I had a friend at Discover who said their (Disovers thoughts) on the next recession was 2017 or 2018.
And since COVID hit, people have been yelling recession every month since. At this point, I don't think there's much of a benefit for a regular joe to know when the recession is going to hit. Best bet is to ride it out when it does hit and have a few months (3-9) of savings to ride out the storm if you happen to lose your job.
Having a year or so of savings seems like a great idea generally, if you can swing it (and once the savings buffer is established, it doesn't require more tending). It switches many financial problems out of the "emergency" class, and emergencies are expensive to deal with.
It is sort of like the opposite of an emergency credit card.
It requires some important tending in the current environment, as that years savings is no longer a years savings. If you're not adding to it as inflation increases and costs rise you're in for a surprise when you need it.
That's true, a little is necessary to keep up with inflation. But, qualitatively, 11 months and 12 months are pretty similar, and I suspect lots of people track their expenses imprecisely enough that inflation is in the error bars.
By 2024? Really? The recession has already begun. It started as soon as the fed started to unwind its balance sheet and raise rates. It will continue so long as the fed has to keep raising rates to get inflation under control. Go back and study the 1980 recession. This is going to be a smaller rerun of that recession. Buckle up everyone, it's going to get worse before it gets better.
Definitely global. China is a disaster economically as well. Europe is getting a double shot with Russia and the Ukraine war, energy, trade, war costs, etc.
I would suggest keeping a good relationship with your current employer and network of business contacts. If you do end up losing your job, a recession is a great time to go back to school for additional training or to get more certification. A short college program with a job placement can especially be helpful. At least, that's how I usually handle recessions. I'm trying to sync my training, so that it finishes at about the same time as the economy is improving.
If people knew we wouldn't be in an economic crisis. There are absolutely no right answers at this point, but there will be in hindsight. Imagine someone in 1999 saying they're going to join Amazon (or even Apple for that matter) it would have seemed crazy and foolish. Some people at Pets.com might have decided to stay put as to not be a new hire at another company doing layoffs. At the same time someone might have left a job a at a bank they hated to start a new career at Pets.com. It's impossible to know in the moment.
The trick for both companies and individuals in down turns is adaptability. Some people will say "stay put!" other will say "find your next job quick before it's too late", but you can be sure of neither of these.
The only dangerous plan is to try to find stability in unstable times. This is a trap a lot of people fall into.
Make sure your resume is up to date, think about what's important to you, and keep any eye on where the world is evolving. A lot of career changes happen during down turns so don't expect to do what you're doing this year next year. This is more true the more severe the situation. The key to survival if it gets that bad is not hesitating to adapt and try something new, this is also the key to finding success in these times if you're looking for more than survival.
You need an emergency fund. 6 months in savings, preferably another 6 months in ibonds. After a year you can roll the 6mo in savings into another tranche of ibonds.
Of course, this may not be necessary if you have 3x your yearly expenses in investments you can cash out if needed, but better safe than sorry.
> I think this is going to look a lot more like 2001-02
You mean Mar-Nov 2001?
That’s kind of my fear. Because while it was an extremely mild and short recession in aggregate terms, the recovery afterward had the worst distributional profile of any recovery in recent memory, seeing declines in the bottom three quintiles, the second-from-the-too quintile mostly flat, and almost all the gains concentrated in a very narrow slice at the top of the top quintile, which was a big reason for how bad the Great Recession was.
And there is a lot of indication that a 2024-ish recession could see a similar, or even worse, policy environment in the US to the one that produced the bad outcomes of the recovery from the 2001 recession.
That's exactly what it will be. Unless we dramatically increase energy usage.
By not being permitted to increase energy usage, all the money is being made with capital, instead of physical things, which helps those at the top.
The only fields "available" if you will, to making money with are those that are intangible, capital, intellectual property, things like that. And those types of things help those at the top.
> So you’re worried that this recession will not be severe but the recovery could be terrible and set us up for another recession in 10 years?
No, I’m worried that the recession, even if not severe in aggregate terms, will be the occasion of a policy response that will set us up for an extended period of bad economic experience for most of the population despite a strong aggregate economy culminating in a catastrophic aggregate collapse both caused by and compounding the bad experience of the bulk of the population.
Top line aggregate numbers don't capture the general experience of the economy.
> Seems like what you are really saying is that you want an 80s style boom recovery
No, I am saying (to the extent a recent historic precedent is the model, though I don't expect the specific causes can or should be replicated) I want a 90s style boom recovery; the 80s “boom“, while not as bad as the 2000s expansion in distributional terms, was far worse than the 90s boom (e.g., real hourly wages fell through 1980s expansion, while rising overall—leveling out in the first few years, and rising strongly after—in the 1990s expansion.)
Well, I think that is a valid worry, but nevertheless my point was that i believe we are headed to a mild recession and that is a far better outcome than a severe recession. But yes, a robust recovery is also better than a weak one and you seem to be focusing on the kind of recovery we might experience. So it seems we are talking past each other.
> nevertheless my point was that i believe we are headed to a mild recession and that is a far better outcome than a severe recession.
