19 Comments
Jun 7, 2022Liked by Claudia Sahm

Thank you, this is *exactly* what I look forward to reading. I don't have the economic chops to dig into the details but have thought all along we were not in a recession. I also agree, gas prices always turn people cranky.

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Jun 7, 2022Liked by Claudia Sahm

Finally some sanity

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"More workers. More stuff. Less Covid." This is so blindingly obvious, and when I point it out to recession prognosticators at work they're like, "huh, yeah, I guess you have a point there."

Thanks again for the sensible writing.

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Jun 7, 2022Liked by Claudia Sahm

Such a good and valid post. Completely agree. But this message needs to be louder. It’s so frustrating watching the headlines tell some alternate universe / sensationalism story.

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Jun 7, 2022Liked by Claudia Sahm

Which is to say when there are supply side deficiencies the Fed is the wrong agency for the job. But nobody wants to say that out loud, so we'll get ongoing rate hikes instead to dampen demand regardless of the actual inflation source.

Not exactly genius ...

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Jun 15, 2022·edited Jun 15, 2022Liked by Claudia Sahm

Agreed. We're not in a recession, and I don't think one is imminent. Employment is a lagging indicator, so I'm not all skittles & rainbows yet. The attachment is a handy chart of the normal sequence of events.

https://twitter.com/MichaelKantro/status/1510671155027451909/photo/1

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Jun 7, 2022Liked by Claudia Sahm

Excellent to see that you are differentiating the difference between what the fed and Dimon claim. Their paradigm is only egalitarianism built and sustained upon greed and profit for the wealthy versus a sustainable good quality of life for labor including the rest of the country. Unfortunately, their greed through lobbyist control of Congress has now created a pseudo democracy and great suffering for the lowest 25%; look at the latest stats on the economic wealth/welfare of our country.

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Jun 7, 2022·edited Jun 7, 2022

There are massive shortages of raw

Material inputs which makes making more goods in our current geopolitical environment very very difficult. We rely on other countries for significant raw materials.

The US economy is 70% consumer spending, how much of that is for nonessential services? Such as vacation travel, going out to eat, entertainment, etc. My theory is It will be deflation in non essential goods/services and inflation in essential commodity goods.

Your assumption completely forgets that the Fed and congress was the only reason the consumer had anything to spend. That money is now gone. This summer you will see massive decline in consumer spending.

The reality is American needs to enter the real world again. No more free money and feeding the government and corporate beasts.

There will be massive realignment and that means a massive recession which has started and will not end for awhile with China and Russia creating a new world order.

Thanks for writing your perspective.

Peace,

Concerned Dad

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I’d bet almost any $ amount we are in a recession by year in 2022 and may already be.

Until supply is increased, the only way to stop runaway inflation is by manipulating the demand side. This is quite clear. We need energy supply, not energy stimulus checks that keep demand artificially high for both energy AND other goods the funds will be shifted toward.

The Fed could have prevented the need for demand destruction by withdrawing liquidity in early-to-mid-2021 when it was OBVIOUS to anyone paying attention inflation was not “transitory”. That was one of the worst, easily avoidable mistakes the Fed has made in 100+ years.

Did central bankers really think increasing liquidity by trillions globally, while commercial bank and securities lending totals were hitting new highs, and while the global supply of goods and services was stagnant — that there wasn’t going to be a massive increase in the price level? Pure stupidity (or corruption). Pick your choice.

Liquidity must be withdrawn. Sending out stimulus checks every time someone has to tighten their belt and make hard decisions about their budget and life trajectory is pure insanity and will not help in the long-run. One of these days when you’re old and wise, after learning from a mountain of mistakes, you’ll realize this.

Keynesianism and endless loose financial conditions caused the inequality we have. More of it won’t help.

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Inflation is purely a monetary phenomenon due to the Fed's expansion of the money supply. Price inflation is merely an effect of inflation working its way through the economy, AFTER THE FACT!

Also, sizable layoffs are starting to occur as demand is starting to drop due to consumers shifting spending from discretionary goods and services to food and energy (which are at nominal all-time highs).

Since the disaster of 2008's housing bubble, the Fed's balance sheet has grown from $800B to nearly $9T.

Covid is the proverbial straw that broke the camel's back in this case (upsetting the delicate balance of the Fed's game of kick-the-can), leading not only to a recession, but the greatest depression ever, as the entire world will suffer from the destruction of the US dollar.

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Job vacancies will play a big part. It's a big gamble to say that will be absolved by people returning to the work force. Just a year ago even Wendy's was giving out signing bonuses. How many people are still waiting to return to work?

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Summers, Furman and a few others were right and all of team transitory was wrong. Gas will hit $6 across the country, power prices will skyrocket in a hot summer and the consumer will sink.

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