Is the risk to the stock market the full opening and employment of the economy?

[tooqk4u22]

Right now with all the stimulus, unemployment payments, moratoriums on foreclosures and evictions, and interest free deferral of student loans plus with things having been shut down there has been less spending on travel,, entertainment, clothing (work and leisure), commuting costs and so on.   It means there are a lot of people working from home with a lot of extra resources and a lot of people not doing working that still have resources.  WE have all seen the gambling (actual and in the markets) and buying up of all kinds of assets so that is not the questions.

The question is what happens when there is no stimulus and people have to start paying rent/mortgage and student loans plus all the other normal work costs and those are the negatives.  But also what happens when people start spending again heavily on travel and entertainment and going out and such.....all that is good for the economy but maybe not for the markets as that extra money may have to be drawn out. 

Also, corporate earnings have been good because costs have been cut (mostly payroll) and being one of the large expenses what will happen when hiring picks up.....again good for the economy but maybe not for the markets.

There will be a lot of factors and some will be offsetting but this is on my mind. 

[Wrenchturner]

My understanding is that Mr Market wants to see more stimulus, either through the monetary system or the fiscal one.  And it is also my understanding that the fiscal side is what we will see going forward.  At least until YCC is attempted.  Biden speaks next Wednesday on the “economic vision for the future.”

Hard to say though!  We live in interesting times!  I remain diversified.

[ChpBstrd]

It's hard to understand the present as anything other than a story of the haves and the have-nots.

Some people, like me, are beneficiaries of the unprecedented economic stimulus, AND I kept my job, AND I saved money working from home, AND I've reduced my spending on restaurants and travel, AND I was invested in stocks. As a result, my accounts are flush and I'm looking for investment and consumption opportunities.

Others are beneficiaries of the stimulus, but they spent several of the last 12 months out of work, OR they are on the hook for thousands of dollars in medical expenses because they got COVID, OR they sold their stocks in late March. These folks are on shaky financial ground and are planning to be austere with their spending / investing. 

Many more fall somewhere in between, with a mix of good and bad fortune. This is always the case.

In the aggregate, though, there were a lot of people and companies that were heading toward bankruptcy in 2020 that ended not going bankrupt due to the measures taken to protect the economy.

https://www.uscourts.gov/news/2021/01/28/annual-bankruptcy-filings-fall-297-percent

Bankruptcy filings fell sharply for the 12-month period ending Dec. 31, 2020, despite a significant surge in unemployment related to the coronavirus (COVID-19).

Annual bankruptcy filings in calendar year 2020 totaled 544,463, compared with 774,940 cases in 2019, according to statistics released by the Administrative Office of the U.S. Courts. That is a decrease of 29.7 percent.

The number of total filings was the lowest since 1986, when 530,438 bankruptcies were filed. Filings fell sharply in the early months of the pandemic, starting in March 2020, when many courts offered limited access to the public.

Similarly, delinquencies did not spike:

Mortgages: https://fred.stlouisfed.org/series/DRSFRMACBS
Credit Cards: https://fred.stlouisfed.org/series/DRCCLACBS
Consumer Loans: https://fred.stlouisfed.org/series/DRCLACBS

Had we seen these data at the end of 2019, we would have gone all-in!

I predict bankruptcies and delinquencies will rise modestly in 2022, but overall the effect of the stimulus has been to apply the brunt of the economic damage to the national debt rather than letting it hit investors, consumers, or companies.

[bthewalls]

Have we bypassed/avoided the normal recession cycle?....was it printed away with stimulus?

[trollwithamustache]

stimulus just kicks the can down the road. ..

Lots of unemployment and underemployment out there.... as things open up it doesn't mean all the businesses that shut down magically reopen. There will be a longer recovery period that most blog posts have the patience for because that's how real life works.

All the Lockdown darlings, Ubereats, amazon, may have some disappointing results in a couple quarters. Will Mr. market care? I don't know.

All your missed payments, ie rent payment delays, business rents in arrears. what happens when this comes due? It is not like the people delaying payments have a magic source of funds to make a balloon payment. 

1400 dollars to middle class and lower individuals doesn't change any of the above.

[theolympians]

"The question is what happens when there is no stimulus and people have to start paying rent/mortgage and student loans plus all the other normal work costs and those are the negatives.  But also what happens when people start spending again heavily on travel and entertainment and going out and such.....all that is good for the economy but maybe not for the markets as that extra money may have to be drawn out. "

I just don't see most of the people being that savvy.

[Telecaster]

There's always something to worry about.

--Peter Lynch

[MustacheAndaHalf]

Struggling companies can borrow from the bond market, thanks to the Fed backstopping junk bonds.  The costs of borrowing are lower, and investors are very willing to buy (since at worst, they can turn around and offload those bonds on the Fed).  Companies with access to the bond market can borrow the money they need, rather than filing for bankruptcy.

In my view, that has kept bankruptcies artificially low.  I don't think anyone knows when the Fed will end those policies, which makes it hard to predict when companies will be unable to borrow, and in trouble.

That doesn't apply to smaller companies who lack access to the bond markets.

[soccerluvof4]

No one knows but there sure are a lot of opinions out there! My guess the back breaker will be when all the taxes that will be put in place that in the end will hurt the middle and lower classes despite what every administration since I can remember said they were there to protect . We replaced millions, with billions and now Trillions. I agree as stated above were just increasing the gap between the have's and have nots. Now lets throw another 3.2-3.5 Trillion on the fire. We have already paid out like 410k per job saved. Perhaps not doing so would have been a lot worse idk but if both sides would get there heads out of there a*s's and do what is really best for the country and not there personal agendas we would at least be more efficient with the money we spend. I don't see that ever happening. One thing for sure my 4 kids are gonna be F'kd

[maizefolk]

Also, corporate earnings have been good because costs have been cut (mostly payroll) and being one of the large expenses what will happen when hiring picks up.....again good for the economy but maybe not for the markets.

If this is at all like the 2000 and 2008 recessions a lot of the jobs companies have cut are not ever going to be refilled. Recessions force companies to do the hard work of structuring their business to reduce payroll costs. But once they've done that work, they tend to have no incentive to go back to the old higher cost system.

Total US economic output recovered from the 2008 recession by 2010, but with about 7M fewer americans employed than before the crash.

[ender]

The stimulus is pretty much irrelevant in the grand scheme of things for most folks. The max per person is $1200+$600+$1400 = $3200 (more for kids, of course). That's not going to meaningfully make someone's finances who has been unemployed for a year.

The unemployment benefits are what is helping folks who are lower income and lost jobs.

