Economy predictions

I don’t like to make predictions, but I won’t be surprised by the S & P rising above 5800.

I predict I will pay no attention at all to government figures about the economy, nor any news sources, because they will all have statistics to back up their OPINION and while statistics never lie, people always do.

The last GDP growth number I saw was Q1 2024, which was +1.4%. I don't think Q2 numbers are out yet, but where are you getting the 2.4% from?

If I had to guess, I'd wager Q2 stays around ~1.5 percent, and I predict the goldilocks economy to continue through Q3, maybe slowing just slightly to grow a little more than a %.

And FWIW, the Q3 2024 numbers are what matters most for November. You can basically predict whether the incumbent party will stay or not based on the growth rate from Q3 in an election year.

The "misery index" will stay remarkably flat.
If we keep rates the same, we'll see unemployment continue to tick up.
If we cut rates, we'll keep unemployment where it is but inflation will increase.

Economic surprises are usually bad. Commercial real estate and consumer debt could cause a crash--the powder keg is there but I don't yet see the fuse.

^ looks like we’ll get an interest rate cut prior to the election, of course Trump will loose his marbles over it, especially if it hammers in October

@25 - we might get a cut, but the question is what does that do to inflation? Inflation and unemployment typically trade off...we're bringing inflation down but at the expense of unemployment.

If I were running for re-election, I'd prefer unemployment to inflation. One affects people at the margins, one affects everyone.

^ According to Powell some unemployment is necessary, we’ll see what they do, I think they’ll show their hand next month after the PPI numbers are published.

I won’t make a prediction but I will make a statement, the economy has become more about the haves and have nots. We are seeing a wider gap between the two, as those who “have” appreciable assets (real estate/stocks/bonds) are seeing their net worth grow to new heights allowing a sizable cushion to continue their lifestyle. Those who “don’t have” assets to fall back on and live in the margins are continuing to get squeezed out of possibly climbing toward financial independence since they aren’t able to save up and purchase those assets because most of their income goes to getting by.

Wages are still rising as corporate profits haven’t slowed enough to reign in their investments/costs towards labor. I work with individuals on a personal basis, and those people who’ve been in their homes and had the same job security for years are allocating much larger portion of income towards savings and investments.

If anything that will slow this economy down will be fiscal policy, which will likely happen if we get a divided government after the elections. It’ll be hard to change the sunsetting tax code after calendar year 2025, when many taxes will go back in effect to where they were prior to the tax cuts and jobs act passed in 2017 goes to expire. If this happens there will likely be a slow down starting next year in preparation for higher taxes.

Just saw this. The lower income brackets are feeling it.
https://www.ft.com/content/4ee8a3d0-7f69…

It seems like any time the government throws out money, it's going to land on the rich. COVID regulations rewarded size and scale like Amazon and Wal-Mart, who were "essential" while the mom-and-pop was not.

Heard something somewhere about instability, thought it was a wise comment and a paradigm shift for my thinking. It went like this.

A. the traditional thinking has always been that stock markets (and investors) thrive on stability
B. Trump is the poster-child for instability
C. but some modern businesses have opted in favor of instability because they have learned that they can actually profit exceptionally off of it

Whether you support or oppose Trump, the above is interesting long-view analysis of the economic impact of the "new world view" that comes along with the MAGA movement. News outlets that benefit from distributing extreme views fuel his rise; deliberate divisiveness supports his political chances; a prediction of capricious and unpredictable market governance decisions would SEEM to motivate the moderate or conservative investor to avoid voting for him; but there's money to be made in the context of all that madness.

I had always assumed, all my adult investing life, that whichever candidate is best for stability (boring!) is probably best for the investment markets (stocks futures funds bonds metals you-name-it). But maybe the new world order means that this stability assumption is no longer true.

@puddy tat there's a paywall to that article, I don't do ft online

@mate27 I agree on your statement about the haves vs the have-nots. I'll add to it, that the supreme idiocy of the Biden camp is radically displayed by their inability to either gesture doing anything about it, or even recognize that the income disparity exists. It took his people MUCH TOO LONG to talk him down from making positive statements about Bidenomics. I vote Democrat almost 100% of the time but I'm profoundly disappointed that this party doesn't do much for the common man any more.

@book guy -
Big US banks have warned that lower-income customers are showing signs of financial stress just a few months ahead of the presidential election.

