Bad Economic Predictions

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TheCatt
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Bad Economic Predictions

Postby TheCatt » Thu Oct 24, 2019 12:50 pm

Yet another millennials are screwed article.

Millennials should aim to set aside nearly half of their income for the future, according to Olivia S. Mitchell, professor of insurance/risk management and business economics & public policy, and executive director of Wharton’s Pension Research Council at the University of Pennsylvania. If you want to live off even half of your final salary in retirement, you need to save 40% of your income over the next 30 years, she says.
...
Other experts agree. The economists at investing giant Vanguard predict that, over the next 10 years, annual U.S. stock market returns will likely average 3% to 5%. When you factor in inflation — which, luckily, Vanguard predicts will be below 2% — the real rate of return is expected to be under 3%.

Morningstar Investment Management predicts an even more meager return: 1.8% over the next 10 years for U.S. stocks, before adjusting for inflation. Meanwhile, perhaps the most pessimistic outlook comes from Boston-based asset management firm GMO, which expects real returns of -3.6% for U.S. large-cap stocks and -1% for small-cap stocks.

Basically, the argument is that stock valuations are so high, that if they persisted, returns would be very low in the near future.

There is certainly a strong argument that equities returns will be lower in the future based on current valuations. Vanguard's estimate seems reasonable. I have no idea what spread/variability they are putting on it for their projections, assume the 2% real RoR is a midpoint.
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Bad Economic Predictions

Postby Vince » Thu Oct 24, 2019 4:35 pm

They should set it aside for easier confiscation when all these social programs go into effect.
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Bad Economic Predictions

Postby Leisher » Thu Oct 24, 2019 7:21 pm

So people's retirement won't last, the government is crazy in debt, SS will be bankrupt, and taxes will only go up.

This will end well.
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Bad Economic Predictions

Postby TheCatt » Thu Oct 24, 2019 8:03 pm

Leisher wrote:Source of the post So people's retirement won't last, the government is crazy in debt, SS will be bankrupt, and taxes will only go up.

This will end well.

I should get more guns.
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Bad Economic Predictions

Postby thibodeaux » Thu Oct 24, 2019 8:07 pm

I guess I'm not retiring soon :/

At least I have guns and a hideout.

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Bad Economic Predictions

Postby TheCatt » Wed Oct 30, 2019 9:08 am

Q3 GDP 1.9%, better than expected (1.6%), not stellar. Just... OK.
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Bad Economic Predictions

Postby TheCatt » Thu Oct 31, 2019 9:26 am

In case you were wondering about the effectiveness of Trump's tax cuts...

The cornerstone of President Trump’s domestic economic agenda is the tax cut he signed into law in late 2017. It would, he said, lift U.S. sustained annual economic growth to 3%, or even as high as 6%. His advisers said it would boost average household incomes by at least $4,000 a year. His Treasury secretary said it would pay for itself.

Nearly two years later, none of those things have happened, and there is scant sign they will. The U.S. economy did enjoy a burst of 3% annualized growth after the tax cut first took effect at the start of 2018. But it has since slipped. It grew at a 1.9% annual rate in the third quarter. In the past 12 months, the economy grew 2%, about the same as it averaged from 2011 through 2017.

This should not come as a surprise. The administration’s claims rested on the belief that cutting the corporate tax rate to 21% from 35% and allowing companies to immediately write off the cost of new equipment would boost business investment and thus worker productivity and wages. Yet numerous other advanced countries had already cut their corporate rates in the prior two decades without experiencing anywhere near the growth boost the Trump administration promised. Many experienced no boost at all.
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Bad Economic Predictions

Postby Leisher » Thu Oct 31, 2019 10:31 am

That's not shocking.

What is shocking to me is how these lawyers...and reality TV stars...turned politicians discuss the economy and people believe they know what they're talking about.

One of the things I loved about Dave (1993), which is underrated and you should give it a look, is how he brought in a buddy who was an accountant or financial adviser and had him helping with the budget. How insane would it be to do people's taxes and then have someone ask you to look over the federal budget?

My company hires a firm to audit it every year. I've always wondered if the government could do such a thing. Do it by department, so no firm covers the whole federal budget. Instead one does DHS, another does the IRS, and so on. All would be done as anonymously as possible, with each firm doing a different department each year (so no quick repetition), and a mandate that the same team/managers cannot work on the same department "the next time around".

I would make only the military and the CIA exempt by law. Why? Sometimes shit needs to happen that people don't have the stomach for, and that stuff needs funding.