Ceteris paribus, I would agree, but I don't think that policy response and the effect on the distributional shape of the post-recession recovery is independent of the dimensions of the recession (though there are other aspects of the economic and political context that play a role.)
There was a general feeling that the preceding recession never ended leading into the Great Recession and the reason for that is that if you look at the experience across the economy adverse conditions persisted across most income segments despite aggregate expansion. It is my contention that as well as an alignment of the right political conditions when the recession occurred, the policies which contributed to this were able to be implemented and sustained, in significant part, because the aggregate recession was short and mild.
You can see prices going up, people losing huge amounts of buying power, companies laying off people, all at the same time and almost none of the opposite.
You don't see anyone hiring in America? Everywhere in New York I see "help wanted" signs.
That's the problem with applying "I know it when I see it" to an economy. Anecdotes from our daily lives and viral social media posts don't even begin to tell the full picture of activity among 330 million people. And the aggregate indicators are necessarily lagging.
Actually, as you're seeing, defining words based on how you feel makes language more difficult than just understanding what the article is about.
The Economist is using the word "recession" to mean what economists define it as: two consecutive quarters of negative GDP growth.
So what's the point of commenting on the article and then rejecting the article's assumption? If someone wrote an article on compilers, would you jump in to say that Microsoft Word is a compiler in your heart?
The accepted definition of the word "recession" is not "how pfortuny feels about his financial prospects whatever the GDP says."
We have a somewhat sane definition, but we can’t use said definition because we don’t feel like it, and that makes everything clearer (“language would be impossible”).
Feel free to define your own terms, don’t pretend terms are undefinable…
The org responsible for calling recessions uses a 2q lookback. We'll need another quarter of data to officially 'know' for sure, that we're in one, but I'm of the belief that it's already started and it's only a matter of time before it's confirmed.
> Are you saying it feels like a recession or that we have already had two quarters of declining GDP?
US GDP dropped 1.4% in the first quarter, so it's entirely possible that a recession has already started. If GDP declines again in the next quarter, then at that point it will (retroactively) be confirmed that there is presently a recession.
I mean they don’t “have to;” it’s a deliberate policy decision, as it was then, to slow economic growth, increase unemployment, and lower wages, in order to curb inflation and discipline labor. We have a political culture where everyone pretends this is a law of the universe but it isn’t really.
The Federal Reserve is given a "dual mandate" written into US law by Congress and signed by the President? So not exactly a "law of the universe" but I wouldn't recommend going around arguing you don't "have to" do things if they don't meet that standard.
I’m eagerly looking forward to the logical pretzeling SCOTUS will engage in to pretend Congress can’t delegate regulating making authority to the EPA but it can do this for the FED.
High inflation will have knock on effects in which consumers will eventually stop buying items, instead focusing on the bare essentials either out of fear or actual cost cutting needs.
This reduction in spending will largely affect non core spending like services and luxury-ish/luxury goods like electronics, cars, houses, etc. This happens to be where the bulk of the US economy is focused which means a slow down in spending there will effect workers in those industries.
Couple that with higher core good costs and just natural momentum in regards to spending. You're left with large parts of the economy that experience a flywheel effect that make it harder to purchase things and further reduce the ability to spend on other non-essential goods and even when things start to change, peoples mindset on spending takes years to shift with it.
All of this leads to reduced demand and ultimately a recession.
Inflated revenues do not show gouging - they show increased costs to sellers.
Inflation alone will increase the numerical value of revenues and profits.
Gouging implies sellers are making significantly more than they used per same amount of sales.
So to demonstrate gouging you should demonstrate increased profit/revenue. I have looked at multiple industries main players, and find no evidence of this (as has many economists).
Again, does anyone have solid evidence for this claimed "gouging" in some sector other than opinions?
You realize the creative accounting companies do to make their profit as close to zero right?
For example, look at the number of stock buybacks. This is money that you're spending with these companies for them to go buy their own stocks, reducing their tax burden.
Theres a ton more. Do you have evidence price gouging isn't happening? Other than looking at the most basic thing of profits?
>This is money that you're spending with these companies for them to go buy their own stocks, reducing their tax burden.
No. Companies pay tax on profit, then use post tax profit to buy back stocks. Learn tax law before making up stuff.
> You realize the creative accounting companies do to make their profit as close to zero right?
Anything they do illegal under tax law should (and is) prosecuted. There is no need for any entity, whether it be a person, a company, a non-profit, a charity, any entity, should pay more in taxes than the laws states.
>Do you have evidence price gouging isn't happening?
Yes, it does not show up in economic analyses of companies. Economists who also study such things have written they also don't fund evidence.
So, now do you have evidence there is any sector wide gouging, other than hand wavy pop culture feelings and rambling?
I told you really solid evidence that the allows checking the pop ignorance on the issue. Now provide the solid evidence to the contrary. Invoking wizards and magic and conspiracies is not evidence.
I would be very surprised if it's a mimic of the early 1980's. It's a different employment and consumer spending environment. BoA CEO is fairly optimistic.
It's the latest recession I know of where the fed raised rates with the explicit purpose of killing inflation.
The tricky thing about inflation, is once people start to believe inflation will continue it takes a whole lot of pain to stop the wage / price spiral and convince them otherwise.
