.@SenWarren (D-MA) to Fed Chair Powell: "You know what's worse than high inflation and low unemployment? It's high inflation and a recession with millions of people out of work. And I hope you'll reconsider that before you drive this economy off a cliff." pic.twitter.com/2ggCSBXMj2
Is that an answer to my question? We're talking about demand effects, in the U.S., if we have a tax holiday.
I just think that the world petro market is a bit too big and a bit too complicated to just assume that what would be a pretty minor increase in demand in the U.S. who send prices higher. And that also assumes that people are driving less right now - so where are my lower prices?
The U.S. is the no. 1 consumer of oil in the world. The U.S. accounts for 19% of the oil consumed in the world, followed by China with 14%. Gasoline accounts for 44% of the oil consumed in the U.S. These are 2020 numbers, which of course were effected by Covid.
"The United States is both the largest producer of oil, mining approximately 11.5 million barrels per day, and also its largest consumer of oil at more than 17 million gallons per day—more than the entire European Union (9.8 million). This is approximately 15-20% of the world’s total oil consumption. This is followed by China, which consumes 14.2 million barrels of oil per day, and India, which consumes about 4.7 million barrels per day. The United States, China, and India alone account for over a third of the world’s total oil consumption. All three of these countries have the three largest populations in the world."
In 2021, the U.S. imported 8.47 million b/d and exported 8.63 million b/d. The U.S. has to import oil because, although the U.S. is a net exported of oil, the refineries in the U.S. are built for heavy crude oils and the oil produced in the U.S. is mainly light sweet crude, which is used in foreign refineries. Oil is a global commodity and the prices of WTI and Brent crudes are related, to take in account quality differentials and transportation cost.
Oil prices are down again today. The prices of almost all commodites are down, including wheat which is down 3%. Fears of a recession are the main reason. Powell has been testifying on the hill the past two days and has said several times that the Fed. is trying to tame inflation without causing a recession, or if there is a recession, it will be a mild one.
In any event, Biden's call for a gas tax hoilday is a bad one, escpecially with crude oil prices falling. Gasoline prices have been falling as well.
National average now $4.939/gal, we could see another 10-20c/gal by July 4, Americans now spending about $30 million less per day on gasoline than a week ago, still $706 million more than a year ago. Downward trend to accelerate! #gasprices
Unemployment is at a 25-year low. May unemployment 3.6%. Only 3.5% in February 2020 was higher. Historically, a 4% unemployment rate has been considered full employment. Powell would like to get the unemployment rate to 4%. Powell has described the labor market as "red hot." There are 1 million job openngs and only 500,000 job seekers. Powell is trying to avoid a wage-price spiral. People demanding more salary to pay for for the rising cost of goods, which in turn furthers the prices and inflation.
eta - Powell called the labor market as "unsustainably hot."
Unemployment is at a 25-year low. May unemployment 3.6%. Only 3.5% in February 2020 was higher. Historically, a 4% unemployment rate has been considered full employment. Powell would like to get the unemployment rate to 4%. Powell has described the labor market as "red hot." There are 1 million job openngs and only 500,000 job seekers. Powell is trying to avoid a wage-price spiral. People demanding more salary to pay for for the rising cost of goods, which in turn furthers the prices and inflation.
eta - Powell called the labor market as "unsustainably hot."
Here's how Hong Kong discourages private ownership of cars and uses the revenues to maintain a world-class public transit system. Want to blame a politician? Too bad... no elections.
there is no evidence of a wage price spiral at this time.
Prescisely. Powell is trying to avoid one. He doesn't want a 1970's scenario. There are a lot of differences now and a wage-price spiral is less likely, but Powell doesn't want to take a chance. Powell wants the unemployment rate at 4%. If he's able to do this there can be a soft-landing. The economy is strong and households have a lot of money saved.
Powell wants to get inflation down to the Fed. target of 2%. I'm not sure how he can do it other than raising interest rates, to slow business down, thereby decreasing the need for workers. Can you tell me how inflation can be tamed with 1 miilion job openings and 500,000 job seekers? You've said that you don't see any excess demand - there it is.
Biden wants the oil companies to build more refining capacity. Why should the comanies build more refining capacity, at a cost of billions of dollars and years of construction when Biden said he wants to put the oil companies out of business? Biden has gotten into a spat with Mike Wirth, CEO of Chevron. He said Exxon is making more money than God. If there were a chance to get the oil companies to build additional refining capacity that's not a great way to do it. He hasn't sat down with the executives of the oil companies, but wants them to spend billions of dollars.
eta - Here's a link to an article in the Washington Post a few days that deals with the reason oil companies don't want to invest in refineries. It's behind a paywall, but those of you who subscribe may be interested.
there is no evidence of a wage price spiral at this time.
