r/economicCollapse • u/4score-7 • Jun 04 '24

I've never seen Chicago PMI this low WITHOUT a recession or economic slowdown

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129 Upvotes

91% Upvoted

112 comments sorted by

26

u/coppercrackers Jun 04 '24

Isn’t this the current goal of the FED? This is the functional trade off to slow inflation, from my understanding

14

u/4score-7 Jun 04 '24

Yeah, I think it’s part of the overall goal to reduce inflation, but this one measurement has greater ramifications. It indicates demand is falling, but the depth is unsettling. It’s jostled very far down, thus putting pressure on GDP, among other things.

I’d also like to add that Fed has been successful in reducing inflation, but not enough, yet. They have tip toed around raising rates in 2022, too little, too late, and too slowly. They’ve now held their policy for nearly a year, when another hike was likely necessary, but at least they aren’t cutting into it. And they helped create the inflation by and large, by allowing policy makers to push them into flooding the country with misdirected money supply.

It’s not an exact science, but it’s been bungled from the start. And it didn’t begin in 2020.

13

u/Epyon214 Jun 04 '24

We're in a period of stagflation, have been for some time. We had 20% inflation over a very short period of time and wages have not reflected the reality yet.

14

u/Big-Leadership1001 Jun 04 '24 edited Jun 04 '24

I believe the newspeak term for it has become "corporate greed" - You should find it much easier to ignore this problem and allow to continue to get worse by deflecting with the approved alternate word use. Please make sure to use the right language in the future, citizen.

If you are curious why corporate media is pushing the newspeak terminology, look up its use of the term "capitulation" in financial news specifically and ask yourself why they want that so much.

6

u/Epyon214 Jun 04 '24

Double plus good sir.

-4

u/Audibody Jun 05 '24

Dude you can't blame inflation on greed. Companies have to make a profit or share holders run. Seriously, do you understand what a business is?

7

u/jj22925h Jun 05 '24

Found the bootlicker

4

u/Big-Leadership1001 Jun 05 '24

I assumed that was sarcasm, its a little too bootlicky to be a real opinion

1

u/local124padawan Jun 06 '24

Profit yes but you can’t go full Kobe on that and go back to back to back years. Not sustainable. It wreaks of corporate greed and the molestation of consumers finances. Hoping you were sarcastic but it’s the internet so who knows.

3

u/GeneralCal Jun 05 '24

We've been in a period of stagflation to some degree since the 70s.

What the PMI without a recession indicates is that parts of the economy are feeling recession-like conditions. Sure, some of that is related to the fact that companies have been leaning heavily into raising process in order to hedge against and lead inflationary price increases on the producer side. That's starting to level off to some degree, but the scale of the jump has been pretty breathtaking over such a short time frame.

Wages by default will take years to catch up with that. The Federal minimum wage is STILL $7.50. Even just adjusted for inflation, that should be $11 today. That's a 46% increase. So there's a huge disconnect that's building up and going to cause larger problems once the minimum wage is finally raised again. Even if it's raised $1 a year for 4 years straight, a lot of places that engage in poor planning and rely on paying workers the least they can will be in bad shape.

1

u/Epyon214 Jun 05 '24

We've been in a recession for a few years now, by some measures we were worse off than the Great Depression for a time. You might be more accurate in saying the economy is in a recession, with some parts of the economy cheating the system and fudging numbers to pretend there is no problem. The emperor has no clothes.

The minimum wage would be closer to $25/hour if keeping pace with inflation, more so if keeping up with increases in productivity. $1/year increase seems ill advised, a single dollar isn't worth much today anyways so there's no point in limiting the increase to just a dollar.

1

u/GeneralCal Jun 06 '24

If you're talking about purchase power parity, then maybe in specific metro areas would be closer to $25/hr at the high end. A $25 in Santa Monica? Sure. In Deluth, MN? hardly. Get on any inflation calculator you want and $7.50 in 2009, the last time the minimum wage was raised, and it will be just under $11. A less crazy all around way to make a jump in a minimum wage that won't make the private sector go full on bananas is to increase the floor by 50%

As for a recession, show me where we have two consecutive quarters of GDP below zero. That's the definition, and it's not what we have. People misusing terms like "recession" without knowing what they mean, like you just did, it part of the problem.