Let inflation get out of hand, and it's very hard to put back in the bottle.
The 80s was a period of stagflation though and not just inflation. I don't see even the most bearish analysts predicting stagflation. Inflation combined with low unemployment and wage growth is a whole new territory.
lol no, US didn't have 30 trillion in debt last time and didn't have a peer competitor to offer an alternative currency like China. Eventually other countries are going to get tired of subsidizing poor US government decision making and move to something else. The US pulling financial stunts like they did with Russia is making even neutral and allied countries look for alternative or backup financial systems
US has to stop inflation which also makes their debt more expensive to manage. Worst case scenario is basically a death spiral. Best case is still vastly lowered living standard for US citizens.
our economy has been propped up by massive debt spending that hasn't been efficient at all. Productivity can't be faked using financial tricks, only innovation that boosts productivity matters
This is a fantasy. China is not even close to a peer competitor if you look at the amount of food insecurity it has. China is hard pegged to the US wether you like it or not.
I was talking financially for investment, not in terms of warfare
but China won't have many worries about food or energy insecurity now because US sanctions have forced Russia into their arms. China will have all the food and oil they need via Russia and they'll get it cheap
>That's not how national debt works, like, at all.
rapidly increasing debt with no economic growth is a good thing?
wouldn't surprise me, having Russia as a vassal state solves almost all of China's potential problems. China is pretty much immune to most forms of sanctions or embargo that the West could do to try and punish them. Only issue I can see for them is the transition of power from Xi to whoever is next, otherwise they are in great shape
It still doesn't solve their demographic issues though. Both Russia and China are basically at their peak from a demographic and economic standpoint. It only gets worse for them from here unless they can resolve their fertility rates.
China is rapidly automating their manufacturing and it's not crazy to think many more mundane tasks will be automated away over the coming decades with the rapid advancements in AI. Throwing more bodies at a problem rather than focusing on being more productive through technology is stone age thinking that for some reason the West is obsessed with
I am ignorant. How does the Fed unwinding its balance sheet and raising it rates affect things in the real economy like consumer demand/spending, unemployment, production?
In simple terms, all those things make borrowing more expensive, reducing effective money supply and aggregate demand, slowing the economy (and inflation), while loose money policies do the opposite.
That's pretty much the whole point of Fed monetary policy, balancing the desire for price stability (low volatility) and low inflation with that for full employment by moving the right money vs. loose money lever.
(Fine tuning distributional impacts is not their job, but retained by Congress which has more levers to pull, but unfortunately Congress tends to be asleep at the switch on economic policy when they aren't actively pushing in the wrong direction.)
This is one of those instances where everybody screams for a market crash and we may just not get it. Too many people are positioned to benefit from a crash right now, which is exactly why it's not going to happen.
Yup - the growth the past 2 years has been great. Up 33%!
Over the past 5 years, 70% growth.
Looking at short timelines doesn't tell you much. There's some fear in the investment world, but the market is not "the economy." It's more of an indicator of what's going on in the minds of investors. They might think we're already in a recession, or are heading towards one, that doesn't make it so.
Yep people/firms with money have no where to put it and are salivating at companies becoming bargains after a chaotic summer, greed will overtake fear before you know it.
the idea that there's nowhere to put capital without a ballooning or nosediving market is a thread in the mental straitjacket that untethered us from reality in the first place
there is an ocean of opportunity, it's just that investing in it is less likely to maximize alpha and more likely to benefit all our children and grandchildren at some immediate financial risk to ourselves and direct dependents
Easy to say when it's not your money, I'm mostly hunting alpha and not surprised most institutions are as well... except maybe big educational / charity endowments who presumably have nobler goals.
I'd wager more people are poised to lose from a crash than ever before.
Roughly 1/3rd of America is over 55+ [1], the highest it's ever been (I believe), and the average baby boomer retirement savings are ~$200k [2]. Asset prices falling is an existential and imminent danger for these people. If prices stop rising, they will have to be supported directly by family or the state, or go out onto the street.
For every working-age HN commenter calling for blood to run through Wall Street to be able to buy a starter home, there are just as many people terrified of the future.
$200k not including social security though, which won't be nearly as impacted by a crash in equities. I also wonder how much of that $200k is in stocks vs bonds / CDs / home equity (not sure if this is counted) etc.
Great observation, however Social Security only has 11 years before the system as we know it today has to cut payments [1]. I too would love to know the breakdown of the 200k.
Even with Social Security payments however I still think a sharp fall in home prices or stock prices would be catastrophic for the retiring generation.
There's a second option where they just raise social security taxes or inject other tax revenue into it. I think that's more likely, cutting payments seems politically unfeasible.
The Fed is looking at the wage increases in the economy (which are blunting the effects of commodities inflation on the consumer) along with unionization drives and will definitely be hitting the brakes hard on the economy.
So for example:
"Fed Governor Christopher Waller says he's prepared to take rates past 'neutral' to fight inflation"
But to really throw the brakes on the economy the yield curve should actually invert and short rates should be at least 3-4% or more.