In second-quarter results on Friday, JPMorgan Chase, Citigroup, Wells Fargo and BNY cautioned about consumers grappling with lower savings and higher prices.

Government stimulus programmes during the Covid-19 pandemic helped insulate Americans from inflation in recent years, but as households have spent the money, the financial health of the consumer could play a crucial role in the outcome of November’s presidential vote.

Consumer sentiment remains “stubbornly subdued” and fell to an eight-month low of 66, according to the latest University of Michigan survey released on Friday.

Profits at Citi’s US consumer lending business, which includes credit cards, plunged 74 per cent from a year ago. The bank’s chief financial officer, Mark Mason, said consumer spending was slowing overall, with account balances now lower than they were before Covid.

US consumers were more cautious than they had been in a while, he added. “We are not seeing the same growth in consumer spending that we had in prior quarters,” said Mason. “There was less traffic in the retail venues that we partner with.”

JPMorgan financial chief Jeremy Barnum said the bank’s “broad take is that the consumer is fine” but pointed to weakness among less affluent customers.

“In the lower-income segment, you start to see a little bit of evidence of some rotation in the spending out of discretionary into non-discretionary,” he said, noting that it was “traditionally . . . understood to be a little bit of a sign of weakness”.

BNY chief executive Robin Vince warned that “inflation is very painful to many people”, particularly those without savings.

“You can see the early signs of that portion of the population [who do not have assets to invest in the stock market] having depleted the reserves they had built up through the pandemic and are confronting the fact that the overall level of prices is just higher,” Vince said.

The bankers’ concerns about lower-income Americans echoed a warning from Pepsi on Thursday that its North American sales volumes were being hit by the impact of multiple years of inflation on lower-income consumers.

There is “some perception and some reality in a lot of households that food is expensive”, PepsiCo chief executive Ramon Laguarta told analysts. Consumers are having to make “a lot of decisions around how they spend their money”.

JPMorgan, Citi and Wells — three of the four largest US banks by assets — as well as BNY reported lower income from lending, as the business has plateaued following enormous gains from the Federal Reserve’s cycle of interest rate rises.

Large banks benefited from being able to charge higher rates for loans but did not immediately need to reward depositors with higher savings rates, boosting profits. But gradually, banks are increasing the rates they pay to account holders.
Column chart of Average rate paid on interest-bearing deposits (%) showing JPMorgan paying higher rates on deposits

Wells said lending demand was “tepid” from individual and corporate clients, and lowered its outlook for loan profits for the rest of the year.

“When you look below the surface and really dig into what is happening across differing consumers, you see that the lower-income folks are struggling,” said Wells chief financial officer Mike Santomassimo.

The industry’s brightest spot was in investment banking, adding to hopes for a sustained rebound in dealmaking activity as Wall Street weathered the quarter considerably better than Main Street.

JPMorgan said investment banking fees increased by 50 per cent to $2.4bn, even better than the bank’s own guidance to investors last month. At Citi, investment banking fees rose 60 per cent from a year ago to $853mn in the quarter.

Across the bank, JPMorgan’s profits reached a record high in the second quarter at just over $18bn, a 25 per cent increase from a year earlier.

But stripping out one-off effects, including a gain of almost $8bn from its stake in the credit card company Visa, net income was up less than 1 per cent from a year earlier in the second quarter.
Column chart of Net charge-offs ($bn) showing Loans marked as unrecoverable rise at large banks

Citi said quarterly profits rose 10 per cent from last year to $3.2bn, driven by the investment banking business and cost cutting.

The bank, which is in the middle of its largest restructuring in years, eliminated 8,000 jobs in the quarter.

Wells, which has a smaller investment bank than rivals, reported a 0.6 per cent drop in profits to $4.9bn, while BNY, which is less exposed to lower-income consumers because of its specialisations in money management and custody, beat analysts’ expectations for revenue and net income.

Shares of JPMorgan, Citi and Wells were down in morning trading in New York on Friday, while BNY was up more than 3 per cent.

@book guy - as far as stability, Trump seems to be, as Nassim Nicholas Taleb says, the "antifragile" candidate. He thrives amidst anger, Republican or Democrat. It energizes the former and makes the latter irrational. That's why I said elsewhere that if Democrats could ignore the noise and give a positive message, they would win. But it's like the kid who can't stop scratching the bug bites. It feels good for a minute then comes back even worse.