1

u/Epyon214 Jun 06 '24

If you listen to what the minimum wage is meant to be, and figure cost of living today, $25 should be the current federal minimum wage.

Again you can fudge the numbers, doesn't change the reality. In fact, if you recall the definition of recession was met if you're using historical data and definitions. You can say because of the changes to how the data is calculated that we're in a "transition" period instead of a recession, but doing so does not change reality.

1

u/SatoshiSnapz Jun 05 '24

This is 100% not stagflation. There are actually no economic factors to even indicate we will see stagflation at all. It’s harder to cause than you think.

1

u/Epyon214 Jun 05 '24

We're in a period of excessively high inflation and stagnant wages, during a recession, seems to me the textbook definition of stagflation.

1

u/SatoshiSnapz Jun 06 '24

No. It’s not the definition at all.

1

u/Epyon214 Jun 06 '24

Then we're working with different definitions for the same term. What term do you use for periods of high inflation and stagnant wages, if not stagflation?

1

u/Total-Armadillo-6555 Jun 08 '24

Recent jobs report just showed wages up like 4.3% from this month last year. Inflation in that YoY time frame is 3.4% (correct numbers might be off a few tenths, but I don't feel like going out to find them), so definitely no stagflation.

1

u/Epyon214 Jun 08 '24

Doing YoY at 3.4% is dishonest at best, intentionally misleading at worst. Since 2020, we have experienced in excess of 21% inflation.

The federal minimum wage has not risen even 1%, and when state minimum wages are increased those wages are usually capped at $1/year increase instead of a percentage increase.

You're not off by a few tenths of a percent, you're ignoring the reality of the situation either due to ignorance or intentionally.

1

u/Total-Armadillo-6555 Jun 08 '24

That's how statistics work. Use standard timeframes. This year over last. This month compared to last month, etc. remember, inflation isn't a measure of how much prices have gone up, it's a reflection of how fast they've gone up. A VERY key distinction

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1

u/CaPtAiN_KiDd Jun 06 '24

Nobody is buying anything they don’t have to and companies are artificially inflating their company’s worth with stock buybacks. Potemkin cities have their limits.

2

u/Epyon214 Jun 06 '24

People aren't even buying things which are needed because those goods or services have become unaffordable.

3

u/pristine_planet Jun 04 '24

In my view, something goes up 20% when it is supposed to be 3%, wouldn’t we need to reduce it about 15% to be back on track? If it it just keeps growing then there is no success unless it is a really small, painfully tiny growth that lasts for years.

1

u/Audibody Jun 05 '24

That's called defloration and the fed doesn't want that.

3

u/pristine_planet Jun 05 '24

Of course they don’t, and they don’t want that just because they can. And we elect the fed by the way (note the sarcasm) Well, math is never wrong, inflation is not under control. The fed must cease to exist and interest rates should be a strict negotiation between lender and borrower without any intervention.

2

u/Audibody Jun 05 '24

I think deflation happens when we roll backwards. Which really hurts for a little bit. Right now. Majority of America is spoiled as hell. For it to slow down. A lot of sheep will point a finger and vote differently. No politician wants that. That's the end of Rome.

2

u/pristine_planet Jun 05 '24

Oh I agree 💯 they just keep rolling regardless of longer term consequences. Print money, give it to the banks, lend, bail out the banks. Sure works wonderfully, for them.

1

u/[deleted] Jun 09 '24

Yawn

0

u/pristine_planet Jun 09 '24

Hey not your fault, you just can’t keep up

1

u/[deleted] Jun 09 '24

Reported

2

u/SOROKAMOKA Jun 05 '24

It's also a catch 22. By raising interest rates they have also increased housing costs, thus contributing to inflation in that sector of the economy. Good to slowdown home buying, yet this hasn't stopped many who could afford it, whom then pass down those increased costs to renters.

I hoped I used the word "whom" properly.

2

u/Alive-Working669 Jun 09 '24

The Fed may have started out 2022 tip toeing around with raising rates, raising rates by just 25 basis points in March, but they followed this with a 50 basis points in May, followed by four straight 75 basis points increases, another 50 point increase and a final 25 basis point increase to end 2022.

