainly had an impact on prices as employers have raised wages to compete for people. COVID worsened the labor shortage but it was already impacting employers prior to COVID. The biggest impact has been on the services and food industry, but not limited to those industries.

The US pumped billions of dollars into the hands of consumers in response to COVID, and that impacted demand. High demand intersecting with ongoing supply chain issues exacerbated inflation in certain sectors of the economy. There we a ton of anecdotal examples during and after COVID as consumers sometimes acted in unpredictable ways. One example: once the weather started warming up in 2020 and folks couldn't go anywhere else (and got tired of watching Netflix), folks took to the streets and parks on their bikes. Bikes and bike parts shortages were common. And, of course, no one will forget folks hoarding toilet paper or trying to sell toilet paper on Craigslist for crazy prices.

So, no, the Fed isn't raising rates in response to a booming economy. The Fed is raising rates to combat inflation-driven factors not related to economic production. Thankfully, some of those inflation drivers are starting to abate and inflation is starting to moderate in some sectors.

[finnbow]

Originally Posted by whell

So, no, the Fed isn't raising rates in response to a booming economy. The Fed is raising rates to combat inflation-driven factors not related to economic production. Thankfully, some of those inflation drivers are starting to abate and inflation is starting to moderate in some sectors.

For a guy who has been all gloom and doom about the Biden economy, this is a decidedly upbeat forecast. To be sure, COVID had a huge impact on the world economy, but the US recovery is better than anyone else's.

[Rajoo]

Originally Posted by finnbow

For a guy who has been all gloom and doom about the Biden economy, this is a decidedly upbeat forecast. To be sure, COVID had a huge impact on the world economy, but the US recovery is better than anyone else's.

Here is proof.

The millions of people who took to the skies ahead of the July Fourth holiday enjoyed relatively smooth travel over the weekend as the Transportation Security Administration set a record for the number of people screened at airports Friday.

The agency said nearly 2.9 million people moved through checkpoints nationwide, topping the previous record set during the Sunday after Thanksgiving in 2019. The record came despite airlines operating almost 2,000 fewer flights than on the day of that previous record.

Also,

The consumer price inflation in the United States declined to 4.0 percent in May 2023, the lowest since March 2021 and slightly below market expectations of 4.1 percent, driven by a decline in energy prices.

from June 2022 inflation rate has decreased from a high of 9.1% to 4% in May 2023. Not bad in just one year.

Thanks Uncle Joe.

https://tradingeconomics.com/united-.../inflation-cpi

[Chicks]

Paul Krugman Smacks Down 'Recession Truthers' Led By Elon Musk As 'Crypto Cultists'
https://www.benzinga.com/amp/content/33111135

Real economists, of course, see right through the buffoonery of Whell’s World.

[whell]

Originally Posted by Rajoo

Here is proof.

I'm glad more folks are flying, but you highlighted the part about 2000 fewer flights. Not sure if that's proof of economic recovery. It is proof that the airlines are getting better at packing folks onto planes like sardines in a can. I'm 6' 5" tall, and flying is one of the least enjoyable things I can think of.