[JGS1980]

No one knows but there sure are a lot of opinions out there! My guess the back breaker will be when all the taxes that will be put in place that in the end will hurt the middle and lower classes despite what every administration since I can remember said they were there to protect . We replaced millions, with billions and now Trillions. I agree as stated above were just increasing the gap between the have's and have nots. Now lets throw another 3.2-3.5 Trillion on the fire. We have already paid out like 410k per job saved. Perhaps not doing so would have been a lot worse idk but if both sides would get there heads out of there a*s's and do what is really best for the country and not there personal agendas we would at least be more efficient with the money we spend. I don't see that ever happening. One thing for sure my 4 kids are gonna be F'kd

Modern Economic Theory advocates for deficit spending and lowering of borrowing costs during lulls in the economy (in order to avoid prolonged recessions/depressions), and raising taxes and raising borrowing costs during boom years (in order to avoid bubbles and them bursting). As a whole, the US is pretty good at deficit spending, but not too hot at raising taxes during the good times (see Trump Tax Cut of 2017) to balance the books.

I see a boom in our future, maybe even a 5-10 year boom. It will be very hard, but I think the powers at be will try to raise taxes to both individuals, small businesses, and corporations once the immediate risk to our economy has passed. Personally, I think this is the right, the sane thing to do considering the federal government is spending like crazy to save all our asses right now. CARES Act, PPP Program, Eviction Moratoriums, Covid vaccine $ for development and distribution are ALL examples of the government competently doing its job.

The hard part is "threading the needle" to ensure you tax fairly and broadly to avoid "killing the golden goose". The devil is in the details, I guess.

JGS

[tooqk4u22]

The stimulus is pretty much irrelevant in the grand scheme of things for most folks. The max per person is $1200+$600+$1400 = $3200 (more for kids, of course). That's not going to meaningfully make someone's finances who has been unemployed for a year.

The unemployment benefits are what is helping folks who are lower income and lost jobs.

I disagree that it's irrelevent, not at all whether for the individual, family, economy or markets as it went to 90% of the population, not just the unemployed.  As for the unemployed, it was necessary to provide unemployment insurance for an expanded time, but the expanded time period but the expanded amounts may have been excessive and like increase stimulus.   Although, a significant chunk went to saving/investing/paying down debt.  The unemployment    Regardless, the point is what happens when the government isn't putting out multiple trillions for no reason (bills early in pandemic weren't in this category but the one in December and especially the current one were und unnecessary and excessive)

Combine that with rise in taxes and maybe an inflationary environment bc of it all, IDK?

 

No one knows but there sure are a lot of opinions out there! My guess the back breaker will be when all the taxes that will be put in place that in the end will hurt the middle and lower classes despite what every administration since I can remember said they were there to protect . We replaced millions, with billions and now Trillions. I agree as stated above were just increasing the gap between the have's and have nots. Now lets throw another 3.2-3.5 Trillion on the fire. We have already paid out like 410k per job saved. Perhaps not doing so would have been a lot worse idk but if both sides would get there heads out of there a*s's and do what is really best for the country and not there personal agendas we would at least be more efficient with the money we spend. I don't see that ever happening. One thing for sure my 4 kids are gonna be F'kd

Modern Economic Theory advocates for deficit spending and lowering of borrowing costs during lulls in the economy (in order to avoid prolonged recessions/depressions), and raising taxes and raising borrowing costs during boom years (in order to avoid bubbles and them bursting). As a whole, the US is pretty good at deficit spending, but not too hot at raising taxes during the good times (see Trump Tax Cut of 2017) to balance the books.

I see a boom in our future, maybe even a 5-10 year boom. It will be very hard, but I think the powers at be will try to raise taxes to both individuals, small businesses, and corporations once the immediate risk to our economy has passed. Personally, I think this is the right, the sane thing to do considering the federal government is spending like crazy to save all our asses right now. CARES Act, PPP Program, Eviction Moratoriums, Covid vaccine $ for development and distribution are ALL examples of the government competently doing its job.

The hard part is "threading the needle" to ensure you tax fairly and broadly to avoid "killing the golden goose". The devil is in the details, I guess.

JGS

Yeah except the fed and government have not been operating in terms of modern economic theory.   They are completely devoid of balance and reason since financial crises (probably goes further back to LTCM).   Rates never really rose.  Tax cut shouldn't have happened, at least not personal, not so sure about corporate as global landscape has lower rates but they have higher rates on dividends and gains.   

And maybe those things arr the government doing its job but the scope, scale and timeframe are all excessive.   

And PPPis the biggest joke.   Plenty of companies large and small took the money bc just had to show a quarter of decline yet they end up having better year as second half recovered.   The restaurants and hotels that were closed or struggling and took the money will will probably still go out of business or bk out of their debts. 

I certainly don't see a long term boom, maybe a near term pop.  I do think the economy will be fine but bc of all this the stock market will be flat or declining for a period. 

[bwall]

If this is at all like the 2000 and 2008 recessions a lot of the jobs companies have cut are not ever going to be refilled. Recessions force companies to do the hard work of structuring their business to reduce payroll costs. But once they've done that work, they tend to have no incentive to go back to the old higher cost system.

Total US economic output recovered from the 2008 recession by 2010, but with about 7M fewer americans employed than before the crash.

And thank God it happens like that! ! ! !

7m fewer Americans producing the same amount of goods and services as previously is the exact definition of increased productivity.

Increased productivity is the only thing that allows for increased wages (and profits) without inflation.

I fully expect us to achieve even greater gains in productivity in 2021/22 than we did during the Great Recession. As a country we would benefit handsomely from it.

[tooqk4u22]

If this is at all like the 2000 and 2008 recessions a lot of the jobs companies have cut are not ever going to be refilled. Recessions force companies to do the hard work of structuring their business to reduce payroll costs. But once they've done that work, they tend to have no incentive to go back to the old higher cost system.

Total US economic output recovered from the 2008 recession by 2010, but with about 7M fewer americans employed than before the crash.

And thank God it happens like that! ! ! !

7m fewer Americans producing the same amount of goods and services as previously is the exact definition of increased productivity.

Increased productivity is the only thing that allows for increased wages (and profits) without inflation.

I fully expect us to achieve even greater gains in productivity in 2021/22 than we did during the Great Recession. As a country we would benefit handsomely from it.

Except that it results in less jobs and widening of inequality.   Good for companies and stock market though I guess.   

[roomtempmayo]

Couple things I don't understand, but would like to understand better:

- What are the distributional consequences of cooling off the economy monetarily (interest rates and/or fed asset buying) versus through increased taxation and regulation? 

- Does it make sense to talk about "inflation" as a unified phenomenon in 2021 when the supply of some stuff takes a long time to increase and the marginal cost of producing an additional unit is high (i.e. heavy stuff made out of piles of steel), but increasingly people consume digital goods where supply has few limitations and the marginal cost of additional goods is extremely low (i.e. an eBook)?