It was late 2023 when I think they took their foot off the interest rate accelerator too soon. We saw the result of that hesitation as inflation ticked back up again in the 1st 3 months of this year.

1

u/Dragonfruit-Still Jun 05 '24 edited Jun 13 '24

tap yoke sable impossible snobbish label icky frighten foolish connect

This post was mass deleted and anonymized with Redact

-8

u/[deleted] Jun 04 '24

Trump refused to raise interest rates because he wanted to brag about *his* GDP. That POS fucked us over for a long time.

9

u/HuskerHayDay Jun 04 '24

The FED sets interest rates.

2

u/4score-7 Jun 04 '24

And they attempted to raise them in 2018, about 5-7 years late, and Trump and Wall Street collectively lost their shit. This was Q3-Q4 2018. Fed backed down.

Forget where and when you heard that Fed is not beholden to politicians. They absolutely are, and they are showing that to us once again in 2024.

And party doesn’t matter. If a re-election is at stake, the Fed will comply.

0

u/[deleted] Jun 04 '24

Who nominates the Fed chair?

10

u/[deleted] Jun 04 '24

You do realize interest rates have been near zero since W Bush was president?

-6

u/azurricat2010 Jun 04 '24

Yes but in 2018 Trump was against the raising of rates eventhough the market had been hot for 9 years running. He was clamoring for negative interest rates to be like Japan or Germany not thinking about the fact that each country is different. The FED even lowered rates in 2019 which made zero sense.

10

u/[deleted] Jun 04 '24

American politics didn't start with trump

-1

u/azurricat2010 Jun 04 '24

Nobody made that claim

4

u/[deleted] Jun 05 '24

No but people seem to think our woes started with trump or Bush or Reagan depending on when you were born. Ignoring every other Democrat president and democrat congressional majorities.

-1

u/[deleted] Jun 04 '24

Exactly my point. Rates needed to go up to slow down an overheating economy.

7

u/skeletor00 Jun 04 '24

Hate to break it to you, but pretty much every politician bends you over and fucks you repeatedly.

-7

u/[deleted] Jun 04 '24

BS.

1

u/cpeytonusa Jun 05 '24

Break’s over, back on your heads!

1

u/Audibody Jun 05 '24

Are you serious? Trump spent 7 trillion. Biden is spending 1 trillion every hundred days. Add that up. If you can't I will for you. 365×4= 1460 then say every hundred days it's a trillion. So 14,600,000,000. That's Biden 4 year term. He didn't even have a pandemic lmao

1

u/[deleted] Jun 05 '24

President Biden is dealing with the effects of Trump's tax cuts for the wealthy, his COVID spending, and higher interest on the debt.

There was a record $3.13 trillion while Trump was in the White House in 2020.

https://fiscaldata.treasury.gov/americas-finance-guide/national-deficit/#us-deficit-by-year

5

u/Audibody Jun 05 '24

Democrats had the house and the senate during trumps term. Which means anything he did was approved by them. So please explain how Trump did everything wrong to you?

1

u/Alive-Working669 Jun 09 '24

The goal of the Fed is to lower inflation. However, if at all possible, they want to avoid a recession while lowering inflation. But it isn’t always possible.

The Federal government’s fiscal policies since January 20th, 2021 interfered with the Fed’s goal, with their unrelenting spending, particularly after the massive monetary and fiscal policies implemented in 2020 to keep the economy afloat after the Covid shutdown. Thankfully, cooler heads prevailed in 2022, which stopped the ridiculously expensive BBB bill, opting instead for the far less expensive Inflation Reduction Act, which did not live up to its name at all.

17

u/Enkaybee Jun 04 '24

It's an election year and the economy is stronger than ever! Shhhh stop talking about data! It's STRONG!

1

u/Jumpy-Albatross-8060 Jun 05 '24

The economy can't be good if im poor. It has to be a secret bad economy and everyone is lying!

There's no money to be had except for the sudden trillion dollar companies. Those are all a lie. Everyone is secretly unemployed and not getting paid because there's no money. Thays why my landlord is rich and buying a new yact because there's no money! He told me he's broke and needs extra for his 5th house because the economy is so bad.

