This is a bit surprising. At least where I live in Texas, I am seeing prices go down. I definitely have noticed fewer people shopping and at restaurants in town. Do you think they are doing their usual , reporting false numbers ?
Lurking dragons, indeed. Let’s hope Trump is the dragon-slayer! (What a great meme that would make.)
“Of far greater concern is the rise in prices even as overall consumption fell. When people buy less, prices generally tend to move down, not up. Is this a sign of a stagflation scenario emerging within the US economy, where inflationary and deflationary pressures converge in the worst possible way?” Peter, I’ve never known if the government bureaucrats who put out these economic reports adjust in any way for demographic bumps. For example, right now the huge Baby Boomer demographic is retiring, living on fixed incomes, and spending less. When I go grocery shopping, as I did this morning, and find that the store selling cherries on sale for $3.99/lb is out of stock, and the other store I stop at is selling cherries for $9.99/lb, well, duh, I just don’t buy cherries. This is the reality of fixed incomes during rising prices - you just do without. When economists are issuing data, is this data statistically adjusted somehow to reflect these demographic bumps, for year-on-year comparisons?
Thanks, Peter, for consistently giving us the best information and interpretations!
Strictly speaking, the lower consumption levels commonly associated with older population cohorts do not represent anything needing adjustment in economic assessments. Regardless of the reason, less consumption is less economic activity, by definition.
Yes. But the big picture is one of a shrinking middle class. Poor people will buy and consume less, as prices rise, and the current Boomer generation switching from wages to smaller fixed incomes will also consume less as prices rise. It isn’t accurate to compare the present anomaly (of the huge demographic bulge of the Boomers) with previous data sets from, say, the 90s. For a politician to say that things are “worse” now than in the 90s, he must take into account that the demographics have changed substantially, in terms of percentage of high-earning individuals - who were high-earning mostly just because they were the right age for doing so. It’s a question of comparing apples to oranges, and I don’t know how statisticians adjust for that. Apparently, they don’t, just as they don’t adjust for changes in technology in the economy. But people pushing an agenda thereby make inaccurate claims, depending on their agenda, for how much better or worse the economy is now compared to earlier eras. Well, I guess that’s politics - we must learn to interpret the data ourselves!
And that’s something you help us do, so thank you, Peter.
The first thing I would say is never listen to politicians babble on about the economy.
The other thing I would point out is that, economically speaking, an aging of the population means things genuinely are "worse" than in the 90s. The retirement of the Boomers is in every scenario and context an economic contraction.
This is but one reason the US and other Western nations need to boost their fertility rates post haste.
I had contemplated a deep dive into that legislation before the Twelve Days War shifted my focus for a time. While that was happening, the political bickering and grandstanding over the bill became simply redonkulous. With everybody's rhetoric pandering to their particular voter base, there simply was no actual policy discussion taking place--certainly not in the Congress, where theoretically one should expect it to take place.
However, while inflation is always possible threat of excessive and reckless government spending, when we have signs of job loss, and in particular manufacturing and construction job loss, my concern tilts more towards the possibility of deflation.
I will no doubt have more to say on that point when the June Employment Situation Summary comes out tomorrow, but if we get another jobs report such as for May then deflation and/or stagflation become plausible potential scenarios for the economy.
This is a bit surprising. At least where I live in Texas, I am seeing prices go down. I definitely have noticed fewer people shopping and at restaurants in town. Do you think they are doing their usual , reporting false numbers ?
These are national numbers. Drilling down into the state and MSA levels your mileage will vary.
Lurking dragons, indeed. Let’s hope Trump is the dragon-slayer! (What a great meme that would make.)
“Of far greater concern is the rise in prices even as overall consumption fell. When people buy less, prices generally tend to move down, not up. Is this a sign of a stagflation scenario emerging within the US economy, where inflationary and deflationary pressures converge in the worst possible way?” Peter, I’ve never known if the government bureaucrats who put out these economic reports adjust in any way for demographic bumps. For example, right now the huge Baby Boomer demographic is retiring, living on fixed incomes, and spending less. When I go grocery shopping, as I did this morning, and find that the store selling cherries on sale for $3.99/lb is out of stock, and the other store I stop at is selling cherries for $9.99/lb, well, duh, I just don’t buy cherries. This is the reality of fixed incomes during rising prices - you just do without. When economists are issuing data, is this data statistically adjusted somehow to reflect these demographic bumps, for year-on-year comparisons?
Thanks, Peter, for consistently giving us the best information and interpretations!
Strictly speaking, the lower consumption levels commonly associated with older population cohorts do not represent anything needing adjustment in economic assessments. Regardless of the reason, less consumption is less economic activity, by definition.
Yes. But the big picture is one of a shrinking middle class. Poor people will buy and consume less, as prices rise, and the current Boomer generation switching from wages to smaller fixed incomes will also consume less as prices rise. It isn’t accurate to compare the present anomaly (of the huge demographic bulge of the Boomers) with previous data sets from, say, the 90s. For a politician to say that things are “worse” now than in the 90s, he must take into account that the demographics have changed substantially, in terms of percentage of high-earning individuals - who were high-earning mostly just because they were the right age for doing so. It’s a question of comparing apples to oranges, and I don’t know how statisticians adjust for that. Apparently, they don’t, just as they don’t adjust for changes in technology in the economy. But people pushing an agenda thereby make inaccurate claims, depending on their agenda, for how much better or worse the economy is now compared to earlier eras. Well, I guess that’s politics - we must learn to interpret the data ourselves!
And that’s something you help us do, so thank you, Peter.
The first thing I would say is never listen to politicians babble on about the economy.
The other thing I would point out is that, economically speaking, an aging of the population means things genuinely are "worse" than in the 90s. The retirement of the Boomers is in every scenario and context an economic contraction.
This is but one reason the US and other Western nations need to boost their fertility rates post haste.
The One Big Beautiful Bill (aka the One Big Ugly Failure) is such a legislative mess that discussion of the particulars seems frankly pointless.
https://newsletter.allfactsmatter.us/p/one-big-beautiful-bill-is-already
I had contemplated a deep dive into that legislation before the Twelve Days War shifted my focus for a time. While that was happening, the political bickering and grandstanding over the bill became simply redonkulous. With everybody's rhetoric pandering to their particular voter base, there simply was no actual policy discussion taking place--certainly not in the Congress, where theoretically one should expect it to take place.
However, while inflation is always possible threat of excessive and reckless government spending, when we have signs of job loss, and in particular manufacturing and construction job loss, my concern tilts more towards the possibility of deflation.
I will no doubt have more to say on that point when the June Employment Situation Summary comes out tomorrow, but if we get another jobs report such as for May then deflation and/or stagflation become plausible potential scenarios for the economy.