And I disagree with the title article that the recession is likely to be "mild" since the Fed is going to introduce significant amounts of pain and things like CMBS are pretty much primed to detonate and create a financial crisis (along with the likelihood of a massive crypto collapse). If the Republicans take over congress that will also create a lot more excitement than in 2008 since many of the Tea Party Republicans are ostensibly against bailouts and TBTF and will see economic chaos as a way to damage Biden.
Meanwhile, in the UK the "real GDP per capita" is still below its 2007 peak, as have a lot of Western economies. In other words, if you count it differently much of the world has been in a sort of "real terms depression" for several years.
It's pretty amazing that the US has continued to grow over the last 15 years.
Hasn't every developed country in the world been doing aggressive QE? My theory for growth is that we have a relatively higher working age population. The demographic dividend, they call it.
Real gdp per capita has grown fairly steadily in PPP terms in the UK since 2007, the issue is that the pound has been devalued against the dollar over that period, whereas the dollar is always worth a dollar.
The UK doesn't have Apple, Google, Microsoft, Tesla and every other major tech company, I think tech really gave the US economy a shot in the arm while the rest of the world(besides China?) languished after the 2008 meltdown.
This always seems confusing to me. How are we not already in a recession? What specifically must happen to officially declare a recession?
My savings (including 401k) have gone down 24% since a year ago. Dinner at a restaurant / UberEats costs 30% - 50% more than a year ago. What else must happen to call it what it is?
Read gdp decrease sustained. And increse in uneployment are good indicators. Not much is budging on either front. The economy is not based on uber eats costs.
In the US, traditionally it has been marked by 2 consecutive quarters of declining GDP but I think the definition is moving away from that, in part because it is such a lagging indicator, and may not be representative of a lot of other factors within an economy.
Generally though we are looking for a couple month period of time in declining employment, GDP, etc...overall health of the economy.
> The committee places particular emphasis on two monthly measures of activity across the entire economy: (1) personal income less transfer payments, in real terms and (2) employment. In addition, we refer to two indicators with coverage primarily of manufacturing and goods: (3) industrial production and (4) the volume of sales of the manufacturing and wholesale-retail sectors adjusted for price changes. We also look at monthly estimates of real GDP such as those prepared by Macroeconomic Advisers (see http://www.macroadvisers.com). Although these indicators are the most important measures considered by the NBER in developing its business cycle chronology, there is no fixed rule about which other measures contribute information to the process.
I was comparing to peak, not specifically a year ago, my bad.
Most of my savings are in index funds, specifically FNCMX and FFIDX. I know in very real terms the value of my savings is down 23.57% compared with November 23rd 2021.
And the economy is not doing bad by most measures. The stock market is only one component of the economy. Unemployment is at near record lows, there are 2 job openings for every job seeker. Wages are up. Profits are up for many industries.
If all your assets are equities, you might not feel like you are doing that well. If your assets are in real estate, you are probably richer than you've ever been.
the rule of thumb i've always seen is "consecutive quarters of negative economic growth" - in other words, negative change in GNP (have seen GDP used as well) after accounting for inflation.
since these indicators are always published after a time period has occurred and been tabulated, its possible we have crossed the threshold and are in a recession as we speak.
Q1 2022 is estimated at -1.5% right now, the final number will be released on 6/29. Meaning Q2 final data will be released sometime around the end of September, to make it an "official" recession (if Q2 ends up being negative).
> My savings (including 401k) have gone down 24% since a year ago.
If your 401k correlates much with the S&P 500 to some degree, can't you comfort yourself and get some additional perspective just by looking a few years back, rather than one?
> Economists estimate that 325K jobs were added in May, down from the 428K increase in April. The unemployment rate is expected to improve slightly to 3.5% from 3.6% in April.
Doesn't it only take two quarters of lower GDP growth from the prior two quarters for it to be a recession? Like there is no moving average, there is no high watermark, its such a easy to hit metric that its remarkable we don't have this more often.
> Doesn't it only take two quarters of lower GDP growth from the prior two quarters for it to be a recession?
No, the usual rule of thumb is “two quarters of negative GDP growth” not “two quarters of lower GDP growth than the prior two quarters”.
(Though for the US, the closest thing to an “official” recession definition—which is neither official nor even government—is “the NBER has declared a recession”, which is done based on multiple dimensions with no explicit criteria.)
People have it backwards. *Will be downvoted due to contrarian view
A recession happened in 2008-2009 due to greedy mortgage investments, and the fed stepped in with quantitative easing (QE) to fix it. Yes, many people lost their jobs and houses, but for the next 10 years, the economy recovered and GDP boomed.
A pandemic hit in 2020, the fed stepped in w/ QE again. Inflation and war today, fed steps in again w/ quantitative tightening (QT). The masses are always so prone to basic survival instincts of fear (FUD) and greed (FOMO).
On the backstage, businessman & financiers take advantage of this psychology for economic gain: selling gold, crypto, ICOs, IPOs, SPACs, pulse oximeters, mortgages, what have you...
While these elite brainwash the masses (via search, social media, trad. media, entertainment, etc.), the fed is "demonized" for keeping the country hustling, producing, and growing [1].
Printed money? It is to keep you productive and prevent you from loosing your mind...be grateful for having a government that can step in to help instead of actually stealing from people [2] and having a work culture that can justify/fuel this [3].
