Now, it is only anecdata. I am in IL. My household is above average in terms of income for US and my state. We are struggling ( not as much as so many other Americans, but I can't say I am comfortable say.. buying a new car or remodeling kitchen or even taking a vacation ) and it is not like we are throwing money at random indulgences and we did not even start school for our kid yet. By all metrics I should be in a comfortable enough position ( and I guess I am by comparison ), but to me outlook is choppy. And it is not just the boom/bust cycle. I am talking real systemic issues that will take both massive tax hikes and services reductions, but that would not be a popular message to take so no one talks about it.
I remember working sub $20k job. I remember being bumped to $30k ( ~US median? ) and I can't even begin to imagine anyone having to live on that today.
In short, I agree.
I disagree. The only way to even begin thinking about selling it to the public, which happens to include moneyed interests is 'shared sacrifice' ( similar to how a war effort would be sold ). In pure mathematical terms, we really should be doing both already. We don't because things did not get bad enough yet, but once it starts, it will be a little hard to stop. Shock therapy is necessary to get things under control. And the longer we wait pretending it can be 'managed', the worse it will be later on.
<< I think more of a re-allocation of where capitol is going is the cure.
From where to where? I don't automatically disagree, but 'entitlements'(depending on how you define them ) are somewhat protected from touching and 'defense' is even harder. Re-allocation is not going to happen, because even current allocation was a result of heavy compromises.
I disagree based on the information provided so far. If you have math to back up either point, please share. Right now, we are still running US on continuing resolutions suggesting that balanced budget now is just not possible. Something is wrong and it needs to be corrected before it gets much worse.
You actually posed a solution here not a disproof. Yes all this requires selling changes to the public and under a social message. One doesn’t need math to know this, it is intuitively true.
> from where to where
I already answered this.
> re-allocation is not going to happen because even the current allocation was a result of heavy compromise.
So anything that requires compromise cannot be undone? I’m not tracking your logic here.
I think you are looking for more evidence to backup my suggestion. See 1930s Germany as example where this model was followed and resulted in one of the greatest economic turnarounds of all time.
> inb4 muh nazis and Holocaust Doesn’t disprove the economic turnaround that transpired.
I am convinced, just about anything can be done given enough effort, time and money. That said, how much of those would have to be expended to undo current compromise status quo? I personally would venture a lot more than most people would be willing to give in exchange.
<< See 1930s Germany as example[..]
Um.. yes, because US just happened to fund that recovery ( and of entire western Europe ) via Marshall Plan. Who, exactly will fund US recovery? I am not sure if you noticed, but central banks have been looking around for an alternative to USD[1] so further debt binge may not be an actual option soon.
This brings me to the original point. Drastic measures will eventually need to be taken. If those are taken now, they will be much less painful.
<< inb4 muh nazis and Holocaust Doesn’t disprove the economic turnaround that transpired.
I am not sure this adds much to the conversation. I will ignore it for unless you think it is relevant. If so, please elaborate.
[1]https://www.cnbc.com/2022/03/22/countries-may-want-to-divers...
Post war Germany was hallowed out and the nation is a husk of what it once was, basically a US vassal state.
If you would like to rebut, please give me the 'good policies', 30s Germany implemented. I worry that may you have the 'national socialism' part confused at best.
<< Post war Germany was hallowed out and the nation is a husk of what it once was, basically a US vassal state.
Somewhat accurate. How would explain the Nordstream debacle then?
edit: I decided to pre-empt it a little. I am not interested in discussing whether fascism was left or right wing ideology. I had this argument before it gets ridiculous fast. I am going to bow out should it happen here.
Why not? Cause the current ruling class frowns up it?
> I am going to bow out should it happen here.
Then the system propaganda has worked fully. You police your own speech.
I will expand a little on the why so as not to look like I am being difficult. I am actively avoiding the conversation I mentioned not because of propaganda, fear thereof, its impact or even because I police my own speech. I avoid it because it is largely pointless. For better or worse, both major parties in US noted that you can make anything work well if you compare the other team to nazis. For that reason and that reason alone, you will see constant bickering whether fascism is a left or right wing ideology, which manages to completely miss the point, because it does not rely on two poles of US politics ( that likes to keep things simple for people ) for its origin. It is like trying to put a square in a round box. It can be done, but nuance will be lost.
<< Why not? Cause the current ruling class frowns up it?
No. Because it is a bad idea. It is difficult to put in words how bad an idea it is, but I will say this. For all my beef with current system, at least it has a degree of predictability and stability to it, which is more than most periods that came before it. It is pretty selfish, but I would like that state to continue for as long as possible. Proposed solutions will not make for a stable society.
edit: removed opening paragraph. not necessary
Agreed, I think this serves a common purpose as other generalized propaganda on the subject. The idea is to poison the well concerning any good-faith discussion of national socialism such that people self-moderate and dismiss the idea prima facie. In this very thread, I pointed to the economic recovery in pre-WW2 Germany which was undeniably facilitated by a shift to nationalist, socialist policies. When I did, you dismissed the idea immediately due to "facism" - announcing you'd withdraw from the conversation if indeed national socialism was the topic.
> No. Because it is a bad idea. It is difficult to put in words how bad an idea it is.
Precisely, I've seen this pattern time and time again. It is prima facie a bad idea, but proof cannot be articulated. In such cases, the fallback is often (not accusing you of this) to attack the person suggesting the idea rather than the idea itself (ad hominem). I agree predictability and stability are ideal characteristics, but only in scenarios where there are other positive characteristics. Predictable and stable misery is a pretty bad state to be in. I think we can agree that the current system has many faults. One of these faults, I think, is that the system has optimized the wealth and opportunity for a very few in number. I believe the nation requires a shift in philosophy away from globalist, hyper individualism, and towards an inward looking (nationalist) stance that optimizes the wellbeing of the people (socialism). Such a shift in national philosophy, as was seen in pre-WW2 Germany, has shown an ability to correct for the excesses and decay of a globalist and individual culture, improving the outlook dramatically for the citizens. By many measures (num of children, unemployment, inflation, wealth, life expectancy) national socialism improved Germany dramatically.
