Quote:
Originally Posted by Chick Webb
Other than the slow trickle of 6 Trillion in federal stimulus that has been authorized but not spent, pretty much all of the benefits have reverted to pre-COVID levels. SNAP expansion ended in early 2023 (see infographic below), the increased child tax credit was not extended beyond 2022 and reverted to $1600/per child for 2023 taxes. Even California generally requires you to actually be looking for work to qualify for unemployment benefits again. Shocking, I know...
Most of the world is already in recession, or will be very soon. The Swiss national bank just lowered their benchmark interest rate by 0.25%, in large part because their economy has been shrinking for 4(!) quarters; I remember when we called that a depression, not a recession. The rest of Europe/UK is right behind them and the only real question now is will the ECB of the BoE be the first to cut? China's problems are obvious. Assuming the West doesn't allow them to export their way out of them, it'll take the better part of a generation to get fully back on track. And the Rest of World (RoW) is suffering under the weight of their (too strong) dollar-denominated debt. Growth for them will be very difficult if not impossible.
All of that federal money printing here is dragging things out, but business cycles are business cycles and we'll get there, eventually. The stagnation train is pulling into the station. Jobs in some industries are already hard to get, and people w/o jobs do not spend money unless they have to. If companies panic and start pulling the plug on all of those extra COVID hires, like the tech guys have been doing since last year, the jobs picture will deteriorate quite rapidly. That would tip us into recession - which, compared to an extended period of stagflation would actually, long run, be preferable - and then we'd get some interest rate relief from Powell.
I've been saying this for quite some time and still believe it. Several million people need to lose their jobs before this cycle can end, we get a chance to clean out the deadwood, and a new cycle of properly-grounded growth can begin. Likely that'll be bad for everyone for a while, but it's necessary for a healthy economy.
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your last statement is sad but unfortunately very very true... there is still too much $ floating around and senseless spending ... a reset would only be possible with high unemployment... right now like you said its only tech... but if it hit all industries, the picture would change quick