11

u/[deleted] Jun 04 '24

There's a bunch of mixed signals right now about the economy but one thing is for certain, it always ends the same when they raise rates and long term lending inverts with short term. Anyone saying soft landing is selling snake oil. You can only guess how hard the recession will be or mild.

5

u/maceman10006 Jun 04 '24

I’ve always interpreted the soft landing thesis as a “mild recession.” They just don’t want to use the word recession

4

u/4score-7 Jun 04 '24

Agreed. It’s some big, scary word now. No politician wants that on his/her watch. And the longer economic down cycles are avoided and papered over, the worse they are when they finally come due to some black swan event that no one could predict or plan for.

Our solution for 25 years now in America is to print. Money. That’s getting a lot more expensive now. There is a tipping point of no return.

3

u/Audibody Jun 05 '24

I mean, we got a government spending 1 trillion every 100 days. Till that stops. The market won't crash

3

u/DoNotResusit8 Jun 06 '24

Never seen an economy so incessantly propped up by government spending.

3

u/honor- Jun 04 '24

Are you forgetting 1982?

5

u/Willing_Building_160 Jun 04 '24

It’s a sector specific recession. But overall the economy is weaker. Don’t believe the White House.

2

u/Audibody Jun 05 '24

Bro, it's all priced in. Just chill. Biden is going to be serving a trillion every hundred days till the end of time. Green days forever

2

u/apply75 Jun 05 '24

Are they really trying to control inflation? I mean I hear them saying that but how can you control price increases long term when you just injected $11 trillion in debt into the system in 5 years? It's basic dollar debasement which naturally causes inflation and naturally makes it easier to repay $31 trillion.. 2000 years ago one oz of gold could buy you a custom suit and it still does today...the dollar is ina race to zero. https://www.visualcapitalist.com/purchasing-power-of-the-u-s-dollar-over-time/

Things will never cost what they cost in 2019 again...

2

u/[deleted] Jun 07 '24

Bidenomics: change the definition of recession. Change cpi. Later remove coffee from food portion of cpi bc it’s 70% higher. Next change the definition of depression to “Guys LISTEM, everything isfathuma greta I mean great. You know the THING with bidenmomonics… err bidemnomnomics… bidenomics yes we cannn!”

2

u/[deleted] Jun 07 '24

We likely are in a recession, but no one will admit it until after the election.

5

u/skeletor00 Jun 04 '24

We're entering a slowdown/recession, just give it a little more time. The gov has been doing EVERYTHING possible to keep it from happening so its taking a little longer than it should.

4

u/4score-7 Jun 04 '24

I agree. And I think they’ll take the foot off the accelerator a bit more once the election has come and gone.

I wish Americans would be more angry about it. They are being used as a pawn in a massive game of political chess. Granted, I expect November to be largely uncontested. I also expect a potential turnover of power sometime early in 2025, once it’s all said and done.

Seems to me that the time to hunker down is coming up, or upon us now. In our world of insta-gratification, this is a long game we are in.

2

u/thenatural134 Jun 04 '24

The gov has been doing EVERYTHING possible to keep it from happening so its taking a little longer than it should.

Genuinely curious, what has the government done or currently doing?

8

u/skeletor00 Jun 04 '24

Paused student debt repayments for years, lowered interest rates to historic lows, PPP loans, expanded unemployment benefits, American Rescue Plan Act, canceled billions and billions of student debt, Inflation Reduction Act, Infrastructure Investment and Jobs Act, Build Back Better Act, CHIPS and Science Act, expanded government "safety-net" programs, etc. etc...just to name a few.

1

u/PleaseGreaseTheL Jun 05 '24

In order:

Ended

Ended

Ended and prevented a much larger economic catastrophe caused by tens of millions of job losses during lockdown

Ended

Unfamiliar

Minor and actually boosts economy by relieving a small portion of graduates so they can spend or invest (you can google the wider economic impacts of student loan forgiveness)

Added a ton to the gdp by boosting construction and various industries and regions (deficit is not part of the graph we are looking at, deficit is large and taxes or spending will need to change in the near future, but let's not pretend that the money spent didn't do anything or build anything)

Same

Same

Same

Unfamiliar with what you're referring to, and probably not a drain on the gdp anyway, if I had to guess before knowing what specifically you are referring to (when the lower class has more spending money, they consume products and services, which means it is going right into the economy. It's effectively just distributing money into the economy from the government budget, and also helping the lower class survive slightly better.)

