The economic pain we are headed for, Recession and Inflation

[edhopper]

The Economy shrunk this quarter. There are major shortages coming this month as the drop in imports at the ports hits, further shrinking the economy but causing prices to rise.
On top of that the Dollar is in trouble as other countries stop buying Treasuries (another outcome of Trump's trade policy). The Fed will have no choice but to raise rates to get buyers for Treasuries, which will slow the economy more.
But at the same time a weaker dollar, plus the cost of tariffs on goods, will be inflationary.
In plain English, we are Fucked.

[Fiendish Thingy]

1. Treasury bill rates are separate from the fed rate

Treasury bill rates have already gone up, then down a bit.

Fed rates are adjusted to impact inflation and cash liquidity.

[edhopper]

2. I worded that badly

They will raise rates on Treasuries. But we still face stagflation.

[IronLionZion]

5. Remember how Paul Volcker ended stagflation in 1980?

it also ended Jimmy Carter's presidency and screwed a lot of Americans hard

https://en.wikipedia.org/wiki/Paul_Volcker#Chairman_of_the_Federal_Reserve

[moniss]

8. I remember

30 year mortgages at 16% and more.

[IronLionZion]

9. Trump promised to lower prices, but we're not going like how it's done. nt

[moniss]

10. Yes indeed the prices weren't that affordable

even when Paul The Heartless was in the Fed.

[Katinfl]

11. Yes, I remember. I had one of those mortgages.

[questionseverything]

19. Decimated the housing industry

[Bernardo de La Paz]

17. The hostage crisis and the failed rescue attempt and Bush sr secret deal trip had more to do with it. nt

[Bernardo de La Paz]

16. They can't raise rates on Treasuries. Those rates are determined by auction sales and open market sales.

Big fundamental point to understand.

[edhopper]

18. Rates on Tresuries will go up, the dollar will go down.

is that better?

[Bernardo de La Paz]

20. Rates on Treasuries and the dollar are ** both down ** since his Inaugurination. . . nt

[Wounded Bear]

3. Might be worse than that. Looking at stagflation starting this summer...

Prices rising, but rates stagnate as the value of the dollar slips. Wages probably drop as layoffs spike. We should have raised the minimum wage when we had the chance.

[edhopper]

4. Manchin and Simena really screwed us on that.

If Schumer were a stronger leader, it would have passed.

[NoMoreRepugs]

6. A 700Billion$ 1st quarter deficit, I assume rising steadily, financed by Treasuries with increasing

interest rates is a really strange form of WINNING and GREATNESS to me.

[Ray Bruns]

7. All I have to say is

[Johnny2X2X]

12. Inflation is rising already

The PCE number was expected to come in today at 3.2%, it came in at 3.5%.

Stagflation is here.

[Wiz Imp]

13. To be clear - we are likely already in the middle of a recession

A recession is generally defined by at least 2 consecutive quarters of negative GDP growth. Well. 1st quarter is now officially negative, and given the current state of things with the tariffs and everything else, it seems highly unlikely that 2nd quarter will show positive GDP growth.

So congratulations to those who correctly predicted we'd be in a recession by the middle of the year. You were 100% correct. (and I was one of those people!) https://www.democraticunderground.com/100220066680

we're just about guaranteed to be in a massive recession as early as late spring or early summer.

[Bluetus]

14. All true. I would just note that

when we say "this quarter", we are talking Jan-Mar. This shrinkage happened entirely from Trump's daily bellicose and ignorant proclamations. The tariff stuff has not yet even entered the GDP equation yet.

And I completely agree with you about the dollar being in trouble. You mentioned that foreign holders can wreak havoc by not buying Treasuries. But there is an even more fundamental issue here. Since the election, the dollar has lost 10% of its value against all the major currencies. That means, everything we import costs a lot more, even BEFORE the tariffs. And it means that foreigners investing in US Treasuries have LOST money in the past 6 months if they value their wealth in Euros, Canadian dollars, Pounds or whatever.

THAT is a good reason for them reducing their stake in US Treasuries.

Trump is an idiot. But this time, he has surrounded himself with nothing but people who are every bit as stupid as he is. None of them have the slightest clue what they are doing economically.

[Initech]

15. Which all of this COULD HAVE EASILY BEEN PREVENTED.

Because people don't think when they vote anymore. And no, Fox and the Heritage Foundation, I don't want to feel pain for your stupid man baby god emperor king. Pull your heads out of his ass and see what the damage he is doing is.