I get the context already 🤣

deleted

So, I guess Robert was saying you can’t handle the truths of Paul Krugman.🤣

Paul Krugman is an idiot.

No Robert was flicking me crap and I knew it…. I had it coming.

But, I wasn't trying to insult you. Just got the sarcasm wrong...

Economists Are Cutting Back Their Recession Expectations

Forecasters still expect GDP to eventually contract, but later, and by less, than previously


WSJ
Easing inflation, a still-strong labor market and economic resilience led business and academic economists polled by The Wall Street Journal to lower the probability of a recession in the next 12 months to 54% from 61% in the prior two surveys.

While that probability is still high by historical comparison, it represents the largest month-over-month percentage-point drop since August 2020, as the economy was recovering from a short but sharp recession induced by the Covid-19 pandemic. It reflects the fact that the economy has kept growing even as the Federal Reserve has raised interest rates and inflation declined.

In the latest WSJ survey, economists expected gross domestic product to have grown at a 1.5% annual rate in the second quarter, a sharp uptick from 0.2% in the previous survey. They still expect GDP to eventually contract, but later, and by less, than previously. They expect the economy to grow 0.6% in the third quarter, in contrast to the 0.3% contraction expected in the prior survey, followed by a 0.1% contraction in the fourth. Forecasters said GDP would increase 1% in 2023, measured from the fourth quarter of a year earlier, double the previous forecast of 0.5%.

Nearly 60% of economists said their main reason for optimism about the economic outlook is their expectation that inflation will continue to slow. The Labor Department’s consumer-price index climbed 3% in June from a year earlier, sharply lower than the peak of 9.1% in June 2022 and the slowest in more than two years. The Fed’s preferred inflation measure—the annual change in the personal-consumption expenditures price index excluding food and energy—has fallen from 5.4% in March 2022 to 4.6% in May. Economists expect it to reach 3.7% by the fourth quarter of this year, though that is still well above the Fed’s 2% target.

Pathway to a soft landing
Many economists first began in the middle of last year to project a recession when persistently high inflation prompted the Fed to raise rates at the most aggressive pace in nearly three decades. Historically, lowering the inflation rate materially has always involved higher unemployment and a downturn, and few economists thought this time would be different.

Now, a pathway to achieve a “soft landing,” or getting inflation down without a recession, is “back on the table,” said Sean Snaith, the director of the University of Central Florida’s Institute for Economic Forecasting. “At the beginning of this year it seemed more of a pipe dream,” said Snaith. Now, “it seems a recession keeps slipping, slipping, slipping into the future.” Snaith has lowered the probability of recession to 45% from 90% in April.

On average, economists still expect the labor market will lose 10,551 jobs a month in the first quarter of 2024, broadly unchanged from their previous forecast. But unlike in the April survey, economists no longer expect job cuts in the third and fourth quarter of this year. They expect employers will add jobs in the second and third quarters of next year, suggesting any downturn will be mild.

“Inflation has slowed remarkably already, and we believe will continue to do so because spending growth is slowing substantially and the growth in labor force is helping service providers,” said Luke Tilley, chief economist at Wilmington Trust.

Still, stronger-than-expected economic growth this year will also likely result in the Fed keeping interest rates higher for longer, according to the Journal survey.

Economists expected the midpoint of the range for the federal-funds rate will peak at 5.4% in December, up sharply from a 5% forecast in the last survey. The latest prediction implies at least one more 25-basis-point increase by the Fed.

More rate increases, later rate cuts
The Fed last month held its benchmark federal-funds rate steady in a range between 5% and 5.25%, its first pause after 10 consecutive increases since March 2022. Market participants overwhelmingly expect the central bank will raise rates by a quarter-percentage point at its July 25-26 meeting, according to the federal-funds futures market.