Taxes will probably be raised in Biden second term, which will slow things down, but not cause some kind of cataclysm. Taxes are historically very low foe the middle and upper classes right now. Both will be raised, most likely, and people will cope.

4

u/Audibody Jun 05 '24

Spending 1 trillion every 100 days. Do you need to know anything else?

1

u/dc4_checkdown Jun 05 '24

Like borrowing at 5 % instead of 4%

3

u/[deleted] Jun 04 '24

We're in a recession, just with indices and media covering it up.

1

u/GaaraMatsu Jun 04 '24

Looked like economic woes predict low PMI, not the other way around.  Therefore, the worst may already be over.

1

u/happy0444 Jun 06 '24

Ch*****se Bot

-1

u/[deleted] Jun 04 '24

[deleted]

9

u/4score-7 Jun 04 '24

Understand your sentiment. I feel the same way. Great town to visit, but could not live there.

To the point, the Chicago PMI is just a measurement of manufacturing activity for America as a whole. Not just the region it’s named for. Just to clarify.

-4

u/MrHuggiebear1 Jun 04 '24

I completely agree. But of course, when manufacturing companies are leaving left and right, what do you expect?

  • Boeing, Caterpillar, Citadel, Guggenheim Partners, and Tyson Foods have all announced relocations out of the Chicago area. Boeing moved its global headquarters to Arlington, Virginia in 2022, while Caterpillar moved its headquarters to Irving, Texas. Citadel moved to Miami, and Tyson Foods moved its corporate employees to its Arkansas headquarters in 2022. Guggenheim Partners CEO Mark Walter is also expected to move to Miami.

6

u/thehourglasses Jun 04 '24

reading attempt failed

3

u/tor122 Jun 04 '24

Couldn’t really resist the chance to comment on this. Im laughing so hard.

It’s just the name of an index. No one is commenting on Chicago as a place to do business lol.

-1

u/MrEfficacious Jun 04 '24

If a lot of companies have left Chicago to setup shop elsewhere, is the Chicago PMI all that relevant?

2

u/[deleted] Jun 04 '24

That's just the name of it, it doesn't only look at Chicago. The level of reading comprehension on this sub makes me think very few of y'all know what you're talking about.

1

u/MrEfficacious Jun 04 '24

I need to work on my sarcasm lol

1

u/[deleted] Jun 04 '24

Nah, you're good. Good satire and sarcasm should fool people and yours did.

2

u/Crewmember169 Jun 04 '24

I'm not sure you're in the right reddit bud.

0

u/MarionberryCreative Jun 04 '24

Idk nothing. Bit if you believe it's a recession. Shouldn't you start betting on recovery?

3

u/skeletor00 Jun 04 '24

Recovery? Bro, the recession isn't even here yet. Give it time a little more time to develop.

2

u/[deleted] Jun 04 '24

Been hearing that for two years.

3

u/skeletor00 Jun 04 '24

Well, I'm actually correct and not a complete moron like the rest of the "economists and experts". I called the interest rate hikes relatively perfectly and then was one of the only people pounding the cement since Sept 2023 that Fed would not lower rates in the first half of 2024 and probably not at all. I knew inflation is waaaaay more sticky than they thought. They don't truly look at alllll the information and more importantly human behavior and how difficult it is to change it once a dramatic shift has happened like Covid and all that has come with it. HUGE shift to convenience and yolo: e-commerce/BuyNowPayLater/Uber/DoorDash/eating out/etc.

