Economic News

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🎁—> https://www.wsj.com/personal-financ...e?st=4vFB6X&reflink=desktopwebshare_permalink

“… The Mortgage Bankers Association recently estimated that mortgage rates would actually increase to 6.5% by the end of the year. The association forecast that mortgage rates would be only slightly lower than that by the end of 2026.

… For the average credit-card balance of $6,473 with a 22% rate, for instance, a quarter-point rate cut would lower the monthly payment by around a buck, according to TransUnion, a credit-reporting company….”
 


The US economy grew at a 3.8% rate in the second quarter, significantly stronger than previously reported​


“… Falling imports and US consumers who kept on spending helped fuel the US economy’s comeback in the second quarter, following a contraction in the beginning of the year when importers stocked up on inventories to get ahead of President Donald Trump’s tariffs, which subtracted from GDP.…”


 

Starbucks to Cut Hundreds More Corporate Jobs, Close Stores​

Coffee chain to lay off around 900 employees in turnaround bid​


🎁 —> https://www.wsj.com/business/hospit...3?st=aBhY2R&reflink=desktopwebshare_permalink

“… The Seattle-based coffee company said Thursday that most of the affected positions are located in North America. Starbucks said it is also eliminating many open positions. The company plans to notify affected workers Friday and asked corporate employees to work from home Thursday and Friday.…”
 
Hey @Ramrouser , @gtyellowjacket et al. watch how this is done.

1. Upon seeing that 0.5% change on that THIRD estimate (i.e. the second revision of the initial estimate), I was immediately skeptical That's a very large revision from 2nd to 3rd. Larger than I recall seeing except during pandemic and post-pandemic.

2. Trump has been firing people who give numbers he doesn't like. So this number is faked, right?

3. Let's consult the historical record to see just how big an outlier this is. I don't want to rely only on my memory for this. Let's check facts before posting.

4. Oh, it's a large revision but not remotely unprecedented. Total revisions from first to third estimate are typically about 0.6-0.7% by my eyeball (the mean is higher but the median is less). So here we have about 0.8%. A little bit off, but there are plenty of examples of larger total swings.

It's considerably less common for the total swing to be more than 0.8% and for the second revision to be larger than the first. It happened during the 2013-2015 years but government shutdowns and debt limit standoffs messed up the BEA's normal schedule and those numbers should be tossed out for these purposes. Still, in multiple quarters in the mid 80s, the second revisions were larger than the first and the total revisions were at least 0.8%. Same in 2003Q1 and 2004Q1 and Q2. 2011 Q2 also.

5. So, should we take this revision with a grain of salt? Probably, given that Trump is firing people. But I was wrong that the revision was a huge outlier or very rare.

6. And this is why I am rarely wrong when I post on the board. My intuitions are usually right, I think (though there's no way to measure that), but more importantly, I check them before posting.
 
This isn't exactly revelatory, but significant parts of economy will likely continue to do "well" as long as the equity markets do well. If spending is being propped up by the top 20%, and the top 20% have significant investments, and investments continue to do well, that class will likely continue to spend money. Spending 20K on a bathroom reno is a lot easier pill to swallow if your taxable investment account grew $30K over the last two months. A sustained bear market will likely cause that top 20% to pull back.
 
Willy said:
This isn't exactly revelatory, but significant parts of economy will likely continue to do "well" as long as the equity markets do well. If spending is being propped up by the top 20%, and the top 20% have significant investments, and investments continue to do well, that class will likely continue to spend money. Spending 20K on a bathroom reno is a lot easier pill to swallow if your taxable investment account grew $30K over the last two months. A sustained bear market will likely cause that top 20% to pull back.
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Agree with your statement, but to nit pick, you might reno a half bath for $20k.

My daughter got 4 quotes just to replace her tub, the lowest one was $14k. My basement finish is costing me over $100k.

Everything is expensive.
 
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