Prescisely. Powell is trying to avoid one. He doesn't want a 1970's scenario. There are a lot of differences now and a wage-price spiral is less likely, but Powell doesn't want to take a chance. Powell wants the unemployment rate at 4%. If he's able to do this there can be a soft-landing. The economy is strong and households have a lot of money saved.
Powell wants to get inflation down to the Fed. target of 2%. I'm not sure how he can do it other than raising interest rates, to slow business down, thereby decreasing the need for workers. Can you tell me how inflation can be tamed with 1 miilion job openings and 500,000 job seekers? You've said that you don't see any excess demand - there it is.
Is the rest of the world experiencing the same tight labor market? They're all suffering from inflation too.
The labor market is not the cause for our inflation. It's wrong for workers to have to pay a penalty for something they have nothing to do with.
Is that an answer to my question? We're talking about demand effects, in the U.S., if we have a tax holiday.
I just think that the world petro market is a bit too big and a bit too complicated to just assume that what would be a pretty minor increase in demand in the U.S. who send prices higher. And that also assumes that people are driving less right now - so where are my lower prices?
Cramer has done an excellent job in providing responses!
The point of a gas tax holiday is to improve prices, but the unintended effect is that it spurs demand for gas ever-so-slightly in the largest consumer of gas in the world. A small percentage increase in the biggest world consumer is a big increase in the scheme of things.
In a situation where there is no capacity to increase supply, guess what happens when demand increases? Prices increase.
So you just gave up your gas tax revenue in exchange for what exactly?
High prices discourage people from “elective driving.” They encourage people to bunch their errands and conserve. Maybe not take that road trip.
Sucks for people who have to drive a lot for work, but if you remove the tax, in the short term the prices are sticky anyway. And the increased demand…
Is that an answer to my question? We're talking about demand effects, in the U.S., if we have a tax holiday.
I just think that the world petro market is a bit too big and a bit too complicated to just assume that what would be a pretty minor increase in demand in the U.S. who send prices higher. And that also assumes that people are driving less right now - so where are my lower prices?
Cramer has done an excellent job in providing responses!
The point of a gas tax holiday is to improve prices, but the unintended effect is that it spurs demand for gas ever-so-slightly in the largest consumer of gas in the world. A small percentage increase in the biggest world consumer is a big increase in the scheme of things.
In a situation where there is no capacity to increase supply, guess what happens when demand increases? Prices increase.
So you just gave up your gas tax revenue in exchange for what exactly?
High prices discourage people from “elective driving.” They encourage people to bunch their errands and conserve. Maybe not take that road trip.
Sucks for people who have to drive a lot for work, but if you remove the tax, in the short term the prices are sticky anyway. And the increased demand…
I think the gas tax is a gimmick to make Biden look like he's taking inflation seriously, but is unlikely to do much about inflation. Hopefully doesn't actually drive up prices (thanks Cramer for laying out how that is a possibility).
Of course, earlier in the thread inflation hawks like Smedley seemed to be arguing that what Biden needed to be doing was to show he was taking inflation seriously, and that he should have been demonstrating this earlier, so maybe this counts?
Well I'm not really the target demographic for performative politics and can't always judge how effective they are. More effective than I expect sometimes. Maybe if a gas tax holiday manages to make people believe Biden is taking inflation seriously it's a win?
I think the gas tax is a gimmick to make Biden look like he's taking inflation seriously, but is unlikely to do much about inflation. Hopefully doesn't actually drive up prices (thanks Cramer for laying out how that is a possibility).
Of course, earlier in the thread inflation hawks like Smedley seemed to be arguing that what Biden needed to be doing was to show he was taking inflation seriously, and that he should have been demonstrating this earlier, so maybe this counts?
Well I'm not really the target demographic for performative politics and can't always judge how effective they are. More effective than I expect sometimes. Maybe if a gas tax holiday manages to make people believe Biden is taking inflation seriously it's a win?
I agree that the political theater has some value, kinda like “security theater” at the airport.
I agree that the political theater has some value, kinda like “security theater” at the airport.
It used to have more value before Fox News, OANN, etc. Biden can't do anything that will satisfy the right wing nutosphere. And most of the "mainstream" media plays along with the right wing framing of stories.
So doing something just to look like he's doing something is generally futile.
I think the gas tax is a gimmick to make Biden look like he's taking inflation seriously, but is unlikely to do much about inflation. Hopefully doesn't actually drive up prices (thanks Cramer for laying out how that is a possibility).
