Evidence that industrial processes have become more efficient? Or the economy as a whole? All those trucks you see are not at all energy-efficient. “Growth” of “the economy” is not more cardboard houses being built, it is determined instead by productive capacity. Increases in eg fuel economy are offset by increasing non-productive (consumptive) miles driven.
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Maser wrote:
agip wrote:
gasoline is apparently around 4% of an average pretax income. Is that a 'very large' amount? Could be, if you are already stretched. But probably not.
of course you'd have to add on to that nat gas bills, etc.
How old is that stat, what was the “average” income cited, why not use the median, how does that relate to those below 50k, etc. And nobody in the real world cares about pre-tax anything. Taxes are an expense like any other, in fact many are included in the gasoline price.
And it has gotten much worse—or better, depending on your perspective.
it's an old stat yeah but given the rise in wages it's probably close - plus or minus. I dunno. It's a range.
As for debt...the household debt service/disposable income ratio is climbing but still far lower than it has been for most of the last 40 years. which suggests the debt binge could go a lot longer. No reason for it to stop here, with incomes rising fast and jobs for everyone. And prices rising. people could keep piling on debt for a long long time. Not bearish for the economy - actually bullish that they have to spend more to catch up to historical trends.
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agip wrote:
Ghost of Igloi wrote:
I was the track coach at Texas A&M-Kingsville when the price of oil dropped and we faced budget cuts. The price of oil affects everything up and down. I would assume the Permian Basin (Midland and Odessa, Texas) is in high cotton at the moment.
heh
texas a generation ago is not the USA of today. Much less oil-dependent. And of course TX is the national leader in green energy and that isn't controlled so much by the price of oil.
but a different point is that the energy business is massively afraid of the boom-bust cycle...they remember just last year when oil had a negative price. They aren't yet spending to get production up very much - they know there will be a bust at some point soon so they don't want to stick out their capital necks very far. So the high prices of oil may not be passing down the food chain to the support industries as much as it has in the past.
Boom bust cycle is very real. During the bust periods towns like Hobbs (NM), Lovington (NM), Odessa (TX), and Midland (TX) turn into ghost towns. My first paid coaching job was at New Mexico Junior College in Hobbs, 1977-79. Fortunately there during an oil boom. I have been to all four of the aforementioned towns during the bust, and not pretty. Fracking has exacerbated the economic swings for oil shale areas of South Dakota and South Texas.
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agip wrote:
well less and less as we become much more energy efficient. This isn't thre 1970s, when the economy was far more energy-dependent for growth.
plus, energy prices are a bit of a price stabilizer....meaning that if energy prices rise....then people pay more for gasoline and heat/nat gas...so they have less money to spend on goods and servces.....reducing demand....which takes away some of the hot demand for goods and services that is causing much of the inflation in the first place. higher gas prices are both inflationary and deflationary in a sense.
As is everything for which demand is elastic. Individuals driving in the US, mot so much—until possibly very recently, since some are availing themselves of wfh options. A good thing, in terms of energy efficiency. Would be huge if more broadly adopted.
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Maser wrote:
Evidence that industrial processes have become more efficient? Or the economy as a whole? All those trucks you see are not at all energy-efficient. “Growth” of “the economy” is not more cardboard houses being built, it is determined instead by productive capacity. Increases in eg fuel economy are offset by increasing non-productive (consumptive) miles driven.
alls I can tell you is that one unit of energy gets you a lot more GDP growth than it used to. And the converse....one fewer unit of energy takes away less GDP than it used to.
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That uses total disposable quarterly income, skewed as it is by the top 1%. Also it ends with Q4 2021. We are way past that, with 7-8% official annualized cpi and arm’s have only begun to reset. Lower-income people are screwed.
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Price at the pump alone was around 3.33 Q4 2021, in Q1 2024 it will end up around 4.10-4.20. Huge difference.
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GDP is calculated using money, not real production. Yes the economy might be more efficient at producing a unit of gdp, but that is an artificial measure and absolutely excludes externalities like dealing with filling landfills, soil erosion/degradation, habitat loss, long-term debt, unfunded liabilities, etc. We are only just beginning to realize some of those costs.
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Any of you guys have an opinion on UAE? The etf, I mean.
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Maser wrote:
Any of you guys have an opinion on UAE? The etf, I mean.
would it absolutely kill you to buy SPY?
Sheesh.
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Maser wrote:
That uses total disposable quarterly income, skewed as it is by the top 1%. Also it ends with Q4 2021. We are way past that, with 7-8% official annualized cpi and arm’s have only begun to reset. Lower-income people are screwed.
stock market don't care who spends the money. Did you know 1/3rd of households make more than $100k/year? There is a tremendous mass affluence in this nation and that's way more important than the '1%.'
and ARMS are just 5% of mortgages. Not a needle-mover.
