The economy’s strength and stability — defying many of the most optimistic predictions — represents a remarkable development after seemingly endless crises
As 2023 winds to a close, Powell and his colleagues are far from declaring victory on inflation. They routinely caution that their actions could be thwarted by any number of threats, from war in the Middle East to China’s economic slowdown. Americans are upset about high costs for rent, groceries and other basics, which aren’t going back to pre-pandemic levels. The White House, too, is quick to emphasize that much work remains.
Yet the economy is ending the year in a remarkably better position than almost anyone on Wall Street or in mainstream economics predicted, having bested just about all expectations time and again. Inflation has dropped to 3.1 percent, from a peak of 9.1. The unemployment rate is at a hot 3.7 percent, and the economy grew at a healthy clip in the most recent quarter. The Fed is probably finished hiking interest rates and is eyeing cuts next year. Financial markets are at or near all-time highs, and the S&P 500 could hit a new record this week, too.
Another narrative: employment was up and workers were gaining power. Out of nowhere, JP Morgan Chase chairperson started going to meetings and talking about a recession, over and over. Other businesses took his lead and started raising prices. After a while we’re no closer to a recession, but we have lost a lot in standard of living.
When a handful of corporations control entire industries, capitalism stops working.
It’s supposed to be a bunch of competitors trying to get as many sales as possible by having the lowest prices or highest quality.
But in the current economy, if a corporation raises their prices across the board, the rest raise their prices. The only times they lower prices, is straight to a loss to force small competitors out of business. The large corporations can deal without profits for six months, smaller companies go under and often have to sell to the giant corporations.
This cycle has been repeating for decades, it’s not hard to notice it
The only solution is breaking up those giant corporations. Republicans sure as shit won’t do it, but neither will the moderate wing of the Democratic party. It would cut into their donations too much.
If anything in the economy is “too big to fail” the solution is breaking them up, not bailing them out whenever necessary.
It also stops working when the vast majority of the population lacks capital. The recent experiments with a UBI in Kenya show this pretty well. Folks who decided on a lump-sum payment rather than monthly invested in creating businesses and were better off.
I mean, there’s been studies in America too.
Give an average American a dollar and it boost the local economy by more than a dollar.
They tend to already have things they’re saving up for, and spend it at local businesses.
Give the wealthy a dollar, and they hide it in Panama. Remember that big thing where we found out they all do it and then nothing happened?
That money never gets spent, it sits in a bank somewhere anonymously and is often permanently removed from the economy.
Worse is when that rich man’s dollar gets dumped into real estate, directly harming everyone else by making housing even more unaffordable
We do have to constantly remind ourselves that the ultra rich aren’t bound by any boarders and have no loyalty to any government.
Why do people even try to say nothing happened with Panama papers. I’ll be the person this time and every time that shows LOTS has happened. From nearly day 1.
People follow the initial headlines but don’t care enough to stay with a story.
Same thing with Biden and the rail workers.
When a handful of corporations control entire industries… that is capitalism. Capitalism isn’t some self-correcting system that benefits all, its a system that supports and benefits those who make the most profit possible. When companies have less competition and more control, they’re better able to make money. And thus, are better at capitalism.
This isn’t capitalism failing to function, this is capitalism working as intended. The “free-market” is an illusion created on hope and delusion.
This isn’t capitalism failing to function, this is capitalism working as intended.
Capitalism “working as intended” includes functional institutions that address externalities.
What you’re doing is the same as saying universal healthcare and communism is the same thing…
All capitalism isn’t “free market”. The government (at least supposed to) regulate capitalism. There was a time in America when it would even break up giant corporations who had monopolies. Lots of Americans alive today were even alive when it happened.
Things changed in the 1990s when James Carville convinced people Bill Clinton caused the Dotcom boom with neoliberal economics.
Suddenly both parties were bending over backwards to funnel money to the wealthy at the expense of what’s left of the middle class.
You’re demonstrating exactly why capitalism doesn’t work. Once corporations capture politicians and grow fat, it is incredibly difficult to get them out. This isn’t an aberration. It’s inevitable in thew long run.
If Keynesians could implement their policies and hold them indefinitely, capitalism might work. They can’t.