Of course, earlier in the thread inflation hawks like Smedley seemed to be arguing that what Biden needed to be doing was to show he was taking inflation seriously, and that he should have been demonstrating this earlier, so maybe this counts?
Well I'm not really the target demographic for performative politics and can't always judge how effective they are. More effective than I expect sometimes. Maybe if a gas tax holiday manages to make people believe Biden is taking inflation seriously it's a win?
I wouldn't consider myself an inflation hawk - an inflation realist, maybe. I have taken issue with the inflation denial, or perhaps more accurately the inflation nihilism, that's been pretty pervasive on this board. No government spending is ever too much government spending, and anyone who brings up inflation concerns (like Manchin) deserves scorn and derision. And then once high and sustained inflation is clearly a thing, well there was nothing the President could have done about it then or now, hence neutral ratings on Biden's handling of inflation. And even the Fed , well maybe they shouldn't raise rates, yeah probably they shouldn't raise rates.
read the whole thread to get the second tweet, but the upshot is that the data is showing that wage growth is slowing, which is a counter-indicator to the idea of a wage-price spiral.
But you know, let's pretend that the Fed is being honest.
#jobsday wage growth slows sharply. The annualized rate comparing the last three months (March-May) with the prior three (Dec-Feb) was just 4.3 percent, down from 5.2 percent YOY rate.
I think the gas tax is a gimmick to make Biden look like he's taking inflation seriously, but is unlikely to do much about inflation. Hopefully doesn't actually drive up prices (thanks Cramer for laying out how that is a possibility).
Of course, earlier in the thread inflation hawks like Smedley seemed to be arguing that what Biden needed to be doing was to show he was taking inflation seriously, and that he should have been demonstrating this earlier, so maybe this counts?
Well I'm not really the target demographic for performative politics and can't always judge how effective they are. More effective than I expect sometimes. Maybe if a gas tax holiday manages to make people believe Biden is taking inflation seriously it's a win?
I wouldn't consider myself an inflation hawk - an inflation realist, maybe. I have taken issue with the inflation denial, or perhaps more accurately the inflation nihilism, that's been pretty pervasive on this board. No government spending is ever too much government spending, and anyone who brings up inflation concerns (like Manchin) deserves scorn and derision. And then once high and sustained inflation is clearly a thing, well there was nothing the President could have done about it then or now, hence neutral ratings on Biden's handling of inflation. And even the Fed , well maybe they shouldn't raise rates, yeah probably they shouldn't raise rates.
Who is denying inflation? Nobody here as far as I can remember.
Arguing about the causes of inflation is not denying it. Arguing that the media is over-blowing it is not denying it.
And Manchin is too stupid to ever take him seriously. I guess you don't notice that.
I think the gas tax is a gimmick to make Biden look like he's taking inflation seriously, but is unlikely to do much about inflation. Hopefully doesn't actually drive up prices (thanks Cramer for laying out how that is a possibility).
Of course, earlier in the thread inflation hawks like Smedley seemed to be arguing that what Biden needed to be doing was to show he was taking inflation seriously, and that he should have been demonstrating this earlier, so maybe this counts?
Well I'm not really the target demographic for performative politics and can't always judge how effective they are. More effective than I expect sometimes. Maybe if a gas tax holiday manages to make people believe Biden is taking inflation seriously it's a win?
I wouldn't consider myself an inflation hawk - an inflation realist, maybe. I have taken issue with the inflation denial, or perhaps more accurately the inflation nihilism, that's been pretty pervasive on this board. No government spending is ever too much government spending, and anyone who brings up inflation concerns (like Manchin) deserves scorn and derision. And then once high and sustained inflation is clearly a thing, well there was nothing the President could have done about it then or now, hence neutral ratings on Biden's handling of inflation. And even the Fed , well maybe they shouldn't raise rates, yeah probably they shouldn't raise rates.
what you're arguing against hasn't been pervasive. and of course you're not even accurately summarizing it, so that you can ridicule it.
What a number of us have been saying are things like this:
I thought it was interesting that a credible report said Yellen wanted to cut the March 2021 stimulus package due to inflation concerns. She has denied the report, but I suspect the report is true and the denial is just her being the good soldier and team player.
Of course there's no presidential magic wand on inflation, but at the same time, there are things and more things a president can do to fight inflation. And when the president is all about stimulus and waves off inflationary concerns for a very long time, and then inflation soars, the president was wrong on inflation.