- Was Friedman right that inflation is always a monetary phenomenon, or are the leftists at least partly right that inflation has a labor side?   

[bwall]

Except that it results in less jobs and widening of inequality.   Good for companies and stock market though I guess.

Hmmm...... I wasn't aware of that. Here's how I thought it worked:

If a company can produce the same amount of goods and services with the investment of, say, an extra machine (computer? App? etc.) and in exchange they have to employ one less worker, all else being equal, the company now has more money (the amount they're not paying that worker) to:

1) give their remaining employees pay raises
OR
2) invest in even more technology (thus providing more jobs at the technology company) and potentially saving more labor or increasing output
OR
3) Increase dividends to shareholders
OR
4) Pass the savings on to their customers, thus becoming more competitive.

The amount of money available to the company is equal to the employee's wage minus the cost of the labor saving technology.

Presumably, different companies will choose a varying mix of the above, depending on their circumstances. 

What about those people who lost their jobs? They could fall into several groups: retirees, FIRE'd-ees, sabbatical takers, or people who quit of their own volition, none of whom would necessarily consider themselves poorer as a result of their not working.

The only group of people who would consider themselves worse-off would be those who are listed as the standard definition of unemployed--seeking work but cannot find it. I humbly suggest that while this may be a frightening time full of insecurities, it might also spur such a person to get additional education in a field where employment is almost guaranteed (medical, tech, etc). The stressful times might be the motivation they need to finally start on a business they'd been thinking of.  I only mention this because I've met a few people who told me that 'losing their jobs was the best thing that happened to them'.

It's this last group of people--retrained workers who are able to become more productive in new jobs, that allow an economy to grow to new heights.

[effigy98]

I'm ready for UBI and living off the government. If this keeps going, need to figure out how to engineer my layoff. I'm not going to keep working if most of my earnings get transfer to others. I rather join them.

[maizefolk]

The only group of people who would consider themselves worse-off would be those who are listed as the standard definition of unemployed--seeking work but cannot find it. I humbly suggest that while this may be a frightening time full of insecurities, it might also spur such a person to get additional education in a field where employment is almost guaranteed (medical, tech, etc). The stressful times might be the motivation they need to finally start on a business they'd been thinking of.  I only mention this because I've met a few people who told me that 'losing their jobs was the best thing that happened to them'.

It's this last group of people--retrained workers who are able to become more productive in new jobs, that allow an economy to grow to new heights.

Consider not only the officially unemployed but the discouraged job seekers who drop out of the labor force entirely. If we still had the labor force participation levels we'd seen prior to the great recession, 16M more people would be either working or looking for work. Instead those 16M people included everyone from early retirees -- although realistically we're a drop in the bucket -- to the growing number of americans living off SSDI payments to the homeless or those trying to squeak by on savings and charity until they turn 62 can qualify for the rather modest early social security payment.

That's not an argument to try to stand in the way of technological progress. We'd fail, and I don't think making people work for the sake of work is the sort of society I want to live in anyway. But the outcomes for those whose fields have gone away, particularly older workers in their 40s and 50s, is a lot more grim than I think you may realize.

I'd suggest checking out the Planet Money podcast about what the top of the line most expensive jobs retraining programs in the USA look like and what their success rates actually are: https://www.npr.org/sections/money/2017/01/27/512060753/episode-750-retraining-day?t=1617050356210

Now about your four options for a company that buys a labor saving "app". 1) They're very unlikely to give raises to their remaining workers and if anything may consider deferring regularly scheduled raises. After all they just laid Sam off and they're pretty sure they could hire him back if Bob or Alice threaten to quit if they don't get a cost of living increase. 2) They may invest in more technology, but if it is more labor saving software, the company they buy it from likely doesn't have to hire anyone else to deliver the product (the marginal cost of additional copies of a software product is essentially zero), they just turn more profit of their own. 3) Yes they may pay a dividend or buy back shares, which is good for stock market valuations and good for those of us, like you and me, who own shares. About 26% of american households have at least $40k invested in the stock market, including retirement plans. 4) If there is price competition in the marketplace, the companies may indeed cut the prices of their produces, which is good for those of us with either jobs or living off of our investments.

Make no mistake, technological progress is, on the whole, a good thing for our society. But it is important to remember that different people benefit and suffer as a result.

[tooqk4u22]

Except that it results in less jobs and widening of inequality.   Good for companies and stock market though I guess.

Hmmm...... I wasn't aware of that. Here's how I thought it worked:

If a company can produce the same amount of goods and services with the investment of, say, an extra machine (computer? App? etc.) and in exchange they have to employ one less worker, all else being equal, the company now has more money (the amount they're not paying that worker) to:

1) give their remaining employees pay raises
OR
2) invest in even more technology (thus providing more jobs at the technology company) and potentially saving more labor or increasing output
OR
3) Increase dividends to shareholders
OR
4) Pass the savings on to their customers, thus becoming more competitive.

1.  Nope, except maybe the high earners/rainmakers..sales, product development, and executives maybe.  Save 20% maybe 5% over time goes to this group directly or hiring more of this group.

2.  Possibly or buying other companies at stupid prices and destroying said savings.

3.  Dividends or share buybacks for sure.  Possible debt reduction but unlikely in this environment as it doesn't make much sense. 

4.  When was the last time Ape cut their prices?   Prices go down when demand goes down, it has nothing to do with employees. 


At the end of the day shareholders and executives win.   Productivity gains are not good for employment unless it is a new technology or innovative industry change.   

[bwall]

At the end of the day shareholders and executives win.   Productivity gains are not good for employment unless it is a new technology or innovative industry change.

For us outsiders, it's impossible to know the reason total economic output stayed steady after the GFC with 7m fewer employees. Perhaps it was due to new technology or innovative industry change. Perhaps not. But, when I look at the world around me, I see products and services that didn't exist in 2009. I view this as new employment via gains in productivity. YMMV.

[tooqk4u22]

At the end of the day shareholders and executives win.   Productivity gains are not good for employment unless it is a new technology or innovative industry change.

For us outsiders, it's impossible to know the reason total economic output stayed steady after the GFC with 7m fewer employees. Perhaps it was due to new technology or innovative industry change. Perhaps not. But, when I look at the world around me, I see products and services that didn't exist in 2009. I view this as new employment via gains in productivity. YMMV.

That is basically what I said, new tech/products create new jobs and likely productivity gains.  An example would be auto manufactures switching from human labor to robots and let's say 4 jobs in auto are lost bc of it but maybe 1 or 2 higher paying robot jobs are gained.   Net loss in jobs, productivity rockets up, economic output is as good or better.   Fast forward and auto Co realizes they can tweak the robots to do even more and faster, 4 more jobs lost none gained,, productivity skyrockets, economic out is same or better.   Do that many times over and you 3nd up with mil fewer employed not making money and dependent on the government or someone else and is falling behind.   