Unionize all the things.
They shouldn’t be able to capture politicians the way they have, that’s a failure of the supreme court, which was also captured.
Again, probably inevitable as you say, but that was in theory the last chance to stop it.
Unions imply capitalism, so… Sure I guess?
Like the history is wrong, and the reasoning is hellaciously wrong, but unions are indeed good.
If Russia and China are what real world Communism always turns out to be, North America and Europe are what Capitalism always turn out to be
Do you see excess stock? Profits are not particularly high after the two years of costs that COVID created. Trillions of dollars were printed during COVID while people were not working and products were not being manufactured/farmed/repaired/…
There simply was/is more money floating around then stuff being produced. Unless God herself comes down and drops food/shelter/iPods from heaven, costs won’t come down. Failing that, it is up to us to produce these products otherwise nothing will change.
There’s a rather long history of it taking a recession to stop inflation. That it didn’t this time is a very big deal.
It’s pretty basic supply and demand. Inflation historically goes up in an economy when a lot of people want to buy stuff, and that stuff is in limited supply.
Workers had cash and stimulus money = higher demand
The pandemic fucked with good manufacturing, and transport = reduced supply
When there is less of something, and people have money, they’re willing to pay more to get their hands on the scarce thing. Companies pay more for chips, or to have first dibs on something from the port, and that increased cost is passed along to the consumer.
Are we really still pretending the “stimulus” money of a whopping1400 actually had an impact for 99% of people?
No, but 3 years of pent-up demand and crippled supply chain infrastructure did
If it was merely an increase in costs, corporate profits should be neutral after they hike their prices to match. Same ratio going in and out.
What we actually saw was corporate profit margins going to record highs. Some sectors did see actual price increases–pandemic supply constraints, the Suez canal being blocked up by a shipping accident, and the war in Ukraine all did cause upward pressure on prices in some sectors. However, none of it could explain the data fully.
Even worse, those corporations saw 15-20% profit margins for the first time ever, and now their public stockholders expect them to keep doing it forever. This is insane. Big tech firms can see that kind of margin, but they’re the exception. Not even banks see those margins on the regular. The belief that they can has driven many of the layoffs from otherwise profitable companies this year.
Corporations used world events as a cover for increasing prices. They had a once in a century opportunity to cover their actions and took it. To be honest, it usually is the case that prices don’t just go up as a matter of greed. That’s not what happened this time.
If it was merely an increase in costs, corporate profits should be neutral after they hike their prices to match. Same ratio going in and out.
You might see that initially, but all of the little supply and demand changes start to inflate the overall value of the dollar, that starts to show up in profits.
Every company is affected differently during times of high inflation. I work for a fortune 50 company that had their earning take a hit because of inflated prices. That said, profit margins for many companies absolutely can and do inflate with the value of the currency.
Your profits are fuel for future investments, and if your finance team is doing their job correctly, they are making sure that profit is adjusted for inflation.
If it was merely an increase in costs, corporate profits should be neutral after they hike their prices to match. Same ratio going in and out.
You’re ignoring both the rise in demand and the increase in available spending money, and misunderstanding the relationship between profits and price.
Yo ngl I cannot care one iota about the S&P 500 when food costs nearly double what it did before the pandemic and rents are skyrocketing.
Where I am, the $5 eggs are back down to $1.80, and the $6 milk is $2.89. Feels the same as before-times.
It’s hard to find restaurant lunch under $15, which is around 50% more than 2019, and even the gyro counter added a default tip when they stopped accepting cash. That’s sad, but I cook more now.
2 years ago yogurt was 40 cents, today it’s 80. Bacon was $3 a pound, today the cheapest is $4.50 unless it’s on sale. Frozen pizzas were $4, $5 on the top end, now they’re $6-$15… for a frozen pizza. Ramen was 20 cents, today it’s 55. String cheese was $4, today it’s $7. A small bag of shredded cheese was $4, now it’s $8. Cereal was $3, today it’s $5 and you get less. Have you seen how expensive a bag or Doritos is? A small bag costs more than what a party size bag used to cost, and that’s true for all chips.
I have dozens of items that are out of reach today that were common fare 3 years ago. Milk and eggs have come back down, yes, but not the rest of it.