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agip wrote:
Maser wrote:
That uses total disposable quarterly income, skewed as it is by the top 1%. Also it ends with Q4 2021. We are way past that, with 7-8% official annualized cpi and arm’s have only begun to reset. Lower-income people are screwed.
stock market don't care who spends the money. Did you know 1/3rd of households make more than $100k/year? There is a tremendous mass affluence in this nation and that's way more important than the '1%.'
and ARMS are just 5% of mortgages. Not a needle-mover.
Is that by number, or dollar amount?
And what is the disposable income of a $100k household? After taxes, mortgage, gas, food, household expense, health insurance, etc—it is squat.
And by that stat, 2/3 of households make less than that. Proves my point. Median household in 2020 was 67.5k.
Again, I was talking about the 50k level.
Not a needle-mover? Tell that to 2008/2009. “All” arm’s today are sub-prime because FICO are fudged, for “equitable” purposes...where they even still use fico scores 😮
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Maser wrote:
agip wrote:
stock market don't care who spends the money. Did you know 1/3rd of households make more than $100k/year? There is a tremendous mass affluence in this nation and that's way more important than the '1%.'
and ARMS are just 5% of mortgages. Not a needle-mover.
Is that by number, or dollar amount?
And what is the disposable income of a $100k household? After taxes, mortgage, gas, food, household expense, health insurance, etc—it is squat.
And by that stat, 2/3 of households make less than that. Proves my point. Median household in 2020 was 67.5k.
Again, I was talking about the 50k level.
Not a needle-mover? Tell that to 2008/2009. “All” arm’s today are sub-prime because FICO are fudged, for “equitable” purposes...where they even still use fico scores 😮
Whether $100,000 is squat or not depends on a lot of factors:
1) When did you buy your house, and what was the mortgage? When I still had a mortgage, it was based on less than a third of the value of my house now, and the mortgage payment was miniscule compared to if I were to buy this same house now and get a mortgage.
2) What is your debt? If you have ZERO debt, $100,000 can go a long way, even in expensive areas of the country, because it's the housing costs that are the biggest issue there.
3) How many people does that $100,000 support? If it's 1-2 people, and you are debt free, again, you can do quite well on that, even in "expensive" areas of the country.
4) What is your typical lifestyle like? If you live in an area where gas is really expensive, but you work from home, that's not going to be a huge cost.
5) Definitely other facts too, but you get the point.
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Flagpole wrote:
Maser wrote:
Is that by number, or dollar amount?
And what is the disposable income of a $100k household? After taxes, mortgage, gas, food, household expense, health insurance, etc—it is squat.
And by that stat, 2/3 of households make less than that. Proves my point. Median household in 2020 was 67.5k.
Again, I was talking about the 50k level.
Not a needle-mover? Tell that to 2008/2009. “All” arm’s today are sub-prime because FICO are fudged, for “equitable” purposes...where they even still use fico scores 😮
Whether $100,000 is squat or not depends on a lot of factors:
1) When did you buy your house, and what was the mortgage? When I still had a mortgage, it was based on less than a third of the value of my house now, and the mortgage payment was miniscule compared to if I were to buy this same house now and get a mortgage.
2) What is your debt? If you have ZERO debt, $100,000 can go a long way, even in expensive areas of the country, because it's the housing costs that are the biggest issue there.
3) How many people does that $100,000 support? If it's 1-2 people, and you are debt free, again, you can do quite well on that, even in "expensive" areas of the country.
4) What is your typical lifestyle like? If you live in an area where gas is really expensive, but you work from home, that's not going to be a huge cost.
5) Definitely other facts too, but you get the point.
Anecdote time.
My 80+-year-old parents own their home outright, they have retirement income of about $75,000 a year, and they barely even need to spend half of that. They go out with friends all the time, are avid birders, will be driving to Texas pretty soon to go see some more birds. They've already traveled the world, so no need to do more of that.
So anyway, $100,000 isn't squat for a lot of people.
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Well, there is this:
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No shlt, sherlock. And within that range you described, it IS squat for many people who are situated differently from your parents.
Never mind the 50% of households below 67.5k.
Going back, you can see that my point was that those earning more than the lowest are the ones who will keep the consumer demand going, while those under 50k will be decimated, with a brief reprieve from helicopter drops.
Nobody on UAE?
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Maser wrote:
Well, there is this:
remember that there are two long-established measures of consumer confidence.
the conference board survey reports consistebtly more optimistic consumers. Given that the michigan survey says consumers are more bummed now than at the depths of the financial crisis....not sure that makes any sense whatsoever and maybe the UMich survey is nonsense right now.
and also remember, consumer confidence seems to have next to zero impact on consumer spending. So not all that relevant to the stock market or economy.
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ach, the 10 year is soaring again - up to 2.8%, dragging down stocks.
on the other hand, the yield curve is doing an astonishing V shaped recovery. Which suggests...well gawdern I have no idea what is suggests. That growth expectations are rising and inflation expectations are shrinking I suppose. It does look like inflation is peaking.
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