The economy is....hot garbage
Good day to you all. It became clear by 2pm on Monday that there needed to be a mid-week newsletter. As the title of this newsletter indicates, the economy is just down in the dumps and we don’t know what better even looks like at this point. This newsletter will be the “bad” news for the week and we will share more positive news in the next one… well we can hope there are some positive highlights by then. Today we are light on the animal world and heavy on the economics. Hope to reverse that on in next newsletter.
—CN & JB
Mid Week Stock Performance
Since last Wednesday to end of day Tuesday…
Econo-stress
(Source: GIPHY)
Unfortunately, I just made up a word that might make you all resign from subscribing to this newsletter. But I couldn’t think of any other term than Econo-stress for the situation we are all facing right now. Let me save you some time… your retirement account looked nicer when everyone decided they were savvy enough to do their own day trading in 2021. Just a quick reminder, the stock market does not determine a recession, but this bear of a market still drags.
As I sat in a weekly meeting on Monday, someone mentioned that the Dow had dropped 600 points, and got worse after that… somehow we still managed to stay on topic. Since then, the Fed had their regularly scheduled meeting and announced what everyone was anticipating - the biggest rate hike in a looooooong time: 0.75%. At this rate (no pun intended) the Fed is raising interest rates fast enough to reach the peak of Mt. Everest (pun now intended). The rest of this news letter will break down the points of contention and why the Fed continues to raise rates, but a short list here - all have impacted inflation:
Supply Chain Problems abroad
Consumer demand isn’t slowing fast enough
War
—CN (JB picked the gif for this one)
Supply Chain Woes
(Source: GIPHY)
If you saw the inflation report from last week, you probably felt like their was a broken record playing in your head. I mean how many times can we say “inflation is rising at unprecedanted rates” before we are all driven mad.
Inflation for the month of May was up 8.6% from a year ago, predominately driven by the transportation and food sectors. But rents were also up and buying that plane to ticket to a tropical beach isn’t getting any cheaper. The driving force behind the acceleration in inflation is supply chain issues. Fuel supply is being crunched with OPEC holding out on any large increases in production, the spring lockdowns in China are still causing distruptions in the tech and car supply lines, and renting or buying a house is just crazy. If you want any indication on housing costs…I just sold my house and bought a new one and I already feel the sting of buyers remorse.
—CN
Summer time fun…no wait….$$$ummer time fun
(Source: LA Times)
I think we are all looking forward to a proper summer vacation this year since COVID-19 restrictions have relaxed, but its going to cost almost as much as a house. Despite high gas prices and lack of supply, demand for travel is returning to pre-pandemic levels and putting more upward pressure on inflation. My gas bill annd my food bill are really trying to duke out which one will reign supreme in the battle for biggest pain point these days.
—CN
War and No Peace
(Source: European Investment Bank)
While the war between Ukraine and Russia only involves direct conflict between those two countries, the economic ramifications are real for the rest of the world. As a new report details, the trade disruptions and inflation are pushing a number of people into poverty in Europe. This has further ramifications for the rest of world. The report also details public policy actions that can help alleviate the issue.
—CN
Something to celebrate - Albino Tortoise Baby
(Image credit: Tropiquarium Servion )
We think some good news is in order for this newsletter given all the doom and gloom of the economy. And what’s cuter than an albino tortoise baby! And best part of it is that it was born on May Day, which is also Clint’s birthday. So, click that link and let out an audible “awwwwwwww” because we know you want to.
—JB
Dog Breed Selector
If you missed the latest research on dog breeds and personality traits, check it out here. While the breed may not scientifically matter as much, why not take the this quiz to see if the dog you have (or want) matches the outcome! —JB
Dropping some Knowledge
One of the most important concepts in economics is Opportunity Cost. It is the epitome of how we Econs think about the world. Simply put, opportunity cost is what you gave up for your next best alternative. Just remember that opportunity cost is not always about financials gains and loses. Your personal happiness also matters!
Opportunity cost = Return on the option not chosen - Return on chosen option
If you haven’t already, hit that subscribe button! We promise to only send newsletter updates to keep your inbox nice and tidy… or is that just me that can’t stand having unread emails? —Clint