I guess my response is that most of what you’ve listed are significantly-to-highly processed foods, and I lump them in the same bucket as ‘restaurants.’ To me, it’s not that the food has gotten expensive, so much as corporate structures are ‘extracting more value.’ And I do realize that a lot of people are in situations where those processed foods are their only practical options. I just think that General Mills, PepsiCo, and Blackstone deserve the blame and hate, more than ‘the economy.’
BTW, I would love me some $4.50/pound bacon. I don’t remember it less than $6/12 oz in the last 5 years, except occasionally on sale. I used to see fairly regular $1/pound pork shoulder sales, and I haven’t seen that under $1.80 in a while, so there definitely are basic foods with inflated prices. My personal experience is that I still get out of the grocery store for the same $40 I was spending in 2018, although I have also given up chips and started making my own yogurt. Switched from beef to chicken, pork and beans, although that’s more for carbon reasons than cost.
Here from Europe, a similar situation.
Some things are still expensive, but a lot of things have gotten better.
Moreover, salaries did increase, so I can’t complain too much.
We are extremely fortunate to have so easily beaten this round of inflation.
It’s mostly the same here.
Grocery prices have definitely gone up overall in my part of the world, but outside of outliers (or outright liars), prices aren’t double. But lots of people around here will claim their grocery bill is double what it was before covid. In general, I’m not willing to say any specific person’s “twice as much” isn’t true, I don’t know their circumstances, but my experience and pretty much all the reports I’ve seen don’t bear that out (again for my part of the world).
The egg thing was a prime example. People were going around saying “eggs are $10 now” but then when I’d look at the local grocers, it was only the premium brands’ free range, organic, woman-owned, holistic, fair-trade type eggs that were anywhere close to that – and it was always the type of person that you know never bought those types of eggs to begin with.
I have seen a lot of convenience and luxury grocery items that I used to buy have gone up around 50% or gone down the shrinkflation route. And for sure, there’s been an uptick in temporary shortages and price spikes.
Restaurants around here are also like you mentioned. Prices have really gone up there. I don’t eat fast food often, but a month ago I was traveling and decided to get fast food breakfast at one of my old favorites. A biscuit and a drink used to cost around $3, now it’s nearly $8. Last year, I had a craving for Wendy’s and it was similar, the food that used to cost me just over $4 back in the day is now a bit more than $11. But then again, eating out is a luxury in pretty close to all circumstances.
I feel you, but there’s not much Biden can do about either thing.
Unfortunately, he will get the blame for it anyway.
I feel you, but there’s not much Biden can do about either thing
Weird the article is giving credit to Biden for inflation then…
It’s just getting old that if something good happens, Biden gets credit. If something doesn’t get fixed, then it’s not his fault because he’s just the president.
It’s the type of stuff I’m used to only hearing from Republicans.
I mean. At the absolute bare minimum the White House should understand how this comes off to voters like the person your replying to.
All it does is highlight how voters aren’t the concern, it’s the wealthy who have already made huge increases in the wealth since 2019.
“Nothing will fundamentally change” he told the wealthy before he was elected. And credit where credit is due, Biden has kept that promise to them.
Within any adminstration there will be things in and outside of their sphere of influence.
What’s often attributed to Biden himself can often more accurately be attributed to his cabinet as a whole.
When people say it’s not their fault they often mean the issue at hand needs a Senate resolution which will never happen because it’s controlled by the Republican party who has a “do you enemy no favors” policy whenever a democrat is in office.
So what did Biden do for this?
The article says:
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Skyrocketing interest rates.
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Increased fossil fuels drilling
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And forcing ports to operate 24/7 to flood the market with imported consumer goods.
All things that have massive negative effects on the average American, but help large corporations and the wealthy who own them.
Which brings us back full circle to OP’s complaint that this victory lap is celebrating something that only benefits the most wealthy Americans and fucks over the rest of us.
Is that what we’re supposed to be congratulating Biden on?
Is this honestly going to convince voters that Biden cares about them? Because according to polls, they don’t feel like that, and that will depress turnout which is the only way Republicans can become president.
The article says:
No, it doesn’t. The article says:
- Skyrocketing interest rates.