But the fact is, despite his rhetoric as a candidate, and going through cabinet secretaries like Taylor Swift through boyfriends, his policies were not out of the ordinary. His big legislative "accomplishment" was the tax cuts, he didn't impose sweeping regulations, he wasn't trying to jawbone fossil fuel producers out of business, he wasn't trying to reform healthcare (whole other topic, but both parties have their heads intra-rectal on healthcare). He largely left businesses alone. Next term, I think he'd do the same. The question is if any of the time bombs in the economy--consumer debt, commercial real estate--go off during his term.

Problem is, both sides are of the rich. More classically the Republicans, but now the Democrats own college-educated coastal voters who are more concerned with pushing luxury beliefs than helping the working man. I don't think Trump will do much for the working man, other than curtailing immigration which exerts downward prices on wages, but he at least doesn't hold people who shoot guns and attend church in contempt.

There are some things which would seem like easy wins--like changing the highly regressive social security tax--which would preserve social security AND take the burden off the poor, but no one seems to do so.

It all depends on who wins.

If Biden wins we will get more of the same- more inflation. More countries unlinking from the USD. More companies leaving for overseas. More shuttered store fronts on Main Street. More Wall Street gains which only benefit the top 1% of democrat donors.

If Trump wins - he will have a long, hard, uphill fight to decouple from China. We will see an administration empower small and midsize American business to push back against mega-corporations. OPEC will return to the dollar as their default pricing currency. Wasteful green spending will be cut. America will return to being net energy exporter. Unemployment will drop, especially for minorities.

Before you scoff- just remember he did all of this before. Economists predicted he would crash the economy then, but instead it grew to new heights. He created GDP growth which Obama claimed would never happen again. His policies created the lowest minority unemployment rates in history. Go by his track record.

@ Puddy Tat

"Problem is, both sides are of the rich. More classically the Republicans, but now the Democrats own college-educated coastal voters who are more concerned with pushing luxury beliefs than helping the working man. I don't think Trump will do much for the working man, other than curtailing immigration which exerts downward prices on wages, but he at least doesn't hold people who shoot guns and attend church in contempt."

This is all true and sums up the sea-change in political poles. I'm ready to kick some Democrat strategists in the head for their stupidity on this obvious point.

Q2 economic numbers are out. Growth accelerated to 2.8%, far outpacing expectations. This Biden Goldilocks economy shows no signs of stopping.

But I’m sure the Trump cultists will be here shortly to explain why economic growth is actually a bad thing.

It’s good news. I don’t care about the political implications.

Statistics from the government are such bullshit. Growth accelerated to 2.8% lmao. People fucking suffering every day and the Biden ass lickers are pretending things are good, which they are, for rich elitists. Economic growth is good except when Democratic Party policies kill the fucking economy and then cheer an alleged 2.8% acceleration. Just a lie. Just a distortion of fact Just a distortion of history, but the be fair this was Winston Smith's job and the Democrats are following the handbook, written 76 years ago.

^ 👍

^That was for Stud me 83

@skibum's response to these terrific growth numbers: 👉😑👈

I mean, if you can't trust the commerce department's numbers, what numbers can you trust?

As time passes and we get further away from 2020, the economy will improve. Not sure anyone can or should take credit, but it’s certainly good news. We’re better off than the rest of the world but we need more. The Fed should start dropping rates, though I’m a bit dubious of how much impact that has on inflation. Lower rates certainly helps businesses. My company has a significant amount of floating rate debt and those quarter point moves reduce our interest expense burden by significant dollars.

I don't see how skepticism over the numbers, or putting them into the context of the broader economy is "rooting against America." That's more of the left impugning patriotism, meanwhile they're the ones who want to "fundamelly transform America" or think it was conceived in evil.

I can just as easily talk about how much growth has come in the public sector, the change in price levels that can't be undone, record personal debt, record small business failures. Regardless of any growth numbers, Americans prefer Republicans on the economy.

That’s fair Puddy. What’s your opinion on Trump telling Powell he shouldn’t reduce rates before the election and also saying he won’t fire Powell? Isn’t the implication there a quid pro quo - if you don’t lower rates which could be good for the economy I’ll let you keep your job. That looks like rooting against America.

^ Trump looks out for Trump, but lowering rates isn't some benign thing. It could reignite inflation.