But my dividends and stock price go up.   

Sure we can retrain these people for the new jobs but jobs haven't grown so they will be competing with others thus resulting in more supply of labor and lowering of wages.   

It's always been this but the pace of change, productivity and obsolescence has accelerated.

[bwall]

At the end of the day shareholders and executives win.   Productivity gains are not good for employment unless it is a new technology or innovative industry change.

For us outsiders, it's impossible to know the reason total economic output stayed steady after the GFC with 7m fewer employees. Perhaps it was due to new technology or innovative industry change. Perhaps not. But, when I look at the world around me, I see products and services that didn't exist in 2009. I view this as new employment via gains in productivity. YMMV.

That is basically what I said, new tech/products create new jobs and likely productivity gains.  An example would be auto manufactures switching from human labor to robots and let's say 4 jobs in auto are lost bc of it but maybe 1 or 2 higher paying robot jobs are gained.   Net loss in jobs, productivity rockets up, economic output is as good or better.   Fast forward and auto Co realizes they can tweak the robots to do even more and faster, 4 more jobs lost none gained,, productivity skyrockets, economic out is same or better.   Do that many times over and you 3nd up with mil fewer employed not making money and dependent on the government or someone else and is falling behind.   

But my dividends and stock price go up.   

Sure we can retrain these people for the new jobs but jobs haven't grown so they will be competing with others thus resulting in more supply of labor and lowering of wages.   

It's always been this but the pace of change, productivity and obsolescence has accelerated.

Yes, I was quoting you to prove my point. It seems as if we agree on some of the information, but reach different conclusions.

For example, I don't believe that there is a limited number of jobs, or that the assumption of 'jobs haven't grown' is accurate. Some people make their own job--I've done it myself and seen others do it by themselves. Thus, the conclusion of 'lowering of wages' doesn't have to happen. It might happen, depending on the choices made by the unemployed, but it's not a foregone conclusion.

[ChpBstrd]

It seems like increases in productivity have at least 2 effects:

1) Reducing the demand for labor, and therefore reducing the price of labor, and
2) Increasing the supply for goods/services, and therefore reducing the price of goods/services.

The aggregate purchasing power of workers has remained roughly flat over time. Their wages, by definition, equal what can be sold in the economy, other than exports. Even a highly productive 100% automated factory has nothing to sell if the population has no jobs / money. Economic growth hits a limit if workers are not earning enough to create demand. Growth also hits a limit if the supply of goods/services cannot increase (i.e. due to slow growth in productivity), but we are living in times of such rapid change and global competition that I do not think this is the limiting factor.

Given these two factors, economic growth would stop as soon as productivity gains caused enough job/wage losses so that the decrease in aggregate demand from workers equaled the economic gains due to productivity. If productivity continued to increase forever, almost everyone would be unemployed and there would be no one left to sell anything. It would be impossible to even approach this hypothetical point because firms would have to continually downsize even as they increased productivity.

There is a third effect of increases in productivity:

3) Wider variety of goods/services are produced, therefore increasing demand for labor.

For example, how many millions of people in the US work in online advertising / social media / SEO optimization / all that stuff that didn't exist a generation ago? We can all think of more examples. 150 years ago, almost everyone had to work in agriculture because productivity was so low this vast amount of labor was required to produce the bare necessities. Today, less than 11% of Americans work in agriculture and food is so plentiful that the majority of our food budget goes to packaging, marketing, preparation services, and restaurants.

As productivity gains reduce demand for labor from existing sectors of the economy, new sectors emerge and soak up the excess supply of labor. At first, these new sectors cater to the owners of capital who benefitted from the gains in productivity (e.g. Teslas and space tourism rides are expensive) but eventually productivity gains reduce the price so that some workers can afford these new luxuries (e.g. TVs and air conditioners used to be expensive). So if the net effect of #1 and #2 are offsetting and would net zero by themselves, factor #3 takes the workers laid off from the high-productivity industries and puts them to work in new, low-productivity industries. This supports the workers' purchasing power so they can continue buying things from the high-productivity industries. And of course, all the while, these new low-productivity industries are working their way into becoming high-productivity industries. Of course, recessions, crises, and fluctuations occur, but this is the long-term picture.

This is how many family histories start with farming, and then a generation works in a factory, and then the next generation works in the service industry, and then the current generation is employed typing stuff into the internet to help sell the stuff produced by the now-highly-productive earlier industries that don't employ as many people as they used to.

There are 3 net effects from this dynamic: economic growth, environmental degradation, and a major arbitrage opportunity for the middle class to become investors and ride the wave of productivity gains, if they can avoid the temptation to spend all their money on the new products being made available all the time and stick to a paleo-cheapskate lifestyle.

[maizefolk]

For us outsiders, it's impossible to know the reason total economic output stayed steady after the GFC with 7m fewer employees. Perhaps it was due to new technology or innovative industry change. Perhaps not. But, when I look at the world around me, I see products and services that didn't exist in 2009. I view this as new employment via gains in productivity. YMMV.

It's certainly true we didn't have instagram influencers in 2009. And phones have gotten a lot more features. Computers and TVs have gotten a lot cheaper.

But what new (labor intensive*) products or services are you thinking about that came into existence since 2009? I am sure there are examples, but the only examples I can think of off the top of my head are a lot of the gig economy jobs, uber and doordash drivers and the like.

*So designing new apps or video streaming platforms don't count. The fact that netflix and amazon are spending billions of new dollars on hiring large teams of people to make countless more TV shows and movies than were being made in the '00s would count though.

[bwall]

But what new (labor intensive*) products or services are you thinking about that came into existence since 2009? I am sure there are examples, but the only examples I can think of off the top of my head are a lot of the gig economy jobs, uber and doordash drivers and the like.

*So designing new apps or video streaming platforms don't count. The fact that netflix and amazon are spending billions of new dollars on hiring large teams of people to make countless more TV shows and movies than were being made in the '00s would count though.

Labor intensive is a relative term, I think. I prefer to focus on high paying jobs, as opposed to Amazon warehouse jobs, tons of which have been created since 2009. Or jobs at Chipotle; the majority of which may have been created since 2009, might not be very well paid.