- Increased fossil fuels drilling
- Forcing ports to operate 24/7 to flood the market with imported consumer goods.
- Tapped into the strategic fuel reserves
- Resisted calls for price controls
- Pursued major new federal spending programs
It also says that 3 helped cool price shocks, 6 flooded the market with new workers who saw wage gains and helped increase demand, 1 helped keep the housing market out of recession, and the combination of 1-6 helped stave off major, economy-wide layoffs. All of these helped the average American, but somehow you filtered the entire analysis through your myopia-lens and latched onto the most damning interpretation you could muster. Wonder why you did that…
So…
You’re saying the article lists three more things that helped the wealthy.
And one of your examples for how that helps the average American is it kept housing prices high?
And you know what avoids layoffs and actually helps workers? Fixing the actual problem which is out of control wealth inequality.
Even just trying to do something about that would pretty much guarantee Biden gets a second term.
You’re saying the article lists three more things that helped the wealthy.
Nope.
And one of your examples for how that helps the average American is it kept housing prices high?
Low inventory keeps housing prices high, numbnuts. Supply & Demand. It’s not rocket science, and the President doesn’t build houses.
And you know what avoids layoffs and actually helps workers? Fixing the actual problem which is out of control wealth inequality.
So we’re back to ignoring things a single American president does have control over in favor of things they don’t?
Good talk, chad.
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It’s not just the stock market. There’s a wide range of metrics which are showing an improvement, and they’re comparing with what didn’t happen, which was a recession.
What hasn’t happened is a rollback of the Reagan-era change in distribution of wealth and income. That requires getting congress to act.
That falls on your local economy and state and local elected officials. Rent is always due to local officials and how the zone the city. Local and State Corporate taxes also play a role in higher prices. If I were you, I’d check the local city council schedule and speak on those concerns.
Plus, counterintuitively, rent is starting to fall in many major metro areas because we’re finally seeing a notable uptick in inventory. The price of a dozen eggs is back in the neighborhood of where it was pre-Covid, and the price of a gallon of gas has wiped away almost all of its 2023 gains and is now back to roughly what it was before Russia invaded Ukraine. Not saying people across the board aren’t struggling since the pandemic, because I’m sure they still feel it in a very real way, but prices are very obviously stabilizing across the board and the S&P is obviously responding to really solid underlying trends.
Wasn’t there a big controversy regarding price-fixing with national rental management companies? Yes, local policies will have a significant effect on local areas… but they’re far from the only ones affecting it.
The meat industry was fixing prices in 2022. The White House addressed the issue and called them out on it.
Can’t really price-fix in the housing market if there’s an increase in supply - it’s the same problem we’ve had since the teens. We are not building enough.
Cool. Now lower interest rates so I can at least dream about the prospect of owning a house again.
Oh no, they’re only going to lower interest rates when the economy takes a shit again
that way out: pretend the stock market is the only thing that matters.
fuck these people
A recession is a specific problem; avoiding a recession does not mean that all economic woe is alleviated.
To throw out a shitty analogy, stating that a hurricane hasn’t happened doesn’t mean that there hasn’t been any bad weather at all.
No, they’re looking at a broad set of measures of economic well-being. The stock market is only one metric.
What they’ve done is pretty amazing, even if it doesn’t roll back the Reagan redistribution in favor of the wealthy, which would require congressional action.
Who tf is downvoting you? You’re exactly right, to them the only thing that matters is the market, and we’re doing fine because the market is still breaking records.
a large contingent of internet facing humans have invested in one way or another in the market. the biggest swindle in history was when companies somehow pushed their entire retirement portfolios to this external hunk of lying shit.
tax every trade. you want to call it a market, lets fucking tax it like one. no ‘dark markets’, no secret trading… 100% in public and taxing every fucking trade.
whats that? it would kill all the big players? ya dont say…
I can’t pay my bills and I’m eating peanut butter sandwiches so I don’t starve.
Yay, we avoided recession.
And some day you’ll be out of college. Personal anecdotes are not meaningful data
I’m in my 30s, so take that “sharp wit” and smug superiority and slice your anus with it.
By your 30s you should have already heard that personal anecdotes are not data because you were an adult in 2016.