Doesn't sound like a quid pro quo to me.

I didn’t doubt you’d rationalize it in favor of Trump. I’m not even casting aspersions about it. My perspective is equally valid and consistent with yours. “Trump looks out for Trump” is his only guiding principle.

^ I'm not rationalizing. Powell served under Trump and even increased rates until COVID. You are creating a conspiracy theory.

@puddy

> I can just as easily talk about how much growth has come in the public sector, the change in price levels that can't be undone, record personal debt, record small business failures.

I could also make a bunch of wild claims unsupported by any evidence. But that wouldn't convince anyone who was on the fence. So I'm curious what evidence you'd show to support these claims. Especially the one about growth being public sector.

The article I read this morning https://www.washingtonpost.com/business/… said, "Consumer spending, business investments and new inventory drove almost all of the second quarter’s growth."

Tangentially, the article also mentions a slow down in home construction as a drag on growth. That problem might be solved by a rate cut in September. I've said this before but Q3 growth in an election year is one of the best tea leaves there is, and it looks like we're headed for a solid Q3.

@ron - here are the links to my "claims unsupported by evidence." You may wash tge egg off your face now ;)

Biden administration has a record high percentage of public sector jobs, as well as healthcare (heavily public sector paid), and low wage hospitality. https://finance.yahoo.com/news/biden-adm…

Change in price levels is everywhere and undisputed, but this is from Forbes and lists some of Biden's shitass excuses for it. https://www.forbes.com/sites/dereksaul/2…

Why it's hitting the lower classes. https://www.ft.com/content/4ee8a3d0-7f69…

Record amount of credit card debt
https://www.cbsnews.com/news/credit-card…

Small business bankruptcies here, yeah it's on a conservative site but data from S&P https://committeetounleashprosperity.com…

GOP plans for the economy more trusted than Democrats'
https://www.reuters.com/graphics/USA-BID…

You're relying on a lot of things to break your way for a Democratic win. A rate cut, 3 months of Orange Man Bad accomplishing what 9 years could not, a continuous and unabating surge in enthusiasm for Harris...and the Trump attack ads are just starting.

You seem to forget that even Democrats didn't want her 4 years ago.

> You may wash tge egg off your face now ;)

My dude, I am never going to apologize for asking for sources. I would prefer you just include them from the start if you're going to make bold claims. And additionally, I don't think these sources fully support the bold claims you've made.

> Biden administration has a record high percentage of public sector jobs

Your source says "25% of New Jobs Are In Government", and also elaborates that "Employment gains in government span the federal, state and local levels, with a substantial increase in hiring compared to the previous year. This surge is partly a response to the vacancies left by public servants who exited their roles during the pandemic, alongside efforts to bolster public services that may have been understaffed or overwhelmed in the preceding years​​​​​​." I don't personally see the problem here.

That source is also 2 quarters old. As I mentioned earlier, this quarter's surprising +2.8 growth is attributable to "Consumer spending, business investments and new inventory drove almost all of the second quarter’s growth."

> Change in price levels is everywhere and undisputed,

I'm not sure exactly what you want me to take away from this source. GDP grew more under Biden than Trump. Debt grew higher under Trump than Biden. And yes, inflation grew under Biden, but it's root causes all happened under the Trump administration. Trump juiced the economy with tax cuts for the rich right before the pandemic, which in combination with his pandemic spending caused record debt that drove inflation.

> Record amount of credit card debt

This wasn't on my radar, but I appreciate source. Something to keep an eye on. I'm also wondering if it's trending downward now that inflation has eased, this is 6 months old... but I can't find more recent data.

> Small business bankruptcies here

There's no link to the S&P data and I can't find it on my own. I'm also highly skeptical because what would the S&P know about small business failures?

> GOP plans for the economy more trusted than Democrats'

It's a good poll, but it happens to from when Biden was still the nominee and before the terrific growth numbers we saw this AM.

All bets are off now, we need new polling, and then I would be eager to see the cross tabs on the new polling.

No such thing for tax cuts for the rich. Blatant and ignorant lie. Taxes were cut across the board and when they expire next year, people are going to howl. In some way maybe its best if it happens with the Democrats in control. A little suffering now, might avoid their tragedy later. If inflation under Biden was because of Trump's policies, then the record growth under Biden is due to Trump's policies. Lies, lies and more lies.