As long as these tenets stay, demand for the American dream/way of life/dollars will survive, so take a deep breath...
Between the housing crisis and COVID-19 the Fed never really pulled back, interest rates stayed at almost zero. As a result the economy was overinflated going right into covid and then we had the unusual economic steps during covid and now an enormously larger amount of money in the economy that can only get sucked out with high fed rates or by being inflated away (and can't be justified with growth because actual growth isn't happening anywhere remotely near where the supply of money has grown)
The answer is straightforward, as a system (input, output): COVID decreased productivity (lockdowns, deaths, supply chains, etc.), so money was created to recover and boost this loss, to restore the balance [to the force ;D].
Man. That must be one hell of a "smoke-filled back room" where all of this snookering gets coordinated. And to think -- not a single snitch in decades to reveal the man behind the curtain! Incredible, when you realize that no two simple bank robbers can keep their mouths shut about a neighborhood heist.
There were several "glitches", not many because of the cost if revealed and the power of brainwashing, because the system is so well built to hide the lies.
Everyone would rather shut up, as long as they get paid. The internet just amplifies these behaviors anonymously.
No conspiracy needed either. As sinister as this sounds, this is how people and society work, if you bother to look...
.... also due to people taking mortgages they could not pay to try and win housing bingo.
If people had not promised to pay for mortgages they could not, lying on forms to get such mortgages, then they would not have defaulted at record rates, increasing risk for investments.
It was meant that way to counter sole blame on "due to greedy mortgage investments".
And it is correct - see my other post in this thread with all the relevant FRED data series on people's finances leading up to the 2008-2009 crisis. People most certainly ran many of their own indicators to record highs before the crash, by choice, by choosing more debt than they could manage.
Well, if you believe people don't have free will, then no sense blaming your "elite" either. Everyone is only doing what they're programmed to do, no sense in holding anyone accountable for any actions ....
Or you can face that people do choose to buy things.
If you believe mortgage purchasers are such idiots that they cannot understand a simple household budget, then we are all in trouble.
The fact is that many, many of them were trying to win a real estate lottery.
Here's [1] FRED mortgage payments as a percent of disposable income leading up the crash. Notice the record all time high? That is people choosing to run up debt for decades until it popped.
Here's [2] the FRED series on household debt as percent of disposable income leading up the crash. Again, note the all time high and run up period.
Here's [3] FRED series on household debt to GDP - same result.
So you can claim somehow people were cattle with zero input on any financial choices or consequences, but that's simply not backed by the evidence.
People were choosing to believe that the gains would never stop.
It's hitting for me. My electricity price doubled, gas for the house is up, home insurance up $450 over last year, 401k in the red. I'm cutting back on everything I can because I have to. I don't know how people scraping by are going to survive this. It's not like there aren't jobs, it's just the amount they pay doesn't offset the cost of food or fuel at this point.
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[ 2.6 ms ] story [ 215 ms ] threadAnd since COVID hit, people have been yelling recession every month since. At this point, I don't think there's much of a benefit for a regular joe to know when the recession is going to hit. Best bet is to ride it out when it does hit and have a few months (3-9) of savings to ride out the storm if you happen to lose your job.
It is sort of like the opposite of an emergency credit card.
The trick for both companies and individuals in down turns is adaptability. Some people will say "stay put!" other will say "find your next job quick before it's too late", but you can be sure of neither of these.
The only dangerous plan is to try to find stability in unstable times. This is a trap a lot of people fall into.
Make sure your resume is up to date, think about what's important to you, and keep any eye on where the world is evolving. A lot of career changes happen during down turns so don't expect to do what you're doing this year next year. This is more true the more severe the situation. The key to survival if it gets that bad is not hesitating to adapt and try something new, this is also the key to finding success in these times if you're looking for more than survival.
Of course, this may not be necessary if you have 3x your yearly expenses in investments you can cash out if needed, but better safe than sorry.
But in any event it might get worse before it gets better.
You mean Mar-Nov 2001?
That’s kind of my fear. Because while it was an extremely mild and short recession in aggregate terms, the recovery afterward had the worst distributional profile of any recovery in recent memory, seeing declines in the bottom three quintiles, the second-from-the-too quintile mostly flat, and almost all the gains concentrated in a very narrow slice at the top of the top quintile, which was a big reason for how bad the Great Recession was.
And there is a lot of indication that a 2024-ish recession could see a similar, or even worse, policy environment in the US to the one that produced the bad outcomes of the recovery from the 2001 recession.
By not being permitted to increase energy usage, all the money is being made with capital, instead of physical things, which helps those at the top.
The only fields "available" if you will, to making money with are those that are intangible, capital, intellectual property, things like that. And those types of things help those at the top.
Sure, but I will still take a mild recession over the multi year double dip 1980 variety.
Seems like what you are really saying is that you want an 80s style boom recovery - me too!
No, I’m worried that the recession, even if not severe in aggregate terms, will be the occasion of a policy response that will set us up for an extended period of bad economic experience for most of the population despite a strong aggregate economy culminating in a catastrophic aggregate collapse both caused by and compounding the bad experience of the bulk of the population.