Economists are also pushing back their estimates for when the Fed will eventually start cutting rates. In the latest survey, only 10.6% of economists expected a rate cut in the second half of this year, down from 36.8% in the last survey. The majority of economists, nearly 79%, expected the Fed will cut rates in the first half of 2024 as the unemployment rate rises. Some 42.4% expected that first cut will come in the second quarter.

Economists are relatively sanguine about the impact of the end of the government’s pandemic-era pause on student-debt payments, which allowed millions of Americans to avoid a big monthly bill for more than three years.

The resumption of student-loan payments is expected to have a relatively minor impact this fall, shaving 0.2 percentage points, annualized, from consumer spending growth, measured from the third quarter to the fourth quarter of this year.

“We will likely see some slowing in spending growth toward the end of this year as a result of the resumed payments denting certain households’ ability to consume, but we do not think the end to the payment pause will be widespread enough to have a significant effect on overall U.S. household spending,” said Wells Fargo chief economist Jay Bryson.

The survey of 69 economists was conducted July 7-12. Not every economist answered every question.

Markets Appear Convinced the Fed Can Pull Off a Soft Landing
Stocks surged this past week on evidence that inflation is cooling


WSJ
Wall Street is more convinced than ever that inflation is subsiding.

That’s giving investors hope that the Federal Reserve might be able to pull off what once seemed impossible: containing pricing pressures without tipping the economy into recession.

The economic data that came out this past week could hardly have been better. The consumer-price index, which tracks prices for everything from used cars to groceries, rose in June at the slowest year-over-year pace in more than two years. Inflation in wholesale prices cooled even more. An index measuring the prices fetched in June by warehouses, factories, farms and energy producers rose at its slowest pace since August 2020.

The reports should help ease what has been one of investors’ biggest fears over the past year. The Fed has been rapidly raising interest rates to try to rein in inflation. Many money managers have worried that the Fed’s moves would lead to a recession. That is because when interest rates go up, so does the cost of borrowing money. That typically slows down spending and hiring among consumers and businesses—often to the point that the economy tips into a downturn.

The longer it takes for the Fed to bring inflation back to prepandemic levels, the more likely a recession seems. If inflation cools quickly enough, however, investors believe the Fed might be able to finish its interest-rate increases while leaving the economic expansion intact.

That’s exactly what markets seem to be pricing in.

The S&P 500 rose 2.4% this past week, its biggest gain in a month. The index is up 17% for the year, while the Nasdaq Composite, which heavily weights technology stocks, has risen 35%.

The yield on the 10-year U.S. Treasury note, used to help set everything from mortgage rates to student loans, ended Friday at 3.818%, compared with 4.047% the previous week. That marked its biggest one-week slide since March.

“We all thought there would be a hurricane, but it hasn’t come yet,” said Brad Conger, deputy chief investment officer at Hirtle Callaghan.

This coming week, investors will get a look at fresh data on retail sales and existing-home sales, as well as earnings from companies including Morgan Stanley, United Airlines Holdings and Tesla.

Parts of the economy have undeniably slowed. The housing market, for example, has cooled. The median price for existing homes being sold around the country fell 3.1% in May from the previous year, the biggest decline since 2011, according to the National Association of Realtors. The manufacturing industry has weakened too. At the start of the month, data from the Institute for Supply Management showed activity in the manufacturing sector contracted in June for an eighth consecutive month.

But the fact remains that, so far, the overall economy has evaded recession. The biggest U.S. banks posted better-than-expected results Friday, thanks to consumers and businesses continuing to spend and borrow money in the second quarter.

Generally good economic news has kept the market climbing.

“Earnings have been resilient, and inflation is less of a problem,” Conger said. “When you put those two things together, yeah, the market…it should be up.”

If the Fed ends up raising interest rates just one more time, as traders currently expect, and the economy keeps on chugging along, markets might have more room to climb, investors and analysts say.

What could go wrong, then?

The obvious answer is that the Fed decides inflation hasn’t come down enough to stop tightening monetary policy, and surprises investors by continuing to raise interest rates past July, said Rhys Williams, chief strategist at Spouting Rock Asset Management.

