Economic Opinions Thread

[Jacob Petersheim]

We could probably use a forum here on finance and economics. Most of us here probably aren't rolling in dough and investing, but we all have concerns. Cost of food and housing, the Job market, car prices, utilities, insurance, pensions and retirement accounts, etc.

But I had a "good news" video and maybe this thread can hold related discussions until something else takes off here.


This is one US-centric: "The Economic Boom Is Just Getting Started"

The guru ( ) here isn't normally what you'd call a pollyanna, but this time he is reporting on good news from at least one source. Under 13 minutes, but you might just watch the first 5. He tends to be realistic about things, though his approach might put one off. None of the flashing colors and sweeping music of the corporate media spoon-feeding. Just a guy and a whiteboard.

 

[Nancy Hart]

I think he gives a pretty fair assessment of what has, and what is, happening in the economy. But he doesn't really give a prediction, so the title of the video is a bit misleading. Too soon to tell, imo. We should know more by Christmas.

 

[Don Alaska]

I suspect a lot is dependent on the interest rate. All other developed nations have cut interest rates, but the Fed is keeping ours higher. Higher interest will slow inflation, but will also slow the growth rate. We'll see by Christmas, as @Nancy Hart has said.

 

[Jacob Petersheim]

One concern you don't hear much is that banks are sitting on high levels of deposits. People have been slowly drawing down investments and retirement accounts and moved into CDs and money market accounts because they've been getting enough interest to make it make sense.

But that's a small fraction of the population. It is enough to be keeping the system afloat however.

I suspect that something not spoken of that Powell worries about is people drawing their deposits if rates drop again. There was already a drop last year and it had an immediate impact. Triggering savers one more time might end up creating a "rank runs" scenario. Even if the savings drawdown happens at a reasonable pace it doesn't leave the banks sitting on all of that cash, putting a big crimp into lending.

 

[Nancy Hart]

The Federal Reserve announces interest rates 8 time a year. The schedule of dates is set long in advance (July 30-31). If they could had waited until after the July jobs report on August 1st, most economists think Powell would have lowered interest rates by .25. I'm surprised the Federal Reserve Board isn't given a heads up from the BLS earlier than the public. But it takes a while for the full board to study the data and take a vote I would imagine.

 

[Don Alaska]

One concern you don't hear much is that banks are sitting on high levels of deposits. People have been slowly drawing down investments and retirement accounts and moved into CDs and money market accounts because they've been getting enough interest to make it make sense.

But that's a small fraction of the population. It is enough to be keeping the system afloat however.

I suspect that something not spoken of that Powell worries about is people drawing their deposits if rates drop again. There was already a drop last year and it had an immediate impact. Triggering savers one more time might end up creating a "rank runs" scenario. Even if the savings drawdown happens at a reasonable pace it doesn't leave the banks sitting on all of that cash, putting a big crimp into lending.

The banks are sitting on all kinds of debt and assets that are declining. Many invested strongly in China, and that isn't working out well for them. Things are also purchased on margin so that magnifies the problem.