Top line aggregate numbers don't capture the general experience of the economy.
> Seems like what you are really saying is that you want an 80s style boom recovery
No, I am saying (to the extent a recent historic precedent is the model, though I don't expect the specific causes can or should be replicated) I want a 90s style boom recovery; the 80s “boom“, while not as bad as the 2000s expansion in distributional terms, was far worse than the 90s boom (e.g., real hourly wages fell through 1980s expansion, while rising overall—leveling out in the first few years, and rising strongly after—in the 1990s expansion.)
Ceteris paribus, I would agree, but I don't think that policy response and the effect on the distributional shape of the post-recession recovery is independent of the dimensions of the recession (though there are other aspects of the economic and political context that play a role.)
There was a general feeling that the preceding recession never ended leading into the Great Recession and the reason for that is that if you look at the experience across the economy adverse conditions persisted across most income segments despite aggregate expansion. It is my contention that as well as an alignment of the right political conditions when the recession occurred, the policies which contributed to this were able to be implemented and sustained, in significant part, because the aggregate recession was short and mild.
Are you saying it feels like a recession or that we have already had two quarters of declining GDP?
Otherwise, language would be impossible.
What is the definition of “being sick”?
You can see prices going up, people losing huge amounts of buying power, companies laying off people, all at the same time and almost none of the opposite.
Whatever the time it takes, that is a recession.
That's the problem with applying "I know it when I see it" to an economy. Anecdotes from our daily lives and viral social media posts don't even begin to tell the full picture of activity among 330 million people. And the aggregate indicators are necessarily lagging.
if they had been hiring, they wouldn't need the help wanted signs - now when i see help wanted i think "doesn't offer high enough wages to get help"
Actually, as you're seeing, defining words based on how you feel makes language more difficult than just understanding what the article is about.
The Economist is using the word "recession" to mean what economists define it as: two consecutive quarters of negative GDP growth.
So what's the point of commenting on the article and then rejecting the article's assumption? If someone wrote an article on compilers, would you jump in to say that Microsoft Word is a compiler in your heart?
The accepted definition of the word "recession" is not "how pfortuny feels about his financial prospects whatever the GDP says."
We have a somewhat sane definition, but we can’t use said definition because we don’t feel like it, and that makes everything clearer (“language would be impossible”).
Feel free to define your own terms, don’t pretend terms are undefinable…
US GDP dropped 1.4% in the first quarter, so it's entirely possible that a recession has already started. If GDP declines again in the next quarter, then at that point it will (retroactively) be confirmed that there is presently a recession.
https://www.chicagofed.org/research/dual-mandate/dual-mandat...
There's no free lunch where you get to shut down big sections of your economy for a year or more and then afterwards it's like nothing happened.
Either high inflation causes a recession or the things you do to avoid high inflation causes a recession.
I'm not familiar enough with historical examples of inflation to know.
This reduction in spending will largely affect non core spending like services and luxury-ish/luxury goods like electronics, cars, houses, etc. This happens to be where the bulk of the US economy is focused which means a slow down in spending there will effect workers in those industries.
Couple that with higher core good costs and just natural momentum in regards to spending. You're left with large parts of the economy that experience a flywheel effect that make it harder to purchase things and further reduce the ability to spend on other non-essential goods and even when things start to change, peoples mindset on spending takes years to shift with it.
All of this leads to reduced demand and ultimately a recession.
Which sector(s) do you claim is gouging people for higher than normal profits? Have evidence in the form of profit/loss records?
Inflation alone will increase the numerical value of revenues and profits.
Gouging implies sellers are making significantly more than they used per same amount of sales.
So to demonstrate gouging you should demonstrate increased profit/revenue. I have looked at multiple industries main players, and find no evidence of this (as has many economists).
Again, does anyone have solid evidence for this claimed "gouging" in some sector other than opinions?
You realize the creative accounting companies do to make their profit as close to zero right?
For example, look at the number of stock buybacks. This is money that you're spending with these companies for them to go buy their own stocks, reducing their tax burden.
Theres a ton more. Do you have evidence price gouging isn't happening? Other than looking at the most basic thing of profits?
No. Companies pay tax on profit, then use post tax profit to buy back stocks. Learn tax law before making up stuff.
> You realize the creative accounting companies do to make their profit as close to zero right?
Anything they do illegal under tax law should (and is) prosecuted. There is no need for any entity, whether it be a person, a company, a non-profit, a charity, any entity, should pay more in taxes than the laws states.
>Do you have evidence price gouging isn't happening?
Yes, it does not show up in economic analyses of companies. Economists who also study such things have written they also don't fund evidence.
So, now do you have evidence there is any sector wide gouging, other than hand wavy pop culture feelings and rambling?
I told you really solid evidence that the allows checking the pop ignorance on the issue. Now provide the solid evidence to the contrary. Invoking wizards and magic and conspiracies is not evidence.
https://www.cnbc.com/2022/05/24/bank-of-america-ceo-says-not...
The tricky thing about inflation, is once people start to believe inflation will continue it takes a whole lot of pain to stop the wage / price spiral and convince them otherwise.
