Inflation vs Interest rates

Nobody knows anything. They’re throwing shite at the wall and hoping it sticks.

Maybe. Look up the definition of “stagflation”, and learn how to profit from it

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Maybe. Look up the definition of “stagflation”, and learn how to profit from it

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Why don’t you tell us how?

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Inflation is still not under control, but now the markets anticipate a full point cut over two meetings because of the latest jobs report?

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Markets also expected 5 cuts this year. Markets also didn't expect JPow to stick with rate hikes.

What the market expects regarding rates isn't always reality. We're far more likely to get a .25 cut in September than anything else. Speculating beyond that is fairly useless as future cuts are going to depend heavily on future data.

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Would that action let inflation run amuck again?

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Yes, if demand isn't squashed

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Would that action let inflation run amuck again?

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Interest rates are relative. There are times when 3% is restrictive to the economy and there are times when 3% rates would have poured gasoline on the economy.

By any traditional measures, a 5.25% Fed funds rate with sub 4% inflation is restrictive. (Notwithstanding the argument that higher rates themselves in this economy are actually inflationary)

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and GDP steadily declining

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GDP can only be considered declining if we're looking at the anomalous high from COVID as the starting point. Sure you can say we've declined from that point, but that's a bit like saying someone's income is lower the year after they won the Powerball than it was during the year they won the Powerball. Looking back to the GFC as a wider scope, GDP is actually a little higher.

The real issue with GDP is that it's been grown since 2021/2022 on the back of quickly increasing consumer debt and that debt is now starting to go delinquent. LINK Debt creation has been the engine of GDP growth since COVID, so as the ability to constant create more consumer debt decreases, so too will GDP. This will likely have a long-term impact as consumers who walk away from their debt (like mortgage holders did with their mortgages during the GFC) will have to move to more of a cash-use situation until they can rebuild their credit enough to get cards once again (meaning marginal spending will take a long time to recover).

GDP can only be considered declining if we're looking at the anomalous high from COVID as the starting point. Sure you can say we've declined from that point, but that's a bit like saying someone's income is lower the year after they won the Powerball than it was during the year they won the Powerball. Looking back to the GFC as a wider scope, GDP is actually a little higher.

The real issue with GDP is that it's been grown since 2021/2022 on the back of quickly increasing consumer debt and that debt is now starting to go delinquent. LINK Debt creation has been the engine of GDP growth since COVID, so as the ability to constant create more consumer debt decreases, so too will GDP. This will likely have a long-term impact as consumers who walk away from their debt (like mortgage holders did with their mortgages during the GFC) will have to move to more of a cash-use situation until they can rebuild their credit enough to get cards once again (meaning marginal spending will take a long time to recover).
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Spot on.

Do you know if aggregate reporting for debt includes balances that are paid down to zero? This was asked in another thread, but don't think it was answered. I know delinquencies is another data point, but that leaves this question unanswered. I wonder if data is skewed by the trend by many to put everything on cards for cash back, then pay the full balance monthly.

Well I can tell you that for at least in Houston, demand is no where near squashed.

The only thing I have seen where supply has caught up is vehicles. Housing and discretional spending are still hot. Restaurants, bars, shopping, all still very busy.