Not only would you, theoretically, eliminate/expose waste, incompetence, and possibly corruption, but you'd also create a lot of jobs.

Aside from the obvious fact that there are people who would not want to see a private firm reviewing governmental budgets, and exposing their cushy jobs, why wouldn't this work? I'm certain there would be major obstacles, but what are they?
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Bad Economic Predictions

Postby TheCatt » Thu Oct 31, 2019 10:43 am

Leisher wrote:Source of the post One of the things I loved about Dave (1993), which is underrated and you should give it a look,

I loved that movie. "I once caught a fish... This Big"

Leisher wrote:Source of the post My company hires a firm to audit it every year. I've always wondered if the government could do such a thing. Do it by department, so no firm covers the whole federal budget. Instead one does DHS, another does the IRS, and so on

Well, they have an audit firm called the GAO...

Leisher wrote:Source of the post
Not only would you, theoretically, eliminate/expose waste, incompetence, and possibly corruption, but you'd also create a lot of jobs....
Aside from the obvious fact that there are people who would not want to see a private firm reviewing governmental budgets, and exposing their cushy jobs, why wouldn't this work? I'm certain there would be major obstacles, but what are they?

Hmm. You're asking for an organizational audit, not a financial audit. Financial audits are "Cheap," relatively speaking. Doing an organizational audit would be 10x more expensive, I'd ballpark. Then the question is whether the cost vs benefit, etc.
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Bad Economic Predictions

Postby GORDON » Thu Oct 31, 2019 11:04 am

Bring in the Bobs to start figuring out which people aren't doing shit.
Fuuuuuuuck YOU.

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Bad Economic Predictions

Postby Leisher » Thu Oct 31, 2019 8:49 pm

TheCatt wrote:Source of the post Well, they have an audit firm called the GAO...


I want a non-government entity to do the work.

TheCatt wrote:Source of the post You're asking for an organizational audit, not a financial audit.


I kind of mixed things up a bit. I could see both being needed, but...

GORDON wrote:Source of the post Bring in the Bobs to start figuring out which people aren't doing shit.


This needs to be done badly. Lots of cushy government jobs where people don't do shit.
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Bad Economic Predictions

Postby TheCatt » Fri Nov 01, 2019 11:13 am

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Bad Economic Predictions

Postby TheCatt » Thu Nov 07, 2019 1:51 pm

Bonds no longer inverted at all, as Fed has cut short rates and China + US are making progress on a trade deal.
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Bad Economic Predictions

Postby TheCatt » Thu Nov 07, 2019 2:36 pm

Declining power of minimum wage over time, relative to housing prices
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Bad Economic Predictions

Postby Vince » Thu Nov 07, 2019 2:58 pm

TheCatt wrote:Source of the post Declining power of minimum wage over time, relative to housing prices
Image

I'd like to see that same chart comparing the earning power of minimum wage vs cost/sqr ft.
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Bad Economic Predictions

Postby TheCatt » Thu Nov 07, 2019 3:01 pm

Vince wrote:Source of the post I'd like to see that same chart comparing the earning power of minimum wage vs cost/sqr ft.

$ per sq ft has been remarkably consistent since 1973 (I couldnt easily find data going back earlier). House size has doubled in that time.
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Bad Economic Predictions

Postby Vince » Thu Nov 07, 2019 3:09 pm

Yes, but the average size of the home has more than doubled since 1940.
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Bad Economic Predictions

Postby Vince » Thu Nov 07, 2019 3:47 pm

I'd like to see the chart compared to buying an ounce of gold over that time.
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Bad Economic Predictions

Postby thibodeaux » Sat Nov 23, 2019 6:11 pm

Bloomberg says chance of recession decreasing:
https://www.bloomberg.com/graphics/us-economic-recession-tracker/

Bloomberg Economics created a model to determine America’s recession odds. Right now, the indicator estimates the chance of a U.S. recession at some point in the next year is 26%, down slightly from 27% in early October. That reading is higher than it was a year ago but significantly lower than before the last recession. There are reasons to keep a close eye on the economy, but it’s not time to panic yet.

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Bad Economic Predictions

Postby TheCatt » Sat Nov 23, 2019 6:36 pm

Yeah, things were looking at lot worse at the beginning of the year. Mfg is still slowing down a lot, and there are cautionary signs, but it looks like were in store for a bunch of mediocre (~2%) growth.
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