Let inflation get out of hand, and it's very hard to put back in the bottle.
https://www.federalreserve.gov/newsevents/pressreleases/mone...
The effects of raising interest rates in May take at least 12 months
lol no, US didn't have 30 trillion in debt last time and didn't have a peer competitor to offer an alternative currency like China. Eventually other countries are going to get tired of subsidizing poor US government decision making and move to something else. The US pulling financial stunts like they did with Russia is making even neutral and allied countries look for alternative or backup financial systems
US has to stop inflation which also makes their debt more expensive to manage. Worst case scenario is basically a death spiral. Best case is still vastly lowered living standard for US citizens.
our economy has been propped up by massive debt spending that hasn't been efficient at all. Productivity can't be faked using financial tricks, only innovation that boosts productivity matters
https://fred.stlouisfed.org/series/GFDEGDQ188S
Until China is a lot more transparent, the yuan won't be a major reserve currency.
> US didn't have 30 trillion in debt
That's not how national debt works, like, at all.
That means that food security issue is far less of a problem.
but China won't have many worries about food or energy insecurity now because US sanctions have forced Russia into their arms. China will have all the food and oil they need via Russia and they'll get it cheap
>That's not how national debt works, like, at all.
rapidly increasing debt with no economic growth is a good thing?
my latest conspiracy is that china conned russia into getting embroiled in a war via bad intelligence in order to:
A : evaluate western response and capabilities
B : bottom out the cost of russian food and fuel for their own benefit
That's pretty much the whole point of Fed monetary policy, balancing the desire for price stability (low volatility) and low inflation with that for full employment by moving the right money vs. loose money lever.
(Fine tuning distributional impacts is not their job, but retained by Congress which has more levers to pull, but unfortunately Congress tends to be asleep at the switch on economic policy when they aren't actively pushing in the wrong direction.)
Yup - the growth the past 2 years has been great. Up 33%!
Over the past 5 years, 70% growth.
Looking at short timelines doesn't tell you much. There's some fear in the investment world, but the market is not "the economy." It's more of an indicator of what's going on in the minds of investors. They might think we're already in a recession, or are heading towards one, that doesn't make it so.
there is an ocean of opportunity, it's just that investing in it is less likely to maximize alpha and more likely to benefit all our children and grandchildren at some immediate financial risk to ourselves and direct dependents
Roughly 1/3rd of America is over 55+ [1], the highest it's ever been (I believe), and the average baby boomer retirement savings are ~$200k [2]. Asset prices falling is an existential and imminent danger for these people. If prices stop rising, they will have to be supported directly by family or the state, or go out onto the street.
For every working-age HN commenter calling for blood to run through Wall Street to be able to buy a starter home, there are just as many people terrified of the future.
[1] https://www.populationpyramid.net/united-states-of-america/2...
[2] https://finance.yahoo.com/news/average-retirement-savings-ba....
[2 alt] https://www.fool.com/retirement/2021/08/24/heres-baby-boomer...
Even with Social Security payments however I still think a sharp fall in home prices or stock prices would be catastrophic for the retiring generation.
[1] https://www.washingtonpost.com/business/2021/09/03/social-se...
[1 skip paywall] https://archive.ph/OaBIv
EDIT: changed social security going from "bankrupt" to "cutting payments"
Longer term, I'm pretty confident you're incorrect.
The Fed is looking at the wage increases in the economy (which are blunting the effects of commodities inflation on the consumer) along with unionization drives and will definitely be hitting the brakes hard on the economy.
So for example:
"Fed Governor Christopher Waller says he's prepared to take rates past 'neutral' to fight inflation"
https://www.msn.com/en-us/money/markets/fed-governor-christo...
But to really throw the brakes on the economy the yield curve should actually invert and short rates should be at least 3-4% or more.
And I disagree with the title article that the recession is likely to be "mild" since the Fed is going to introduce significant amounts of pain and things like CMBS are pretty much primed to detonate and create a financial crisis (along with the likelihood of a massive crypto collapse). If the Republicans take over congress that will also create a lot more excitement than in 2008 since many of the Tea Party Republicans are ostensibly against bailouts and TBTF and will see economic chaos as a way to damage Biden.
Good cop, bad cop: "Bullard says U.S. Fed could cut rates in 2023, 2024 once inflation under control"
https://www.theglobeandmail.com/business/international-busin...
given the rise in wages and overhang in jobs i don't think getting inflation under control will be easy.
"US fed could cut rates in 2023, 2024 once the economy has been pushed into a deep recession" is how I read that statement.
It's pretty amazing that the US has continued to grow over the last 15 years.
Aggressive quantitative easing since 2008, and then a short pause, and then tons more of that in 2020
My savings (including 401k) have gone down 24% since a year ago. Dinner at a restaurant / UberEats costs 30% - 50% more than a year ago. What else must happen to call it what it is?
Stock market valuations and cost of eating out don’t factor into it.
Generally though we are looking for a couple month period of time in declining employment, GDP, etc...overall health of the economy.
