Re: the economy rolling over\u2014<\/p>\n
The biggest reason to think that this is happening isn\u2019t AI entering bubble territory (although FWIW, capability growth clearly leveled off this year and the OpenAI spend that a lot of CoreWeave and Oracle\u2019s projected data center buildout are financed against probably won\u2019t happen unless they can get that going again very quickly; as with dot coms in the late 1990s, the underlying tech is economically valuable but there\u2019s a good chance that related capex is overshooting), but much more boring movements in \u201cnormal\u201d macroeconomic indicators:<\/p>\n
1: ISM manufacturing PMIs have been in contraction for most of the year<\/p>\n
2: Services PMI stalled to flat territory in the last print<\/p>\n
3: Activity indicators in trucking and logistics are way down <\/p>\n
4: Quit rates in construction (a typical leading indicator) dropped to levels not seen since the GFC<\/p>\n
5: Retail and manufacturing companies started seeing significant margin contraction even last quarter, and FIFO inventory accounting effects are likely to make this worse over time<\/p>\n
6: Employment in the most cyclical private sector categories is in contraction <\/p>\n
7: We\u2019re seeing significant credit default problems in cyclical industries (Tricolor and First Brands bankruptcies).<\/p>\n
8: Employment growth in general has rolled over, and although we don\u2019t have the latest NFP print due to the shutdown, ADP\u2019s private sector payroll growth estimate is in the red two months in a row (after revisions).<\/p>\n
And all of this is happening in a stagflationary policy-engineered supply shock (tariffs, shift to immigration restrictionism, permitting regime that\u2019s increasingly and irrationally hostile to low-LCOE wond and solar power deployment)\u2014 and because of that, inflation has been accelerating at the same time that employment is rolling over, making it much harder to do a monetary rescue of the economy without causing really high inflation.<\/p>\n","protected":false},"excerpt":{"rendered":"Re: the economy rolling over\u2014 The biggest reason to think that this is happening isn\u2019t AI entering bubble…\n","protected":false},"author":2,"featured_media":83286,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[138,219,111,139,69],"class_list":["post-83285","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-new-zealand","tag-newzealand","tag-nz"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/83285","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=83285"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/83285\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/83286"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=83285"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=83285"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=83285"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}