Here's my non-exhaustive, off the top of my head list.:
1) Tesla. I think that just about every Tesla you see on the road today was built since 2009
2) Apple's 20x expansion from $100b company to $2trillion; that's $1.9t in market cap, that in my mind, accounts for increased jobs and productivity.  Same for GOOG and MSFT's explosion in market cap since 2009. More workers have to be hired somewhere to make all that happen.
3) All CRISPR-related companies, which is about half (or so) of ARKG ETF.
4) Airbnb rentals; Renting spare rooms that would otherwise sit empty as opposed to building new hotels = increase in productivity. In addition to the great jobs at Airbnb headquarters in the Bay Area.
5) Salesforce: Went from $7 to $210 and $6b to $190b market cap since 2009. All that cloud has to go somewhere! :) Speaking of the cloud; I don't follow the space very closely, but it wasn't really a thing in 2009, I think. Now it is, and plenty of companies have the market cap to show it (MSFT, Amazon's AWS, plus other I can't think of). I'll include ZOOM in here as well, since meetings on Zoom might result in fewer expensive business trips, post-pandemic.
6) Fracking. How could I forget fracking? I think that the majority of fracking in the USA has been since 2009. Fracking has brought immense geo-political power to the USA, moving the fulcrum of the 'Swing producer" from the oilfields of Saudi Arabia to Midland, Texas. We're now projected to be net exporters of oil, I believe.

Not to mention that some of these companies are great exporters. Anytime anyone outside the USA rents on Airbnb, buys on Amazon, uses google, FB, etc. a small sliver of that profit flows to a US based company and thus creates jobs (or profits) in the USA. It goes both ways, of course; anytime anyone, anywhere takes an Uber, their trip is subsidized by an American company.

I'm sure that I'm overlooking some other great examples of how the market for goods and services has changed since 2009. Maybe others can add to the list?

[maizefolk]

I find it strange that you try to argue increased market cap "accounts for increased jobs and productivity" instead of looking at the actual numbers. Public companies do report the number of employees they have each year.

Apple's market cap did expand 20x. Its employee headcount expanded 4x. Which is nothing to sneeze at. But apple's market cap is about 13.6M per employee. So making up for the 16M missing jobs would require apple to add 217 trillion more to its market cap.

Telsa is another interesting case. The company has made a lot of cars in the last decade and hired a lot of people to make those cars. But as far as I know Telsas aren't more labor intensive to make than ICE cars, and may very well be less so (less complex drive trains with fewer components, giant die casting machines that make huge parts of the car at once instead of welding together components). And critically, Telsa sales have displaced ICE cars, they haven't created new demand. In 2019, the USA auto industry (including Telsa) sold 16.9M cars and trucks, the same number of cars and trucks being sold in 2005. 2020 was much lower, but had a good excuse. So while it's great to have the option to buy an electric car, the existence of Tesla is not creating many new jobs, just moving which companies the same auto manufacturing jobs are located at.

Zoom is a great example of a company where demand for its product makes its profits go up without much need to hire many additional employees. Zoom meeting usage increased 30x between December of 2019 and April of 2020 (four months and one nasty pandemic). It's market cap added ~70B. Yet zoom only hired 800 new employees in 2020. $87.5M in new market cap per new employee.

[bwall]

Thanks for the great observations showcasing the elusive productivity increases we're trying to locate in the economy. I couldn't have said it any better.

Productivity is defined as more goods and services produced by the same number (or fewer) of people. So, yes, when Apple's increase in market cap doesn't result in a corresponding increase in employees, we are witnessing increased productivity. Thank you for looking up the statistics.

The great thing about EV cars (Tesla, Lucid, and the re-branded Voltswagon, plus others) is that the products themselves are more productive than an ICE for the simple reason that they have fewer components. Transmissions, radiators, exhaust systems, and of course, no motors. So, no more need to pay for labor to have these parts maintained. Oil changes, transmission flushes (or repairs), radiators, etc. This means a direct savings for those who buy an EV. The savings here can be viewed the same as the macro-economic model upthread. The EV owner can take this reduction in maintenance costs and invest it, spend it elsewhere, or pay off debt.

Some Tesla fans argue that Teslas are safer than ICE, which would be another area of increased productivity. Since they don't have a massive chunk of steel under the hood, traveling at the same speed of the car, they might be right. Dunno.

The real potential for productivity with Tesla would be if they could usher in autonomous driving. They're working on it and it would be a game-changing leap in productivity if it can happen. Then there'd be no need to own a car. No parking to worry about, no maintenance, no insurance, no taxes, no cost of ownership, no pride of ownership (except maybe a classic car as a hobby). Wow! It's crazy just to contemplate.

Thanks for bringing up the stats on Zoom. They're a very productive company, as you point out about 6x more productive than Apple, when expressed in market cap per employee. Wow! That's a lot!!

The productivity increase that Zoom brings to the economy isn't in their own office space, but in their product. In the future, how many business trips won't need to be taken because of Zoom (or their competitors)? This means fewer first class airfares, fewer car rentals, fewer nights in hotels, and fancy restaurant meals, not to mention the time saved by the people doing the travel can be spent either in leisure or at work (more productivity!). Sure, these activities will still occur, but if, say, 10% of them are no longer needed, then this also represents an increase in productivity for the company (and the country). There are massive amounts of money to be saved here by the company with no reduction in employee count at all.   

All in all,  I guess you could say I see the glass as half full. If someone else sees it as half empty, well, that is their prerogative.

[tooqk4u22]

Thanks for the great observations showcasing the elusive productivity increases we're trying to locate in the economy. I couldn't have said it any better.

Productivity is defined as more goods and services produced by the same number (or fewer) of people. So, yes, when Apple's increase in market cap doesn't result in a corresponding increase in employees, we are witnessing increased productivity. Thank you for looking up the statistics.

The great thing about EV cars (Tesla, Lucid, and the re-branded Voltswagon, plus others) is that the products themselves are more productive than an ICE for the simple reason that they have fewer components. Transmissions, radiators, exhaust systems, and of course, no motors. So, no more need to pay for labor to have these parts maintained. Oil changes, transmission flushes (or repairs), radiators, etc. This means a direct savings for those who buy an EV. The savings here can be viewed the same as the macro-economic model upthread. The EV owner can take this reduction in maintenance costs and invest it, spend it elsewhere, or pay off debt.

Some Tesla fans argue that Teslas are safer than ICE, which would be another area of increased productivity. Since they don't have a massive chunk of steel under the hood, traveling at the same speed of the car, they might be right. Dunno

The real potential for productivity with Tesla would be if they could usher in autonomous driving. They're working on it and it would be a game-changing leap in productivity if it can happen. Then there'd be no need to own a car. No parking to worry about, no maintenance, no insurance, no taxes, no cost of ownership, no pride of ownership (except maybe a classic car as a hobby). Wow! It's crazy just to contemplate.

Thanks for bringing up the stats on Zoom. They're a very productive company, as you point out about 6x more productive than Apple, when expressed in market cap per employee. Wow! That's a lot!!