So ultimately one can approve of how Biden is handling inflation for whatever reason(s), or abstain from answering due to the semantics of the question (kinda lame if you ask me, but w/e). But there are also valid reasons to disapprove of how Biden has handled inflation. If that disapproval is "irrational" or "uninformed", then I don't want to be rational or informed.
it's not completely thinking the issue through to just "disapprove" of how Biden (and Congress) "handled" inflation. As PVW and jimmurphy have also pointed out, we can't have it all when it comes to the economy. Less stimulus would have likely meant more unemployment, more poverty, more evictions (assuming that less stimulus also meant allowing evictions during the pandemic), and slower recovery. It probably would have also meant a lot more COVID deaths because more people would have continued to go to a workplace if they weren't receiving pandemic relief.
"Disapproving" of Biden's "handling" of inflation also means either ignoring the likely other effects of not having COVID relief funding, or not understanding how those factors work together.
I don't like high inflation any more than anyone else. But if there was less money spent on COVID relief, I really worry about what our country would look like today from an economic and human suffering standpoint. But maybe you are well-informed and rational, but you think somehow the economy would have been fine without COVID relief, and job growth would have been strong anyway. Or maybe you just don't care if it hadn't been.
It's not irrational to think the COVID relief spending was a good idea even if it caused inflation, because the alternative probably would have been a whole lot worse, entailing an awful lot of immediate suffering -- unemployment, hunger, homelessness.
And to this point, I haven't seen any explanations for what Biden could have done a year ago to ward off inflation short of cutting off COVID relief, which wasn't much of a realistic choice when the pandemic was still ongoing, and a majority of Americans hadn't yet been vaccinated.
I think the gas tax is a gimmick to make Biden look like he's taking inflation seriously, but is unlikely to do much about inflation. Hopefully doesn't actually drive up prices (thanks Cramer for laying out how that is a possibility).
Of course, earlier in the thread inflation hawks like Smedley seemed to be arguing that what Biden needed to be doing was to show he was taking inflation seriously, and that he should have been demonstrating this earlier, so maybe this counts?
Well I'm not really the target demographic for performative politics and can't always judge how effective they are. More effective than I expect sometimes. Maybe if a gas tax holiday manages to make people believe Biden is taking inflation seriously it's a win?
I wouldn't consider myself an inflation hawk - an inflation realist, maybe. I have taken issue with the inflation denial, or perhaps more accurately the inflation nihilism, that's been pretty pervasive on this board. No government spending is ever too much government spending, and anyone who brings up inflation concerns (like Manchin) deserves scorn and derision. And then once high and sustained inflation is clearly a thing, well there was nothing the President could have done about it then or now, hence neutral ratings on Biden's handling of inflation. And even the Fed , well maybe they shouldn't raise rates, yeah probably they shouldn't raise rates.
what you're arguing against hasn't been pervasive. and of course you're not even accurately summarizing it, so that you can ridicule it.
What a number of us have been saying are things like this:
I thought it was interesting that a credible report said Yellen wanted to cut the March 2021 stimulus package due to inflation concerns. She has denied the report, but I suspect the report is true and the denial is just her being the good soldier and team player.
Of course there's no presidential magic wand on inflation, but at the same time, there are things and more things a president can do to fight inflation. And when the president is all about stimulus and waves off inflationary concerns for a very long time, and then inflation soars, the president was wrong on inflation.
So ultimately one can approve of how Biden is handling inflation for whatever reason(s), or abstain from answering due to the semantics of the question (kinda lame if you ask me, but w/e). But there are also valid reasons to disapprove of how Biden has handled inflation. If that disapproval is "irrational" or "uninformed", then I don't want to be rational or informed.
it's not completely thinking the issue through to just "disapprove" of how Biden (and Congress) "handled" inflation. As PVW and jimmurphy have also pointed out, we can't have it all when it comes to the economy. Less stimulus would have likely meant more unemployment, more poverty, more evictions (assuming that less stimulus also meant allowing evictions during the pandemic), and slower recovery. It probably would have also meant a lot more COVID deaths because more people would have continued to go to a workplace if they weren't receiving pandemic relief.
"Disapproving" of Biden's "handling" of inflation also means either ignoring the likely other effects of not having COVID relief funding, or not understanding how those factors work together.
I don't like high inflation any more than anyone else. But if there was less money spent on COVID relief, I really worry about what our country would look like today from an economic and human suffering standpoint. But maybe you are well-informed and rational, but you think somehow the economy would have been fine without COVID relief, and job growth would have been strong anyway. Or maybe you just don't care if it hadn't been.
I thought it was interesting that a credible report said Yellen wanted to cut the March 2021 stimulus package due to inflation concerns. She has denied the report, but I suspect the report is true and the denial is just her being the good soldier and team player.