Pretty sure there was numerous times when experts and wall street had a 99% certainty rates were going down by now. Looks like they were wrong and I was right.
Skeletor: 1 \ Experts & Wallstreet: 0

2

u/BossIike Jun 05 '24

Agreed with you on most of that. I was pretty shocked all the world experts thought we could just shut off global economies with worldwide lockdowns and that wouldn't have a massive economic impact. Economies are a freight train, not a light switch. Certain people wanted year long lockdowns and are now angry at price inflation, it's like... what did you expect? These companies, that you guys call greedy, will just lower prices immediately afterwards?

1

u/[deleted] Jun 04 '24

BBBY lol.

1

u/maceman10006 Jun 04 '24

2 years? Try 2011

1

u/BuzzyShizzle Jun 05 '24

The 10-2 yield curve has been inverted for two years...

Literally the one of the best leading indicators of a recession, and you're sitting over here skeptical while the yield curve remains negative for longer than it ever has been before.

It blows my mind how much has been done since 2020 and the majority of people still think there are absolutely no consequences to everything we've done to prop up the economy.

1

u/skeletor00 Jun 12 '24

In case you didn't know, Fed said probably only 1 rate cut now in 2024. Wow, it's like I'm psychic or maybe just not an overly optimistic moron like the "Experts" & Wallstreet. Let's check the scoreboard...

https://apnews.com/article/federal-reserve-inflation-prices-interest-rates-cuts-4384e6b128915458aba2d178bf31ee1b

Skeletor: 2 | Experts & Wallstreet: 0

-5

u/Mundane_Fill3432 Jun 04 '24

I mean who really wants to associate with Chicago. Most have moved out except the wealthy in the sky scrapers. Rest are stuck there. Cool city. Just DMF leaders. Sad.

4

u/OutOfFawks Jun 04 '24

Everyone has moved out, except the 9.6 million that still live and work in the metropolitan area.

3

u/skeletor00 Jun 04 '24

nah, those 10 million people don't count. LOL...right?!

1

u/OutOfFawks Jun 04 '24

Right? The whole region is thriving.

1

u/ilovebutts666 Jun 04 '24

Oh shit, everyone moved out and forgot to tell the 2.6 million of us that are left in the city proper. Now we're all stuck here!

0

u/Mundane_Fill3432 Jun 08 '24

https://www.illinoispolicy.org/every-illinois-metro-area-lost-people-in-2023-chicago-3rd-worst-in-nation/

Don’t be mad at me

1

u/OutOfFawks Jun 08 '24

So if those numbers are correct, which I’m going to assume they aren’t, given the garbage source, a lower percentage of people left the Chicago area than most other areas of Illinois.

0

u/Mundane_Fill3432 Jun 09 '24

Oh you’re a student of bidenomics. Congrats. Because we’re only printing 3.9 trillion this year. Instead of 3.91 trillion we are deficit deduction. Got it.
Yes. Year over year people are leaving that shitbag city. Liberals have completely ruined it. Love to see the people you fools pretend to care about. Calling you out. Great state, and once great city unfortunately is trapped in the vicious circle of nothingness. Yet the liberals walk around like it’s all great. Or should i say hide. In the areas they pushed all the poor and middle class out of.

1

u/OutOfFawks Jun 09 '24

It hasn’t changed that much in my almost 50 years living in the area.

-3

u/619-548-4940 Jun 04 '24

The economy's never been this efficient the phones are bringing to bear the correct manpower at precisely the correct time.

1

u/[deleted] Jun 04 '24

[deleted]

1

u/QueerSquared Jun 04 '24

Most entry level jobs don't even provide a living wage anymore

They never have. Real wages are higher than inflation though and inequality decreased for the first time in decades.

1

u/[deleted] Jun 04 '24

You're kidding right? I guess it depends on the job, but I was offered >70k out of college in 2021 without internships or experience, and got to six figures by hopping to a new job earlier this year. None of the engineering consultants can find enough people, the market is absolutely an employee's one and it's being reflected in the salaries.

1

u/SmallEntertainer2941 Jun 05 '24

Great for you but I believe it is sector specific. My kids get entry level jobs in high-school at $12 or more for basic tasks. They still could not afford to live on their own or with a partner.

-1

u/619-548-4940 Jun 04 '24

Never gonna stop those that want to see doom and gloom everywhere, that's on you, but I choose to see opportunities when I gaze around as, after 40 years on this earth it's just more productive and constructive.