Economy

[OlDawg]

36 minutes ago, UT alum said:

Infusing cash before having an idea of how tariffs affect demand could be risky. Lowering rates to help finance an import tax is injecting money that will have zero productivity value. Again, don’t see how taxing U S citizens to further international political agendas will end well. India because we want to two them where to buy oil, Brazil because Trump doesn’t like the way they’re treating Bolsonaro. That is not an economic plan.

Yes. Could be risky. But, I think not in this case. We’ve had a stronger than normal 2nd quarter, and 3rd quarters are typically solid. I don’t think 50 basis points is too drastic with the adjusted employment numbers where they’re sitting. While it wouldn’t help the consumer right away, it would help business cash flow at a time when it’s needed. The other big item is the help it would provide the housing market. If the housing market could get back on its feet even a little, the economy would be in solid shape. Getting that benchmark down would help a lot. Still need more supply. But, it would be a big help for people financing, builders building, and even those remodeling to sell.

Definitely wouldn’t do what Trump’s suggesting with a 300 basis point whammy. That’s just nuts. I think 50 is about right for a slow walk to see where it goes. Like I say, if we can get the benchmark to within 100 of inflation—and have stability—I could give a little on the Fed’s target. 2%? 2.5%? 2.75%?…all pretty relative and arbitrary.

We’re in a new situation with the tariff money. Needs to go to pay down debt. We don’t need refunds. I know folks would like refunds. But, the long term issue is debt. There are enough tax breaks in the BBB that most will notice a pretty decent increase in take home pay. (Hopefully, they’re smart enough to put some away in a rainy day fund.)

[UT alum]

22 hours ago, OlDawg said:

Yes. Could be risky. But, I think not in this case. We’ve had a stronger than normal 2nd quarter, and 3rd quarters are typically solid. I don’t think 50 basis points is too drastic with the adjusted employment numbers where they’re sitting. While it wouldn’t help the consumer right away, it would help business cash flow at a time when it’s needed. The other big item is the help it would provide the housing market. If the housing market could get back on its feet even a little, the economy would be in solid shape. Getting that benchmark down would help a lot. Still need more supply. But, it would be a big help for people financing, builders building, and even those remodeling to sell.

Definitely wouldn’t do what Trump’s suggesting with a 300 basis point whammy. That’s just nuts. I think 50 is about right for a slow walk to see where it goes. Like I say, if we can get the benchmark to within 100 of inflation—and have stability—I could give a little on the Fed’s target. 2%? 2.5%? 2.75%?…all pretty relative and arbitrary.

We’re in a new situation with the tariff money. Needs to go to pay down debt. We don’t need refunds. I know folks would like refunds. But, the long term issue is debt. There are enough tax breaks in the BBB that most will notice a pretty decent increase in take home pay. (Hopefully, they’re smart enough to put some away in a rainy day fund.)

Yeah, my guess is that the import tax monies will go to debt service just like lottery money went to fund public education in Texas. Not.

[thetragichippy]

22 hours ago, OlDawg said:

The other big item is the help it would provide the housing market. If the housing market could get back on its feet even a little, the economy would be in solid shape. Getting that benchmark down would help a lot. Still need more supply. But, it would be a big help for people financing, builders building, and even those remodeling to sell.

I sold my house right before the rates went up to the current level and moved into my childhood home.  The plan was to build, but now thinking I may buy and existing home that needs to be remolded.  I'm in no hurry because my current home is paid for.  The problem is not a lot of houses on the market because people don't want to sell their homes and give up that 3% interest rate to jump on a 7% rate on a larger home. 

When the rates get to 5%, the market will be flooded with houses folks been wanting to sell for 5 years but was holding off for rate. That should force down home prices too.

[UT alum]

23 hours ago, OlDawg said:

Yes. Could be risky. But, I think not in this case. We’ve had a stronger than normal 2nd quarter, and 3rd quarters are typically solid. I don’t think 50 basis points is too drastic with the adjusted employment numbers where they’re sitting. While it wouldn’t help the consumer right away, it would help business cash flow at a time when it’s needed. The other big item is the help it would provide the housing market. If the housing market could get back on its feet even a little, the economy would be in solid shape. Getting that benchmark down would help a lot. Still need more supply. But, it would be a big help for people financing, builders building, and even those remodeling to sell.

Definitely wouldn’t do what Trump’s suggesting with a 300 basis point whammy. That’s just nuts. I think 50 is about right for a slow walk to see where it goes. Like I say, if we can get the benchmark to within 100 of inflation—and have stability—I could give a little on the Fed’s target. 2%? 2.5%? 2.75%?…all pretty relative and arbitrary.

We’re in a new situation with the tariff money. Needs to go to pay down debt. We don’t need refunds. I know folks would like refunds. But, the long term issue is debt. There are enough tax breaks in the BBB that most will notice a pretty decent increase in take home pay. (Hopefully, they’re smart enough to put some away in a rainy day fund.)

