Oddbean new post about login | logout The market is reacting negatively this morning to extremely poor ISM manufacturing data. Here’s the TLDR: Demand fell, inventories rose (due to unsold stock), and prices *rose* (due to labor and shipping costs). In essence, this is stagflation (higher prices in a stagnant or slowing economy). The Fed’s worst nightmare. https://m.primal.net/KcSH.png
We have been raising prices non-stop since 2020. All 100% to battle increased input costs (gross margins have still dropped from 42% to 35% and net margins from 8% to 4%). Since Q3 2023 we have only increased pricing slightly, due to (finally) flattening labour costs and flattening net margins. Sentiment is ugly - business is less profitable, labour force feels financially "ok" (not "good"), and revenue forecasts are flat at best.
Any chance the fed backtracks on its proposed rate cuts? 😂
There is a case to be made where the job market is already bad and folks are tapping the savings to keep the boat afloat https://m.primal.net/KcVg.jpg
savings rate is down and may even be negative excluding govt transfer payments from income. also seeing credit card balances increase meaningfully. auto and cc delinquencies on the rise