“Clearly the market is saying that inflation has peaked, the Fed is looking through the rearview mirror, and the incremental news is going to just keep getting better…but the data suggests the Fed might have to keep going for a while,” Williams said.

The Fed’s preferred inflation measure, the personal-consumption expenditures price index, rose 3.8% in May from a year earlier. That was the slowest pace in two years but still well above the central bank’s 2% inflation target.

Another risk is that economic momentum falters. Some indicators—such as the bond market’s yield curve, and the Conference Board’s leading economic index—have been at levels that have historically signaled recessions for months.

“We still think it’s coming,” said Jason Ware, chief investment officer of Albion Financial Group, regarding a recession. A downturn would likely hit corporate profits, sending stocks lower once again, he added.

The biggest worry some investors have is that they simply run out of reasons to keep pushing stock prices higher.

At this point, it seems as though the market has already priced in the good news: that inflation is less of a problem than investors feared, and that economic growth has at the same time been more resilient than investors anticipated, Conger said.

“It’s hard to see what will make the market go to even higher levels,” he added.

What Markets Are Saying About the Fight Against Inflation

Investors greet inflation progress with cautious optimism


WSJ
New signs of cooling inflation sparked market gains last week. But is the pain from inflation—and the Federal Reserve’s interest-rate-raising campaign to fight it—really over?

Here is what market gauges are showing:

Investors have long expected inflation to fall back to the Fed’s 2% target relatively quickly, a bet that is starting to look better now than it did a few months ago.

Past moments of optimism have met with disappointment. The Fed has repeatedly raised its own interest-rate forecasts since early 2022. Investors have often been hesitant to follow suit but have ultimately been dragged along for the ride.

The Fed’s preferred inflation measure—the core personal-consumption expenditures price index, which strips out volatile food and energy items—stood at 4.6% in May, still well above its 2% target. But there have been signs of progress, with even some easing in non-energy or housing services—a key category for the Fed sometimes known as “supercore” inflation.

One note of caution for investors is that progress on inflation has come despite a very tight labor market. Many believe that wage increases, in particular, will need to subside for inflation to come fully under control.

Investors do expect interest rates to fall in the coming years, but their forecasts don’t necessarily include a recession.

The Fed’s benchmark federal-funds rate is expected to fall gradually over the next decade to a long-term level that neither stimulates nor slows growth, according to an analysis of Treasury yields by Benson Durham at Piper Sandler. By comparison, Australian bond yields suggest a more concerted effort to boost the economy over the next couple of years, with rates dipping below their long-term expected level before climbing back later in the decade.

If we didn't have a central bank with its fiat money and interest rate setting monopoly, inflation and corruption wouldn't be such a big problem. History proves it but people are dumb.

A Permanent Engine of Corruption

By Thomas DiLorenzo
New American 07/31/2023

Lunge perry...lunge lunge...so confused 😕

Pay Raises Are Finally Beating Inflation After Two Years of Falling Behind

Wages rise more than 4% while consumer prices increase 3%


WSJ
Americans’ growing paychecks surpassed inflation for the first time in two years, providing some financial relief to workers, while complicating the Federal Reserve’s efforts to tame price increases.

Inflation-adjusted average hourly wages rose 1.2% in June from a year earlier, according to the Labor Department. That marked the second straight month of seasonally adjusted gains after two years when workers’ historically elevated raises were erased by price increases.

If the trend persists, it gives Americans leeway to propel the economy through increased spending, which could help the U.S. skirt a recession. Since estimates earlier this year, economists surveyed by The Wall Street Journal have lowered the probability a recession will start in the next 12 months.

Amy Silverman, a 61-year-old Brooklyn resident, said she has seen prices stabilize over the past few months after previously noticing an increase in food prices, especially when dining out. Silverman also secured a new job as a psychotherapist last year that pays more than her previous job, leaving her feeling confident about her economic future.