Of course there's no presidential magic wand on inflation, but at the same time, there are things and more things a president can do to fight inflation. And when the president is all about stimulus and waves off inflationary concerns for a very long time, and then inflation soars, the president was wrong on inflation.
So ultimately one can approve of how Biden is handling inflation for whatever reason(s), or abstain from answering due to the semantics of the question (kinda lame if you ask me, but w/e). But there are also valid reasons to disapprove of how Biden has handled inflation. If that disapproval is "irrational" or "uninformed", then I don't want to be rational or informed.
it's not completely thinking the issue through to just "disapprove" of how Biden (and Congress) "handled" inflation. As PVW and jimmurphy have also pointed out, we can't have it all when it comes to the economy. Less stimulus would have likely meant more unemployment, more poverty, more evictions (assuming that less stimulus also meant allowing evictions during the pandemic), and slower recovery. It probably would have also meant a lot more COVID deaths because more people would have continued to go to a workplace if they weren't receiving pandemic relief.
"Disapproving" of Biden's "handling" of inflation also means either ignoring the likely other effects of not having COVID relief funding, or not understanding how those factors work together.
I don't like high inflation any more than anyone else. But if there was less money spent on COVID relief, I really worry about what our country would look like today from an economic and human suffering standpoint. But maybe you are well-informed and rational, but you think somehow the economy would have been fine without COVID relief, and job growth would have been strong anyway. Or maybe you just don't care if it hadn't been.
It's not irrational to think the COVID relief spending was a good idea even if it caused inflation, because the alternative probably would have been a whole lot worse, entailing an awful lot of immediate suffering -- unemployment, hunger, homelessness.
And to this point, I haven't seen any explanations for what Biden could have done a year ago to ward off inflation short of cutting off COVID relief, which wasn't much of a realistic choice when the pandemic was still ongoing, and a majority of Americans hadn't yet been vaccinated.
Anyone who thinks that the COVID relief was a major component to our inflation still has to explain why similar rates of inflation are seen around the world.
read the whole thread to get the second tweet, but the upshot is that the data is showing that wage growth is slowing, which is a counter-indicator to the idea of a wage-price spiral.
But you know, let's pretend that the Fed is being honest.
Right, so the Fed should "be honest" and not move on inflation that has ramped up over the past eight months to a 40-year high. Instead they should sit tight because your number shows slowing wage growth, which of course means inflation will come down to 2% in the very hear future.
There are a million and one economic data points out there, you can always cherry-pick one to fit your narrative.
read the whole thread to get the second tweet, but the upshot is that the data is showing that wage growth is slowing, which is a counter-indicator to the idea of a wage-price spiral.
But you know, let's pretend that the Fed is being honest.
Right, so the Fed should "be honest" and not move on inflation has ramped up over the past eight months to a 40-year high. Instead they should sit tight because your number shows slowing wage growth, which of course means inflation will come down to 2% in the very hear future.
There are a million and one economic data points out there, you can always cherry-pick one to fit your narrative.
Oy.
Fed is saying we need to avoid a wage-price spiral.
Data shows the opposite of a wage-price spiral.
Maybe you have alternative data. Ha Ha. But I would guess you don't and you just have a thing for the Fed, who of course is never wrong.
Anyone who thinks that the COVID relief was a major component to our inflation still has to explain why similar rates of inflation are seen around the world.
What countries that have unusually high inflation and didn’t throw money into pandemic relief are you thinking of?
Anyone who thinks that the COVID relief was a major component to our inflation still has to explain why similar rates of inflation are seen around the world.
What countries that have unusually high inflation and didn’t throw money into pandemic relief are you thinking of?
Was it some kind of coordinated effort, because inflation started rising about the same time all over the world.
Anyone who thinks that the COVID relief was a major component to our inflation still has to explain why similar rates of inflation are seen around the world.
What countries that have unusually high inflation and didn’t throw money into pandemic relief are you thinking of?
I don't know much about the Tax Foundation, but they collected that type of info.
Compared to Europe, the U.S. was more likely to offer direct cash assistance to households, whereas European governments were more likely to rely on loan guarantees and support to businesses. Germany, for example, relied heavily on subsidies to businesses to maintain their payrolls and not lay off workers. While the U.S. experimented with a similar scheme through the Paycheck Protection Program, it also substantially expanded unemployment benefits to individuals, which continued until September 2021.
and as always, it's really easy to criticize in hindsight. Anyone who didn't predict the Omicron wave and the continuing effects on supply chain, and didn't predict that Russia would invade Ukraine and drive up energy prices can't really blame the president or Congress for not anticipating those events.
Most people expected supply chain issues to be worked out be early 2022, and the reality is that it's still a problem.
You tell'em Liz!