> The committee places particular emphasis on two monthly measures of activity across the entire economy: (1) personal income less transfer payments, in real terms and (2) employment. In addition, we refer to two indicators with coverage primarily of manufacturing and goods: (3) industrial production and (4) the volume of sales of the manufacturing and wholesale-retail sectors adjusted for price changes. We also look at monthly estimates of real GDP such as those prepared by Macroeconomic Advisers (see http://www.macroadvisers.com). Although these indicators are the most important measures considered by the NBER in developing its business cycle chronology, there is no fixed rule about which other measures contribute information to the process.
Are you exaggerating or were you just extremely careless in your investments? S&P500 is down 1.4% and Nasdaq is down 11.0% since June 2nd, 2021.
Most of my savings are in index funds, specifically FNCMX and FFIDX. I know in very real terms the value of my savings is down 23.57% compared with November 23rd 2021.
In technical terms, it’s strictly referring to the amount of production that is taking place in the economy, it has to be reducing.
Your stock portfolio going down isn’t a recession, pricing for specific foods/services increasing isn’t a recession.
If all your assets are equities, you might not feel like you are doing that well. If your assets are in real estate, you are probably richer than you've ever been.
since these indicators are always published after a time period has occurred and been tabulated, its possible we have crossed the threshold and are in a recession as we speak.
Q1 2022 is estimated at -1.5% right now, the final number will be released on 6/29. Meaning Q2 final data will be released sometime around the end of September, to make it an "official" recession (if Q2 ends up being negative).
Unfortunately, unless you a a politician or a professional economist, your opinion will lose value even faster than your salary. .
If your 401k correlates much with the S&P 500 to some degree, can't you comfort yourself and get some additional perspective just by looking a few years back, rather than one?
https://seekingalpha.com/news/3845238-pace-of-job-growth-exp...
There is no way in hell that we're currently in a recession with that kind of job growth and low unemployment.
No, the usual rule of thumb is “two quarters of negative GDP growth” not “two quarters of lower GDP growth than the prior two quarters”.
(Though for the US, the closest thing to an “official” recession definition—which is neither official nor even government—is “the NBER has declared a recession”, which is done based on multiple dimensions with no explicit criteria.)
A recession happened in 2008-2009 due to greedy mortgage investments, and the fed stepped in with quantitative easing (QE) to fix it. Yes, many people lost their jobs and houses, but for the next 10 years, the economy recovered and GDP boomed.
A pandemic hit in 2020, the fed stepped in w/ QE again. Inflation and war today, fed steps in again w/ quantitative tightening (QT). The masses are always so prone to basic survival instincts of fear (FUD) and greed (FOMO).
On the backstage, businessman & financiers take advantage of this psychology for economic gain: selling gold, crypto, ICOs, IPOs, SPACs, pulse oximeters, mortgages, what have you...
While these elite brainwash the masses (via search, social media, trad. media, entertainment, etc.), the fed is "demonized" for keeping the country hustling, producing, and growing [1].
Printed money? It is to keep you productive and prevent you from loosing your mind...be grateful for having a government that can step in to help instead of actually stealing from people [2] and having a work culture that can justify/fuel this [3].
As long as these tenets stay, demand for the American dream/way of life/dollars will survive, so take a deep breath...
[1] Insider's POV: https://news.ycombinator.com/item?id=31589103
[2] https://en.wikipedia.org/wiki/Corruption_Perceptions_Index
[3] https://news.ycombinator.com/item?id=29903457
Everyone would rather shut up, as long as they get paid. The internet just amplifies these behaviors anonymously.
No conspiracy needed either. As sinister as this sounds, this is how people and society work, if you bother to look...
Ex:
1. Jim Cramer: https://www.youtube.com/results?search_query=jim+cramer+mani...
2. Book: https://www.amazon.com/Trust-Me-Im-Lying-Ryan-Holiday-audiob...
3. The Social Dilemma: https://www.imdb.com/title/tt11464826/?ref_=nv_sr_srsg_3
.... also due to people taking mortgages they could not pay to try and win housing bingo.
If people had not promised to pay for mortgages they could not, lying on forms to get such mortgages, then they would not have defaulted at record rates, increasing risk for investments.
And it is correct - see my other post in this thread with all the relevant FRED data series on people's finances leading up to the 2008-2009 crisis. People most certainly ran many of their own indicators to record highs before the crash, by choice, by choosing more debt than they could manage.
Or you can face that people do choose to buy things.
The fact is that many, many of them were trying to win a real estate lottery.
Here's [1] FRED mortgage payments as a percent of disposable income leading up the crash. Notice the record all time high? That is people choosing to run up debt for decades until it popped.
Here's [2] the FRED series on household debt as percent of disposable income leading up the crash. Again, note the all time high and run up period.
Here's [3] FRED series on household debt to GDP - same result.
So you can claim somehow people were cattle with zero input on any financial choices or consequences, but that's simply not backed by the evidence.
People were choosing to believe that the gains would never stop.
[1] https://fred.stlouisfed.org/series/MDSP
[2] https://fred.stlouisfed.org/series/TDSP
[3] https://fred.stlouisfed.org/series/HDTGPDUSQ163N
How does anyone even take this metrics seriously?
Just sharing because I think it's a helpful tool.
[1]https://www.newyorkfed.org/research/capital_markets/ycfaq#/i...