“I don’t see inflation right now as being the problem it was many months ago,” she said. “I really feel like the ups and downs financially, it sort of evens out.”

Not adjusting for inflation, private-sector workers’ hourly wages were up more than 4% in June from a year earlier. Those gains have eased over the past year, but remain enough to outpace inflation this summer. Overall consumer prices in June rose 3% from a year earlier, down sharply from a four-decade high a year prior.

In addition to enjoying solid wage growth, Americans are taking comfort in slower price increases for everyday items—such as gasoline and groceries—that have the biggest influence on their perception of inflation.

Consumer confidence in June reached its highest level since January 2022, the Conference Board said. Americans’ assessment of current economic conditions and their outlook for the future improved. Americans are nonetheless anticipating a recession within the next year, the survey found. That is likely because they are aware of the Fed’s ongoing effort to fight inflation and how that might trigger a broad economic slowdown, said Conference Board Chief Economist Dana Peterson.

The Fed has lifted its benchmark interest rate 10 times since March 2022, to a range of 5% to 5.25%, and is on track to do so again later this month. Those interest-rate hikes have contributed to a cooling in the U.S. economy, but the labor market and wage growth remain on solid footing.

Average hourly earnings adjusted for inflation, percentage change from a year earlier, by industry

Elevated raises at odds with Fed’s goal
Raises for lower-income workers were particularly strong in early 2023. Restaurants, hotels and similar businesses hired at a brisk pace to cater to customers eager for services that were limited initially in the Covid-19 pandemic. While leisure and hospitality employment gains have slowed in recent months, workers in the industry saw their hourly pay rise faster than overall wage growth and inflation.

Wages for manufacturing and business-services workers are also outpacing inflation. Pay gains have been narrower in the tech-heavy information sector, where several large companies have cut staff.

Federal Reserve Chair Jerome Powell signaled wage growth is still too strong for the central bank’s comfort in its inflation-fighting campaign. He said in June that wage gains had eased, but “quite gradually.” Pay raises allow consumers to purchase more expensive goods and services, which in turn supports elevated inflation.

“It’s great to see wage increases, particularly for people at the lower end of the income spectrum,” Powell said. “But we want that as part of the process of getting inflation back down to 2%, which benefits everyone.”

A tight labor market, in which job openings exceed the number of unemployed people looking for work, is a factor propelling sustained wage growth, said Bob Schwartz, a senior economist at Oxford Economics. Workers in recent years had more power to demand raises, but there are signs that trend is cooling.

Inflation comes down, and that’s already happening, wage demands will also abate,” Schwartz said. “You’ll see the two going together.”

Sticker shock persists for some
While improved for the past two years, inflation-adjusted wage growth remains below the trend in the five years before the pandemic, said Julia Pollak, chief economist at jobs site ZipRecruiter. There are some other underlying signs of weakness. Weekly wages are rising more slowly because the average number of hours Americans work decreased from last year. And hiring eased this spring.

Some Americans still feel sticker shock at the cost of items, despite gains in income. The cost of rent, cars and travel is well up from 2019, despite some recent moderation.

Hope Davis-Numbers, 46, said she and her husband faced a rude awakening while online shopping recently. The Red Bank, N.J., couple were looking for deals on items such as laundry detergent and a playpen for their 10-month-old, and were surprised when their order totaled much more than anticipated.

“My husband got up and he actually rechecked our order, because the total was $450,” Davis-Numbers said. “He’s like, ‘I don’t think we got anything for that.’ ”

As a medical sales representative, Davis-Numbers said she hasn’t seen a raise since the start of the pandemic. Her husband, who works in housing finance, received an increase in pay that helps them remain comfortable, she said. He is considering starting his own business in a bid to further boost his income.

Another doom and gloom article.

I heard INFLATION makes you like a milk cow chasing her tail.

Any despair or agony..?? 😕

Perry Perry it is!

