(10-31-2022 12:49 PM)Ken Barna Wrote:  Dear steve,
Isn't the economy on the way back with the latest gross national product statement, unemployment still at an all time low, gasoline prices falling, (I paid $3.57 a week ago) wages up? The only drag, in my opinion, is inflation. Still around 8%, but could be dropping as well.

The economy is a tough beast to understand.

First, the effects of fed rate hikes has not been really felt yet. It takes time for those hikes to slow the economy.

As you indicate, the economy, EXCEPT inflation, is kind of goldilocks, just warm enough to keep growing slowing, not fast enough to make the labor shortage worse or drive up demand for service employment as well as energy.

My understanding of inflation is simple: It can be on the GOODS side or the SERVICES side. Goods inflation has been tamed. The real inflation now is in the service sector which is labor intensive and feeling shortages (think teachers, laborers, etc.). Immigration slowed the last say 4 or 5 years and we are short say 1 - 2M workers. We loss some do to long Covid. Also, child care issues pulled some women out of the labor force.

Gas is tough. With the war in Ukraine it can go south without help from the Strategic Petroleum Reserve.

My favorite line is: The overall economy is fine (employment, wages, corp. profits, etc.) it is INFLATION that people hate.

My take, and take it for what it is worth: The economy won't be semi-normal until the Ukraine war ends. This war isn't academic. Some war between two countries half ways across the globe. It is effecting the whole world.