The productivity increase that Zoom brings to the economy isn't in their own office space, but in their product. In the future, how many business trips won't need to be taken because of Zoom (or their competitors)? This means fewer first class airfares, fewer car rentals, fewer nights in hotels, and fancy restaurant meals, not to mention the time saved by the people doing the travel can be spent either in leisure or at work (more productivity!). Sure, these activities will still occur, but if, say, 10% of them are no longer needed, then this also represents an increase in productivity for the company (and the country). There are massive amounts of money to be saved here by the company with no reduction in employee count at all.   

All in all,  I guess you could say I see the glass as half full. If someone else sees it as half empty, well, that is their prerogative.

You said it right there in the definition...same or fewer employees.     As I said before, productivity in itself is not good for employment. UNLESS it comes from newer technologies or products that result in new jobs.   And for the most part that has been the case historically but productivity is exceeding new employment from new industries......so sure we might have 5 million more low wage service and retail jobs. 

Also, market cap has nothing to do with it, could be a by product at times but certainly is not a driver or indicator.    Apples market cap exploded bc it's multiple went from 11 to 30+ ....it's revenues have been flat for the last several years and net income has been too.

As for the tesla safety argument, aside from actual structural designs that make it safer, it doesn't hold water bc a tesla is significantly heavier than a comparably sized vehicle (civic. Accord)   bc of those very heavy battery packs (incidentally the production of which makes teslas less environmentally friendly than ICE cars).   Maybe if the comparisons are to suburbans and hummers the two arguments hold up but that is more apples and Oranges,although that never stopped anybody

[bwall]

Thanks for clearing up the reasoning behind the 'Tesla is safer' argument for me. Now I know!

[tooqk4u22]

Thanks for clearing up the reasoning behind the 'Tesla is safer' argument for me. Now I know!

TBH, I was surprised by the actual difference and thought they may weigh similarly. 

Accord weight- 3,150 - 3,430 lbs
Tesla S weight - 4,561 - 4,941 lbs

Tesla is 45% heavier!  Wow. 

[maizefolk]

bwall, now you're trying to have an argument with me on a position we share. I completely agree the remaining employed workers are continuing to get more productive (at least in some fields, education and medicine are notable laggards, and we see that in the relative price of those services compared to everything else) and I don't think I've ever said otherwise.

That doesn't mean growth in market cap = more jobs. As long as you agree that growth in a company's market cap isn't any sort of good indicator that the company is having to hire lots more people, I think we are, in fact, in agreement.

Companies are making more and more money per worker and having to hire smaller and smaller numbers of workers to make billions in new profits and trillions in new stock values. So more people have dropped out the the labor force than at any time since 1974 when tens of millions of women still weren't able to work outside the home. If you look only at men (so we don't consider the effect of women entering the labor force for the first time in the 1960-1990s) of every four men who were working or looking for a job in the 1950s, only three of the four are able to find work or at least haven't given up on trying to find work today.

[MustacheAndaHalf]

Tesla's effort at autonomous driving is one example of computer AI aiming to replace workers.  Computer AI can already scan X-rays to determine specific types of cancer, and a generalized version isn't too far off.  Similarly, there's significant progress in reviewing legal documents for errors.  I wonder if "per capita" should still be divided by the number of human workers?

Another example: how many workers are involved in a Google search?  It's really your computer talking to a nearby data center - the work has already been done before you get the results back.  That's why companies like Zoom can seem really valuable "per capita", when the amount of computing power in their data centers is ignored.  But without Google and Zoom's data centers, they wouldn't have those profits and productivity.  "per cpu-ita", maybe?

[mistymoney]

a major arbitrage opportunity for the middle class to become investors and ride the wave of productivity gains,

because we're not getting it in our paychecks....

[Telecaster]

- Was Friedman right that inflation is always a monetary phenomenon, or are the leftists at least partly right that inflation has a labor side?

Look at this recession and especially the last one.  The printing presses almost melted down yet inflation has remained the lowest in decades. 

[tooqk4u22]

- Was Friedman right that inflation is always a monetary phenomenon, or are the leftists at least partly right that inflation has a labor side?

Look at this recession and especially the last one.  The printing presses almost melted down yet inflation has remained the lowest in decades.

The jury is still out on the current one.  But for the last one, significant productivity gains and stricter credit requirements leads to 7 million fewer jobs, stagnant wages, and and as a result low inflation.   But because rates were zero inequality continued to increase. 

[Telecaster]

Yes, the operative part is seven million fewer jobs.  Fewer jobs means wages are bid down and consumer demand is necessarily lower too. 

[MustacheAndaHalf]

- Was Friedman right that inflation is always a monetary phenomenon, or are the leftists at least partly right that inflation has a labor side?

Look at this recession and especially the last one.  The printing presses almost melted down yet inflation has remained the lowest in decades.

The last time was spreadsheets - the Federal Reserve simply moved billions into central banks.  And those banks mostly kept the money over fears of needing the extra capital.

This time, direct checks were sent to individual taxpayers, plus businesses small (PPP) and large (Fed backstopping the junk bond market).  This time, the money went well beyond large banks, which provides a different context for inflation concerns.

[chasesfish]

I'm a little late to this but it's been interesting reading...

The country has gotten really bad at giving benefits without a funding mechanism.  Whether it's tax cuts, the ACA, stimulus checks, or now new programs passed under names like "COVID Relief" and soon to be "Infrastructure", it's all being done without funding mechanisms or pretending that a few percentages on corporate rates or on a minority of people actually do anything. 


I'm specifically concerned about how benefits like student loan deferrals and evictions/foreclosure moratoriums ever end.   The CDC just extended the eviction ban, even though everyone can get a vaccine in April, stimulus plus enhanced unemployment benefits puts someone's income squarely in the middle class range, and unemployment is dropping rapidly.    500,000 people/year normally get foreclosed on - it's part of a normal economy and it's been perpetually delayed.   The landlords aren't getting funded, it's a "free" benefit with someone else's money.

All this stuff works until it either doesn't anymore, or has become fully priced in.  Take the housing market - it's on fire yet the federal reserve is still buying massive amount of mortgage bonds.   Zombie companies survived thanks to junk bonds being acceptable issuances at 6%.  This level of interference doesn't exist without consequences, but we don't know what all the consequences are.

My guess is there's a bit of a boom left, followed by Japan or European style stagnation for a long time.  The EU and Japan have proven debt can be monetized (issued then bought back by the reserve) for decades and have yet to explode.  Demographic changes will be challenging too given immigration continues to not be addressed.

Lower returns for longer will be the norm, but I don't know how much further the run goes before we settle into that starting point.

[ChpBstrd]

Yes, the operative part is seven million fewer jobs.  Fewer jobs means wages are bid down and consumer demand is necessarily lower too.