Inflation has been normalized since birth; it is a curious inherited idea that it is the way things must work and should be expected in an advanced economy. That's not my idea, it doesn't pass historical muster. The effects of modern inflationary policies are no different from when the Kings of old clipped the edges of gold coins and tried to pass the debased money off as having the same value.

it's either parry parry or peri peri
depending on if it's about lunging, or luncheon.

Dow Notches Longest Win Streak Since 2017

Tesla stock drags the S&P 500 lower


WSJ
The Dow Jones Industrial Average rose Thursday for a ninth consecutive session, while a post-earnings selloff in Tesla shares weighed on the S&P 500 and Nasdaq Composite.

The Dow rose about 160 points, or 0.5%, to clinch its longest winning streak since September 2017. The S&P 500 declined 0.7%. The tech-heavy Nasdaq pulled back 2.1%. The Dow outperformed the Nasdaq by the widest one-day percentage-point margin since March 2021.

Though the 2023 stock-market rally has been broadening in recent weeks, most of this year’s gains have been driven by a small group of megacap tech stocks, including Tesla. The S&P 500 and Nasdaq are weighted by market cap, so the biggest companies have a greater influence on index performance than the smallest ones. That makes the major indexes vulnerable to a pullback if a few heavyweights fall.

“The danger of any market being so top-heavy is that if any of them slip, they can really drive the market south,” said Eric Sterner, chief investment officer at Apollon Wealth Management.

Tesla fell 9.7% after Chief Executive Elon Musk cautioned that the electric-vehicle maker might need to cut prices further. Netflix, another tech-focused stock that has climbed this year, slid 8.4% after the streamer reported revenue that fell short of its own projections, despite adding 5.9 million subscribers.

Meantime, Johnson & Johnson gained 6.1% after the company reported better-than-expected earnings and boosted its guidance. The stock had its best day since March 2020, lifting the S&P 500’s healthcare sector and contributing more than 60 points to the 30-stock Dow.

“Investors are getting more fundamental now that we’ve gotten past the sentiment part of the rally and substance is required,” said David Waddell, chief executive at Waddell & Associates.

Semiconductor stocks pulled back after Taiwan Semiconductor Manufacturing, the world’s biggest contract chip maker, offered weaker-than-expected sales guidance for the year. The PHLX Semiconductor Sector Index dropped more than 3%. U.S.-listed shares of Taiwan Semiconductor declined 5%, while Intel and Nvidia each shed 3%.

Traders saw the Dow extend its winning streak on Thursday. PHOTO: MICHAEL M. SANTIAGO/GETTY IMAGES
Shares of regional banks diverged after a fresh batch of quarterly reports. Fifth Third Bancorp and KeyCorp rose after reporting an increase in deposits from the previous quarter, while Truist Financial fell as deposits were largely flat from the quarter prior.

With about 15% of companies in the S&P 500 having reported fourth-quarter results, 74% have topped analysts’ consensus earnings estimates, according to FactSet. That is below the five-year average of 77%.

The stakes get higher next week as some of the biggest tech companies in the U.S. are set to report earnings, including Alphabet, Microsoft and Meta Platforms.

In economic data released Thursday, existing home sales decreased in June from the prior month to the slowest sales pace since January, the National Association of Realtors reported. The reading highlights the impact of the Federal Reserve’s interest-rate-raising campaign on the housing market.

Agenda-setting analysis and commentary on the biggest corporate and market stories from our Heard on the Street team.

Fresh U.S. jobless claims data signaled the labor market remains tight. Jobless claims, a proxy for layoffs, slipped last week, the Labor Department reported.

The benchmark 10-year U.S. Treasury note rose to 3.853% from 3.741% Wednesday—its largest one-day yield increase of the month.

Investors are awaiting the Fed’s policy meeting next week, where central-bank officials have signaled plans to raise interest rates by a quarter-percentage point to a 22-year high.

Bought Truist and a Tesla on the dip today. NASDAQ was brutal.