I am interested in your thoughts on Trump using import taxes for non-economic reasons

[OlDawg]

8 minutes ago, UT alum said:

I am interested in your thoughts on Trump using import taxes for non-economic reasons

Specifically what? Right now, they’re going into the general fund. You need to give me more specifics.

[Reagan]

9 minutes ago, OlDawg said:

Specifically what? Right now, they’re going into the general fund.

I think he's talking about punishing countries with tariffs for going against America's interest.  

@UT alum

[OlDawg]

1 hour ago, Reagan said:

I think he's talking about punishing countries with tariffs for going against America's interest.  

@UT alum

Gotcha. I was thinking along a different track.

Generally speaking, I’m not a tariff fan either way. But, in the economic/political scheme of things (as far as exerting influence beneficial to U.S. policy) tariffs are actually an easier and more adaptable measure than sanctions. They can exact a price on the issuer (U.S. in this case), but, so can sanctions & sanctions are much harder to enact, enforce and/or modify.

Tariffs are a relatively straight forward economic and political tool with flexibility.

I would prefer tariffs not be used for knee-jerk personal issues. However, some—like Brazil at 50%—supposedly started as a personal issue, and now is helping our big tech firms. Will it hurt U.S. coffee drinkers some? Probably. But, not THAT much. Our cup of Joe may go up a nickel or two. But, Big Tech—a major driver of our economy as a whole—will benefit greatly.

So, you have to view them all through an economic lens, and that lens is different depending on where you’re looking through it.

Economic measures of any means are preferable to military conflict if influence is needed to affect a political goal for the good of the nation. I’m not a ‘war/conflict is good for the economy’ person. I’ve been involved in my past. Avoid it at almost any cost.

Hopefully, that answers your question better.

@UT alum

[OlDawg]

2 hours ago, thetragichippy said:

I sold my house right before the rates went up to the current level and moved into my childhood home.  The plan was to build, but now thinking I may buy and existing home that needs to be remolded.  I'm in no hurry because my current home is paid for.  The problem is not a lot of houses on the market because people don't want to sell their homes and give up that 3% interest rate to jump on a 7% rate on a larger home. 

When the rates get to 5%, the market will be flooded with houses folks been wanting to sell for 5 years but was holding off for rate. That should force down home prices too.

Almost 40% of U.S. homeowners own their home outright as of 2024. We’re one of them. I’ve joked it will take a nuclear bomb to get me to move. Hard to go back to having a payment of any size once you’re used to having none. Ours has been paid off for almost 20 years. I’d have no clue what to do with a house note.

I’ve read that many are selling (when they do) and taking the cash to buy another smaller home. No new mortgage.

[baddog]

31 minutes ago, OlDawg said:

I’ve read that many are selling (when they do) and taking the cash to buy another smaller home. No new mortgage.

That would be me. 

[Reagan]

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[baddog]

What kind of person makes fun of Trump for firing someone who doesn’t do their job? Oh yeah…..the haters.

[OlDawg]

I was actually expecting worse job numbers with the ex-government workers actively on the job-seeking roles again. We're still at almost record employment even with the layoffs in multiple sectors.

People have to understand the economy of today is like a bubble. It's flexible now. Our economy is more technology driven than physical assets. It can easily adapt to changing conditions because it's more knowledge based. Coding, content, talent and IP rights contribute a lot more than physical/manufactured items. That's why the drivers of the markets are mainly Tech firms. They have high upfront costs, with exponential returns, and basically no marginal costs after the initial investment.

Code is written, code is employed, costs are complete, and revenue is then scalable. Similar with any of the high tech ventures. Even engineering processes are licensed out.

Yes. We still have manufacturing. But, not for low margin/low tech goods.

Trump is attempting to open up the technology sectors in other markets. He can afford to do this without crashing our economy because our economy isn't driven by physical items anymore. Our main export is actually technology, services, and licensing.

His other arrow in the quiver is deregulation. Not talked about much. But, a critical component of costs and the economy. The EPA rolling back the 2009 Endangerment policy from the Obama Administration that justified over $1 Trillion in regulatory costs is going to save individual taxpayers thousands. This was the policy that basically allowed the government to regulate almost everything we buy and use. Choice will return, and the cost of goods for everything delivered by truck will decrease substantially. Estimates are that the American consumers should save around $54 Billion annually just from this regulatory change alone.

Press/News Release from EPA:

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[OlDawg]

2 hours ago, Reagan said:

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The only ‘national’ news program I watch is Fox Business. They are the most accurate business coverage on the airwaves. Yes, you have to listen to some politics. But, it’s not near the amount or respective bias of the other straight news/opinion outlets. You can tune most of it out & focus primarily on the economics—which is what I do.
 

He’s been a fairly regular guest. Once or twice a month I’d say. Pretty much a supply side conservative. Friedman/Laffer type. Not a big tariff guy. A lower tax & lower regulation guy.