I had no reason to assume you were not in college.
It might take another six months before it is felt across the board, but prices are noticeably lower than last year in Colorado.
That doesn’t mean your wages are high enough for you to afford the lifestyle you want.
For a while gas in COS was absolutely bananaballs. It’s come down rather nicely again. Filling my Impreza was painful there for a minute.
Happy I can drive into CostCo without wait 15 minutes for the line for gas to stop blocking the entrance at the Barnes location. It was $2.19 this morning. It was $3.42 last year at this time ($5.41 in July 2022)
I mean - there are no guarantees. Everyone claiming we are out of the woods, but if inflation stays above 3% the fed isn’t going to lower rates very fast. We could see a recession hit.
Printing trillions of dollars isn’t a solution. The only reason it works is because we are the reserve currency of the world still because of oil sales. Once that changes, we are fucked.
It’s all about gas prices, nothing more.
So the inflated price should come down right? …right…
Damn when a pound of onions cost $2.50 I don’t really call this progress or “Finding a way out”
Ending inflation doesn’t mean that prices come down. It means that they stop rising. (or, more realistically, go back to rising at 2% to 3% per year)
Deflation is when prices drop. It’s bad; what happens is that it’s more valuable to hold onto cash than to invest it in starting or expanding a business, so the economy as a whole craters like the US did in the Great Depression. You probably don’t want that.
Are you kidding me? Crash the economy so hard it snaps in two. It’s time we put capitalism out of it’s misery
This is the kind of shit champagne socialists say as they sit back at brunch. Do you have any idea not only how many casualties this would cause, but how badly it would set us back from evolving past capitalism?
How will the people surviving paycheck to paycheck, barely getting enough food on the table, going to survive? An economic collapse means food logistics cease to exist. You can’t just go to the grocery store. What will everyday people eat? What will they drink when they run out of the chemicals needed for clean water?
Not to mention, the collapse would mean all logistics and supply chains stop working. You need a medicine by tomorrow afternoon or you’ll begin to die? Whoops, we have no idea when that’s coming in. Everyone who relies on medication to live will die. Even more who rely on it for quality of life will severely suffer. You’ll have brilliant minds that are incapable of helping design a more equitable system because they’re anxious wrecks. Any new injuries would probably be a death sentence.
Do you understand what this would mean? An economic collapse would be a massacre of the working class and anyone needing consistent healthcare. You need bright minds to develop a better system than capitalism. They’ll all be dead or held captive by their own bodies.
Seriously! Now tell us how much time you’ve spent understanding how working class Americans lived during the great depression and what parts you’re most interested in seeing repeated
The status quo already has us living in hoovervilles
I cannot imagine the level of privilege it takes to unironically make a statement like this. There are no words.
Far too many people think that they’ll survive and lead the masses in a glorious revolution that will fix all of our problems.
For starters, the masses wouldn’t exist. An economic collapse would massacre the working class. Way too many people are already barely making ends meet. They’d all starve to death.
This is the sort of pipedream that only the bourgeoisie think of.
That happened in 1929. Don’t. Do. It. Again.
If that’s what it’s gonna take to get a green new deal then maybe we should. Without a crisis like that, at the current trajectory both parties seem set on selling out the planet for there corporate donors.
The party that does it will end up out of power for a generation because it’s such a bad idea. People can make that mistake out of ignorance, but won’t do it willingly
Are you saying the green new deal will be a bad idea and unpopular or triggering a depression to get it would be unpopular and a bad idea? Because the former I’d say is necessary to stop and help heal both climate change and income inequality, and if it’s anything like the first new deal would bring the party into power for a generation and set a new economic consensus. I think the latter is a bit extreme to accomplish it but idk any other way to get people to completely turn away from the current system and it’ll just be boiling the frog as the planet gets hotter, the rich get richer and the parties lose popularity but retain power.
No, I’m saying that crashing the economy on purpose will result in the party which does it being incredibly unpopular. You can’t do that and expect people to even listen to your next idea.
