What we’re reading (12/22)
“A New Chat Bot Is A ‘Code Red’ For Google’s Search Business” (New York Times). “Although ChatGPT still has plenty of room for improvement, its release led Google’s management to declare a “code red.” For Google, this was akin to pulling the fire alarm. Some fear the company may be approaching a moment that the biggest Silicon Valley outfits dread — the arrival of an enormous technological change that could upend the business.”
“Housing Market Doesn’t Need Much For Buyers To Return” (Washington Post). “A better guess about where the housing market will stabilize would take into account the fact that housing activity was still just fine up until April, even though affordability was much worse than pre-pandemic. You also would need to account for the squiggles in the data as mortgage rates have moved up and down since then. And those measures suggest it wouldn’t take much for the housing market to get back into balance with more stable pricing and transactions. It might take as little as mortgage rates falling back to below 6%, or some additional modest declines in home prices combined with a little more wage growth for workers.”
“What The Fed Should Do Next On Inflation” (Larry Summers, Washington Post). “It is very unlikely that we will have a recession so severe as to drive the underlying inflation rate below the 2 percent target. Hence, overshooting on inflation reduction is not the primary risk, and the Fed is right to emphasize its inflation objective going forward. This judgment is supported by another consideration. There has been a transitory element in inflation’s recent deterioration caused by bottlenecks in sectors such as used cars. As these bottlenecks ease, and prices return to normal, there will be a transitory deflationary impact hitting the statistics. This must not be confused with enduring resolution of the inflation problem.”
“A Strong Signal That Recession Is Looming” (New York Times). “[G]oing back to 1968, every time the long-term rate was at least 0.07 percentage points higher than the short-term rate, the economy escaped recession. And every time the long-term rate became at least 0.07 percentage points lower than the short-term rate, the economy entered a recession within six to 17 months. The average gap so far in December is 0.81 percentage points, which is the biggest since 1981 and deep into recessionary territory.”
“Japan’s Consumer Inflation Hits Fresh 40-Year High” (CNN Business). “Japan’s core consumer inflation hit a fresh four-decade high as companies continued to pass on rising costs to households, data showed, a sign price hikes were broadening and could keep the central bank under pressure to whittle down massive stimulus.”
