My just so story is that the recession oddity is mainly due to inflation and getting goods, both intermediate and finished.
A 5% increase in wages is pretty weak after a year and a half of 8-10% inflation; that looks to me like a 3-5% drop in wages. Inflation, unusually, seems to be both due to massive spending/money printing by government and the huge drop in goods production and disruptions caused by the COVID reactions. Prices are going up because there is more money chasing fewer goods.
On the supply side, there are still big shortages in raw materials, intermediate goods and finished goods, with rationing based on things other than prices that are locked in by contract. My company has some lead times of at least a year, others I have seen up to two years. That is, if you order today you will get it July 2024. That isn't for high end, very complex finished goods either, but intermediates that were pretty standard 6 week lead time items. So we need the staff to run as hard as we can with what we can get, but we are paying out the nose for transport (flying stuff in some cases) and it is hand to mouth up and down the chain. No spare money for growth. If that holds true across manufacturing industries, then lots of zero growth due to just scraping by means there is little countering industries with negative growth. A recession due to not being able to get enough stuff to grow.
Many pundits have focused on unemployment as being low and not flashing a recession signal. However, hasn't unemployment generally been a lagging indicator?
We really need a an NGDP futures market that the Fed could be guided by or even intervene is as its main policy instrument. Pending that Treasury should at least create lots more TIPS with intermediate tenors of 1,2,3,7.
Did it? How does this square with a large number of people who have ‘disappeared’ from the workforce, and complaints by businesses that they are struggling to rebuild their workforce to pre-pandemic of government lunacy levels, and some like airlines/airports cancelling services due to lack of staff?
My just so story is that the recession oddity is mainly due to inflation and getting goods, both intermediate and finished.
A 5% increase in wages is pretty weak after a year and a half of 8-10% inflation; that looks to me like a 3-5% drop in wages. Inflation, unusually, seems to be both due to massive spending/money printing by government and the huge drop in goods production and disruptions caused by the COVID reactions. Prices are going up because there is more money chasing fewer goods.
On the supply side, there are still big shortages in raw materials, intermediate goods and finished goods, with rationing based on things other than prices that are locked in by contract. My company has some lead times of at least a year, others I have seen up to two years. That is, if you order today you will get it July 2024. That isn't for high end, very complex finished goods either, but intermediates that were pretty standard 6 week lead time items. So we need the staff to run as hard as we can with what we can get, but we are paying out the nose for transport (flying stuff in some cases) and it is hand to mouth up and down the chain. No spare money for growth. If that holds true across manufacturing industries, then lots of zero growth due to just scraping by means there is little countering industries with negative growth. A recession due to not being able to get enough stuff to grow.
Many pundits have focused on unemployment as being low and not flashing a recession signal. However, hasn't unemployment generally been a lagging indicator?
We really need a an NGDP futures market that the Fed could be guided by or even intervene is as its main policy instrument. Pending that Treasury should at least create lots more TIPS with intermediate tenors of 1,2,3,7.
‘… the economy added 372,000 new jobs in June…’
Did it? How does this square with a large number of people who have ‘disappeared’ from the workforce, and complaints by businesses that they are struggling to rebuild their workforce to pre-pandemic of government lunacy levels, and some like airlines/airports cancelling services due to lack of staff?