I studied environmental politics and climate change in grad school. When the global economy went into meltdown in 07/08, a lot of us in academia mused that maybe the great breakdown of existing power structures would free up cognitive space to try to reimagine a better, more sustainable path forward. During our conferences there were a few cynics who repeatedly pointed out that when bills are hard to pay, and when opportunity is scarce, and when systems are stressed, people respond by being less innovative and flexible, not more. When shit hit the fan, it turned out, the cynics were absolutely right:
https://www.imf.org/external/pubs/ft/fandd/2009/12/jones.htm
https://www.sussex.ac.uk/broadcast/read/49910
When times get tough, programs like the Green New Deal get shredded and forgotten, because putting food on the table takes immediate precedence over longer-term visions for a different future. If you want to blow a gigantic hole in every environmental initiative that’s generated a modicum of attention over the past few decades and hasten the demise of the clean energy sector in favor of fossil fuel-based industries, then by all means cheer for the collapse of the economy. It’s just about the most surefire thing you could possibly imagine if you’re interested in seeing the Green New Deal relegated to the dustbin of history.
How would a collapse stop that? It would only hasten it. The rich will kill anyone who currently owns food productions and take it for themselves. Corporations will advertise food and shelter, and then use the extremely high number of people desperately trying to live as slave labor. Countries would fall only to be replaced by McDonalds and ConAgra.
And that’s without discussing the massacre of the working class. Not to mention too, the Inflation Reduction Act is an enormous amount of sustainability spending that’s spurred the entire West to do more. It may not be called the Green New Deal, but it sure as hell doesn’t fall far from it.
I think your overestimating how much people will tolerate deprivation before turning on the system. After a certain point people will reject the system, sometimes violently , and seek a new way of organizing society. It’s why the great depression didn’t turn into the corporate hellscape you envision even though companies were just as powerful at the end of the 1920s. Barring some sort of military coup you can’t subject a majority of the population to slavery and poverty without those people revolting.
The system relies on the at least tacit consent of the majority of the population, if you break that it becomes unstable and in that instability new ideas can come in. This is why most successful revolutions follow a crisis, one that discredits the current ruling order and allows something new to take it’s place.
It can be dangerous though, that new thing could be FDR or it could be Hitler, but it’s bound to happen eventually and our best hope now is to lay the groundwork so that when it does we get a leader ready to usher in a new green economy.
I think that’s different from a total collapse of the system. It’s moreso reforms, which I see as different.
That assumes what we are experiencing is inflation. Inflation is part of the equation, but another big part is just corporations are pushing up prices and making record profits. That part can result in prices going down without causing issues.
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Are you a politics mod too?
No, but I I studied a tiny bit of macroeconomics once.
You’re already ahead of 90% of Lemmy with that.
I wonder how many people here would agree with the idea of lowering taxes in order to reduce inflation.
Good, I’d hate for the mods here to delete points of view that they don’t agree with 🤪. Like the Climate sub!
It’s not a matter of disagreement; there’s room for legit disagreement about a lot of things. It’s a matter of joining in a active fossil-fuel-industry disinformation campaign. That gets me to take content down because it’s basically impossible to have a rational discussion when that’s part of it.
Thinking that humans are a net negative to the natural world and deserve the consequences of the climate apocalypse isn’t a fossil fuel industry disinformation talking point, you literally just disagree with my opinions and shadowbanned me without warning or way to appeal. Big difference in “taking content down” and the former.
Doomerism is in fact a fossil fuel industry talking point; it’s part of what they do to discourage action.
If the only solution is suicide, nobody will act.
This is why I shop at restaurant supply stores. 10 lbs. of onions for $5
At our local Wegmans a lb of onions is $0.90, $1.73, or $2.05, depending on if you want yellow, sweet, or red. It’s the exact same price at all their stores elsewhere in the US. White onions are $1.49/lb at other major grocery stores. White and yellow onions are being reported at $1.79 and $1.29 per pound, retail. Where in the heck are you paying $2.50/lb?
This guy’s onions. Are you Shrek? 😅
No, but I am, since I’m buying them by the 10 lb. sack.
Probably Whole
PaycheckFoods
They DID find a way out! They threw every other American citizen under the bus so they could save themselves! Claps all around, we fucking did it, the FED and their cronies won’t have to suffer the atrocity of skipping out on their daily caviar for budget reasons.
:) There is no economic problem in U.S. of A. :)