What policies from 30s Germany would you argue US should adopt precisely to get it out of current set of trouble?
Your atlantafed link shows unweighted wage increase peaking at 6.7% in August 2022. In what way did wages outpace inflation?
Just this week we saw a jobs number that absolutely rofl stomped the consensus expectations. At the same time the credit card number came in ism services business purchasing came in 35% over expectations and new orders were way over expectations as well. Businesses are out there doing something!
You could watch in real-time as the markets all did a collective about face on what the narratives should be.
I frankly don’t know if we are in a good economy or not, but there are lots and lots of indicators we are, so saying someone is on “copium” because they espouse that view says a lot more about your biases than theirs.
The situation's super-weird and it's evidently hard for people used to being able to easily spin the narrative one way or another to adjust to whatever the hell this is. It's definitely not the case that all indicators look great, but damned if the economy's not still trucking along.
But I can see being critical of a ceo saying it’s the macro environment when other industries are doing really well. They clearly mispredicted the future, that’s different than a broad economic decline.
Since most of the companies doing 6-8% layoffs are concurrently reporting revenue growth, it isn't clear why they feel their future revenue is going to suddenly decline. It also isn't clear why, if they truly expect a decline, they'd continue to buy back shares or issue dividends. Seems like they'd want to keep that cash on hand, if they actually had concerns about the future, and weren't just using the social contagion as an excuse.
This is clearly not true, although it is probably the most important thing.
Interest rates matter if a company financed expansion using debt. Cost of capital matters if your plan is to grow through VC and you're not yet profitable. Changes in these areas can change a company whose books add up to one that doesn't.
I haven't personally seen companies taking out operating loans using adjustable rates. Have you? If rates are fixed, then a company's expansion plans may need to slow or stop, but that's not the same as the company contracting.
> Cost of capital matters if your plan is to grow through VC and you're not yet profitable.
Which does apply in Gitlab's case, I think, but does not apply in most of the cases we have been seeing of 6-8% layoffs made at profitable companies, many of which are concurrently doing expensive stock buybacks or issuing dividends.
If your business model depends entirely on 0% interest rates, then a 7% layoff is probably not enough, you have a dead company walking. But 6-8% is what's popular, so that's what we get.
Actually, those are all traditional signs that the economy is overheated. They're not signs that the economy is doing poorly, they're signs that the economy is doing too well.
> Record high credit card balances
Nope, it's back to normal. [0]
> record low personal savings
Well perhaps. If you take a hyper-zoomed-in-view of this chart [1] then I can see how you'd have this takeaway. But contextually this is in the period right after a 1-2 year period where rates were consistently 3-5x above the average. Consumers drawing down on personal savings right now is a natural release from all the savings during covid, and in fact is a positive economic indicator because it injects a lot of cash into markets and that goes straight to corporate balance sheets. Probably a good time to be hiring, not laying off.
> 40 year high inflation
1. This is often good for companies and businesses, because it means that they get a free pass to essentially lower pay across the board for every single employee. While on the revenue side, since "everyone is raising prices" they get a free pass to adjust pricing UP to account for inflation, and then some! So in the end businesses are probably pretty happy with how inflation has played out this last year, particularly because...
2. The actual pain experienced from inflation is more connected to the area under the curve. If we had sustained 40-yr high inflation for several years, then yes that is truly disruptive to an economy. But an inverted "V" like peak (which is clearly what we have the last year [2]) means a single shock, but after that everything resettles. We're clearly in the resettling period, as current inflation as of December is only 6.5% and dropping quickly. That may feel painfully high for millenials accustomed to decades of near zero inflation, but merely newsworthy for another time and place.
> rising interest rates and no sign of the fed stopping
As I said in another comment, perhaps this is a reason for a small startup with a short runway and highly dependent on investor cash and bank credit to layoff employees, but Microsoft and Google? They're flush with cash and are not dependent on credit markets to survive. These layoffs are clearly about "showing fiscal responsibility" and "trimming fat", and not at all about a mathematical response to economic conditions.
As it is, there are plenty of signs that the fed will be stopping soon. Already rate hikes have dropped from 50p to 25p, and markets are indicating a complete end to rate hikes some time later this year.
> Housing affordability at its lowest point
One would think that raising interest rates would mean the housing market would totally seize up, right? In fact nearly the opposite has happened. Construction, housing starts, and housing completions are an a contradictorily high point right now, particularly in one of the most affordable segments: multi-unit housing! These giant real estate companies are not worried at all about interest rates and are instead plowing ahead adding tons of supply to the market.
Lenders are getting creative about how to get around high interest rates. Sellers often buy-down the buyer's interest rates. Adjustable rate mortgages actually make sense for once and are getting more popular. California is finally solving the NIMBY housing crisis and zoning high-density. Outlook in housing in general is pretty good right now.
[0] https://tradingeconomics.com/united-states/consumer-credit
[1] https://tradingeconomics.com/united-states/personal-savings
[2] https://tradingeconomics.com/united-states/inflation-cpi
If you're suggesting people worked two jobs out of desperation, we need to see the evidence.
If the "solution" is a bunch of layoffs, it's just going to compound the problem. The solution is all these companies that aren't actually dying need to raise wages to match all the recent inflation.