I've always been told to believe that Republicans always implement tax cuts for the rich and that the poor and middle classes seldom see benefit to their taxation under Republicans. I would wish for proof that this is not the case.

"My dude, I am never going to apologize for asking for sources."

Don't call it unsubstantiated. Too many specifics for me to pull out of my ass.

"And additionally, I don't think these sources fully support the bold claims you've made."

Of course not, you're stretching harder than Simone Biles to shill for Democrats.

"I don't personally see the problem here."

Public sector job creation is paying the public with the public's own money. We paid the price in debt and inflation.

"Trump juiced the economy with tax cuts for the rich right before the pandemic, which in combination with his pandemic spending caused record debt that drove inflation."

How many times do I need to teach you the difference between spending during a deflationary shock and an inflationary period with a supply chain crisis? Amazing how it all landed under Biden, all the excuses admitted it, and so much of his spending was on green shit unrelated to the pandemic. But hey, never let a crisis go to waste ;)

Also GDP naturally bounces back from a deflationary shock. "GDP grew more under Biden" is misleading because it omits critical context.

"I'm also wondering if it's trending downward now that inflation has eased,"

Again speculating. I'm wondering if it has increased since the overall price level is sticky.

"I'm also highly skeptical because what would the S&P know about small business failures?"

They're a lot more than an index and a ratings agency for debt.

"It's a good poll, but it happens to from when Biden was still the nominee and before the terrific growth numbers we saw this AM."

This wasn't Trump vs Biden, it's Republicans vs Democrats. Most people don't give a shit about GDP numbers. Certainly aren't seeing a one day change. I'm happy for my stock portfolio but it hasn't accounted for salary increases in the last 4 years nowhere near inflation.

"All bets are off now, we need new polling, and then I would be eager to see the cross tabs on the new polling."

I really hope you're this skeptical when polls favoring Republicans come out. So far, I'm seeing a man trying to convince himself.
Betting odds 57% Trump 35% Harris, and those respond quickly.

Also @Puddy just a note on the cross tab on the economy, from your reuters survey: https://www.reuters.com/graphics/USA-BID…

That doesn't show that "voters trust the GOP more on the economy." It shows, that voters whose primary issue is the economy prefer the GOP. Two pretty different things. I wouldn't expect the trend on that cross tab to change: if you think the economy is doing well (and, it actually is) the economy is probably not your number 1 issue. If you're primarily informed by Fox News or right-wing social media spewing doom and gloom about the economy, you're probably not voting for the incumbent party.

The extremism cross tab is really interesting to me.

^ Last time I watched Fox News was when I was in the hospital for a week. They do not factor into any of my views. I read both left and right wing sites and put them in the appropriate context.

"When asked which of the two candidates had a better approach for the economy - the No. 1 concern for respondents - registered voters picked Trump 43% to 37%."

If this is the statement, you are misreading it. It has in ellipsis that the economy is the #1 concern for respondents, it is not just polling people who believe that.

It is your opinion that it is going well, and that seems to be in the minority. This board is biased towards guys with enough money to monger. The working class isn't in the stock market, they just see their paycheck and prices at the grocery store.

PLEASE go ahead and keep telling them they're too dumb to see how good the economy is. Acting like they're a bunch of immoral idiots is what got Trump elected in the first place.

The latest good economic numbers continue to expose the lies Republicans have tried to peddle to Americans for years.

It's also well documented that the economy tends to perform better under Democratic presidents than Republican. For example, annual real GDP growth has averaged 3.79% under Democratic administrations vs. 2.60% under Republican.
https://www.epi.org/press/new-report-fin…

When confronted with favorable economic data, Puddy Tat always trots out this line that Dems are telling Americans they are dumb. What a moronic statement.

It's been like 3 decades since the GOP has actually been good for the economy. It's the party of deficit spending: https://x.com/MikeOkuda/status/158453482…

@wld4logic...not!

Perhaps when I can jack you up again and again with the truth, it might be time to rethink your position rather than get pissy?

Putting data into context and showing how you attempt to mislead is a mitzvah. You still can't address inflation and wages, so you think Americans are too stupid to see how good the left is. It's not just you, even your idol Paul Krugman says as much (reliably wrong on everything though he is).

Once again, your sniping only winds up with you as the Puddy Tat's litter box! ;)