Early in the pandemic, when both politicians and regular people were behaving dysfunctionally, I estimated a large percentage of Americans would get Covid and that would result in about 1 million deaths in the US within 12 months (i.e. a 1-2% death rate), and maybe 2-3 million disabilities. Also, with 20% of the infected ending up hospitalized, I figured it would be a big wealth drain on US consumers and that bankruptcies would increase. Healthcare expenses are already the #1 cause of consumer bankruptcy.

I thought the erasure of a million consumers, the long-term loss of income for millions more, the buildup of medical debt, and the eventual onset of terror would put a bigger dent in aggregate demand. I also watched the US savings rate skyrocket into double digits in 2020. I knew a lot of the dead would be leaving inheritances to their younger and spendier descendants, but I figured those funds would be locked up for at least a year.

I knew the helicopter money that arrived in April 2020 would have a huge effect, but I did not anticipate a round 2 in December 2020 and round 3 in March. I went 100% long in about August-September because one doesn't ever fight the Fed, even during an apocalypse. As it turns out, these stimuli outweighed the loss of millions of jobs and the deaths of hundreds of thousands of people.

There's something unnerving about the realization that money and lives really are interchangeable in an economic and political sense. But in the end, MMM was right about how the pandemic will be a blip on the demographic curve. Life really is cheap, as the people sitting in packed restaurants keep reminding me.

Maybe the most unnerving thing is what we've learned from all this: Going trillions into debt is easier than cooperating or accepting inconveniences as the Chinese or Koreans did. The deaths of our countrymen on the scale of a nuclear bomb is more acceptable than mask mandates or closed bars, and we can blissfully play social media games while such a massacre occurs. We are very much a different people than the ones who freaked out on 9/11/01 about the sudden deaths of 3,000 people; there were anti-mask protests when we were losing that many people per day. Where does this mentality go in the future? Will we kill off a few million old people to preserve the solvency of Social Security? Do we try a UBI, giving ourselves raises until the currency implodes? Shall our politics devolve into violence because we honestly do not care about the lives of our fellow Americans any more? Deregulation of pesticides and other carcinogens makes sense, economically, if the early deaths of millions does not affect the economy, and it makes sense politically if people vote based on how the stock market is doing.

[The Hin]

I think the answer to the question of why there has been so little inflation since the Great Recession can come down to the concept of velocity of money.

The velocity of money is the frequency at which one unit of currency is used to purchase domestically- produced goods and services within a given time period. Over the last 40+ years, nearly all of the gains in wealth in this country have accrued to the top 10% (and top 1% in particular), while the income and wealth of the middle and lower class has stagnated. Rich people, by and large, save and invest a far larger percentage of their income than middle/lower income folks. So, as more and more of the wealth in the country is held in fewer and fewer hands, those funds stack up in savings accounts and brokerage accounts, and bid up the price of anything else that can be considered a store of value / investable asset (real estate, sports cards, bitcoin, paintings, etc. etc.). There's no broad-based inflation because the new money coming into the economy is being saved at an extremely high rate - in other words, reduced velocity of money is offsetting the possible inflationary effect of increased money supply.

If America were to return to something closer to full employment (including the large numbers of non-working but working age people who are no longer looking for work) and those people were to make a living wage such that they had enough money to spend on consumer goods, I think you could see organic inflation. It might look something like the Clinton-era American economy. But as it is, the money pouring into the economy is just ending up with people who are already rich, and they're not spending it in such a way as to cause inflation. This causes a feedback loop: more $$ into the system does not cause inflation, which means that expectations for future inflation remain muted, which increases the value of stocks (and rewards saving/investing) and removes an inflation-fear based push to buy before prices rise. It basically the opposite of the inflationary spiral of (1) prices rise, (2) people rush out to buy things before they get more expensive, thus (3) increasing demand and forcing prices up faster.

I can't say what exactly is going to break the dynamic we're currently in. It feels mostly like a political construct - there is no inherent reason why the wealth gap should be at exactly the level it's currently at. If incomes become more evenly distributed (via, say, increased taxes on corporations or the wealthy) the system will rebalance and the new equilibrium state will likely have more inflation in it, lower stock prices but likely large GDP gains.

[maizefolk]

But as it is, the money pouring into the economy is just ending up with people who are already rich, and they're not spending it in such a way as to cause inflation.

Well unless you want to buy art, or collectable classic cars, or beachfront property (all things wealthy people do spend money on which, as a result, are going upwards far faster than inflation).

[JGS1980]

But as it is, the money pouring into the economy is just ending up with people who are already rich, and they're not spending it in such a way as to cause inflation.

Well unless you want to buy art, or collectable classic cars, or beachfront property (all things wealthy people do spend money on which, as a result, are going upwards far faster than inflation).

Things rich people spend money on that are now more expensive:
Yachts
Houses in desirable ski areas or lake areas
Houses in great school districts
Colleges for their kids
High end wine/booze?
Club sports for their kids
Country club memberships (Mar a Lago, anyone?)
Stocks
IVF
Groceries at Whole Foods
Peloton
Board Seats?

Ok that’s all I got,

JGS

[ChpBstrd]

I think the answer to the question of why there has been so little inflation since the Great Recession can come down to the concept of velocity of money.

The velocity of money is the frequency at which one unit of currency is used to purchase domestically- produced goods and services within a given time period. Over the last 40+ years, nearly all of the gains in wealth in this country have accrued to the top 10% (and top 1% in particular), while the income and wealth of the middle and lower class has stagnated. Rich people, by and large, save and invest a far larger percentage of their income than middle/lower income folks. So, as more and more of the wealth in the country is held in fewer and fewer hands, those funds stack up in savings accounts and brokerage accounts, and bid up the price of anything else that can be considered a store of value / investable asset (real estate, sports cards, bitcoin, paintings, etc. etc.). There's no broad-based inflation because the new money coming into the economy is being saved at an extremely high rate - in other words, reduced velocity of money is offsetting the possible inflationary effect of increased money supply.

If America were to return to something closer to full employment (including the large numbers of non-working but working age people who are no longer looking for work) and those people were to make a living wage such that they had enough money to spend on consumer goods, I think you could see organic inflation. It might look something like the Clinton-era American economy. But as it is, the money pouring into the economy is just ending up with people who are already rich, and they're not spending it in such a way as to cause inflation. This causes a feedback loop: more $$ into the system does not cause inflation, which means that expectations for future inflation remain muted, which increases the value of stocks (and rewards saving/investing) and removes an inflation-fear based push to buy before prices rise. It basically the opposite of the inflationary spiral of (1) prices rise, (2) people rush out to buy things before they get more expensive, thus (3) increasing demand and forcing prices up faster.

I can't say what exactly is going to break the dynamic we're currently in. It feels mostly like a political construct - there is no inherent reason why the wealth gap should be at exactly the level it's currently at. If incomes become more evenly distributed (via, say, increased taxes on corporations or the wealthy) the system will rebalance and the new equilibrium state will likely have more inflation in it, lower stock prices but likely large GDP gains.

^Yes.

[MustacheAndaHalf]

chasesfish - Japan in the past (still?) rolled over their zombie loans.  Banks simply didn't call a loan in default, which is a serious financial malfunction.  While yes, the U.S. is doing that right now - it's for the purpose of getting past Covid-19.  So there will come a time when those foreclosures and debts come due.  I think it's delayed for maybe a year, not for decades like in Japan.

ChpBstrd - I suspect the people who protested mask mandates were also viewing news media that exclusively supported those beliefs.  I assume that meant not showing graves being dug, or stories about crowded hospitals.  In other words, a large number of people lacked accurate information about Covid-19, and their behavior reflected that misinformation.  That's unlike 9/11, where all news outlets were united in their coverage, and it was an intentional terrorist attack - not a virus that impacted countries around the world.

[TomTX]

As for the tesla safety argument, aside from actual structural designs that make it safer, it doesn't hold water bc a tesla is significantly heavier than a comparably sized vehicle (civic. Accord)   bc of those very heavy battery packs (incidentally the production of which makes teslas less environmentally friendly than ICE cars).   Maybe if the comparisons are to suburbans and hummers the two arguments hold up but that is more apples and Oranges,although that never stopped anybody

No. Tesla vehicles always get high or very high safety ratings from independent agencies. The "EVs weigh more!!!1111" is vastly overblown.

Model 3 SR+ is pretty comparable to an Accord in size and is only ~400 lbs heavier (the new cast frame will cut ~70 lbs of that). Model 3 is actually lighter than a Q50 if you want something in the same price range.

[tooqk4u22]

As for the tesla safety argument, aside from actual structural designs that make it safer, it doesn't hold water bc a tesla is significantly heavier than a comparably sized vehicle (civic. Accord)   bc of those very heavy battery packs (incidentally the production of which makes teslas less environmentally friendly than ICE cars).   Maybe if the comparisons are to suburbans and hummers the two arguments hold up but that is more apples and Oranges,although that never stopped anybody

No. Tesla vehicles always get high or very high safety ratings from independent agencies. The "EVs weigh more!!!1111" is vastly overblown.

Model 3 SR+ is pretty comparable to an Accord in size and is only ~400 lbs heavier (the new cast frame will cut ~70 lbs of that). Model 3 is actually lighter than a Q50 if you want something in the same price range.

If anything, that would fall under my structural comment.   My response was specifically to the lower weight of teslas due to the absence of an engine.   When in fact they actually weigh more than most or at best close in weight to some.  Point being having no engine does not make it safer. 

And besides, weight has a greater effect on what the vehicle hits.   

[TomTX]

Thanks for clearing up the reasoning behind the 'Tesla is safer' argument for me. Now I know!

TBH, I was surprised by the actual difference and thought they may weigh similarly. 

Accord weight- 3,150 - 3,430 lbs
Tesla S weight - 4,561 - 4,941 lbs

Tesla is 45% heavier!  Wow.

S is also a much larger car. And they haven't even made any this year.

It's like saying "Oh hey, a Crown Vic weighs more than a Civic! Wow!

Compare with Model 3.

[TomTX]

As for the tesla safety argument, aside from actual structural designs that make it safer, it doesn't hold water bc a tesla is significantly heavier than a comparably sized vehicle (civic. Accord)   bc of those very heavy battery packs (incidentally the production of which makes teslas less environmentally friendly than ICE cars).   Maybe if the comparisons are to suburbans and hummers the two arguments hold up but that is more apples and Oranges,although that never stopped anybody

No. Tesla vehicles always get high or very high safety ratings from independent agencies. The "EVs weigh more!!!1111" is vastly overblown.

Model 3 SR+ is pretty comparable to an Accord in size and is only ~400 lbs heavier (the new cast frame will cut ~70 lbs of that). Model 3 is actually lighter than a Q50 if you want something in the same price range.

If anything, that would fall under my structural comment.   My response was specifically to the lower weight of teslas due to the absence of an engine.   When in fact they actually weigh more than most or at best close in weight to some.  Point being having no engine does not make it safer. 

Are you unfamiliar with how crumple zones work? Having a huge block of metal between you and the front fender is a pretty big safety disadvantage (sure, modern engines are supposed to "submarine" instead of end up in your lap, still isn't as good). The next generation of Teslas with structural battery packs should be even better at passenger protection.

[tooqk4u22]

As for the tesla safety argument, aside from actual structural designs that make it safer, it doesn't hold water bc a tesla is significantly heavier than a comparably sized vehicle (civic. Accord)   bc of those very heavy battery packs (incidentally the production of which makes teslas less environmentally friendly than ICE cars).   Maybe if the comparisons are to suburbans and hummers the two arguments hold up but that is more apples and Oranges,although that never stopped anybody

No. Tesla vehicles always get high or very high safety ratings from independent agencies. The "EVs weigh more!!!1111" is vastly overblown.

Model 3 SR+ is pretty comparable to an Accord in size and is only ~400 lbs heavier (the new cast frame will cut ~70 lbs of that). Model 3 is actually lighter than a Q50 if you want something in the same price range.

If anything, that would fall under my structural comment.   My response was specifically to the lower weight of teslas due to the absence of an engine.   When in fact they actually weigh more than most or at best close in weight to some.  Point being having no engine does not make it safer. 

Are you unfamiliar with how crumple zones work? Having a huge block of metal between you and the front fender is a pretty big safety disadvantage (sure, modern engines are supposed to "submarine" instead of end up in your lap, still isn't as good). The next generation of Teslas with structural battery packs should be even better at passenger protection.

Me - commented to poster who heard that tesla has no engine weighing it down so must be safer.

Me - say not so bc they weigh more while acknowledging that structure design is ignored in this. (i.e just weight comparison)

You - yeah but structure....

Me - yeah but it was just the weight aspect being discussed....

You - yeah but structure....

Structure and design matter more than weight but that doesn't negate the fact that the comment was just about the weight comparison in that teslas are safer than a comparable car bc they weigh less bc they don't have an engine.....it's false bc they don't weigh less!  That's it.

If you substitute tesla with 2.5 steel ball and accord/g50/comparable size vehicle with tennis ball you would have two things of generally equal size.
Somebody says that the steel ball is safer for whatever reason.  And I say let me throw both at you and tell me which one hurts more. One weighs more than the other.  That's it.   

Of course, feel free to make it about the structural design of the steel ball vs the tennis ball.