Ask HN: Folks who were around the 2008 Recession

So far, until the big layoffs start hitting everywhere, this doesn't feel like a recession. I'm guessing once the tech companies start laying off, it will have an effect throughout the economy due to their higher salaries. If this does occur, California will be in big trouble.

This is nothing. 2008 looked like the end of the world (or at least the end of the financial system). I was literally 24 hours away from pulling all my money out of my bank account into cash. [Why? Because if I waited an extra day, I wasn't sure whether my money - or even my bank - would still be there. Am I worried about my bank surviving 48 hours this time around? Not at all.]

2008 came very close to ending very, very badly. It wasn't "will I get laid off, and if I do, will I lose my house". 2008 was "will a number of the largest banks in the world fail, overwhelm the FDIC, and take everything else with them".

This feels like the middle, but I could be wrong. It could be just a flat spot on the way down.

We are in a supply recession, thus far, not a demand recession. There's plenty of demand (including for labor), but economic activity has shrunk (two quarters in a row, even) because of supply problems (including people no longer in the labor force, some of whom retired early in 2020 and aren't coming back).

That doesn't mean it won't become a demand recession; it might. But the only thing I see that looks at all like 2008 is that house sales in at least some areas seem to have "frozen up", because everyone knows the prices from 3 months ago aren't good any more but nobody is sure how much cheaper they should be. So, the market isn't functioning all that well. But every other part of the economy seems to be functioning just fine, in terms of there is a market price. The price keeps going up, for everything except housing and gasoline, but that's not a recession.

Now there are a lot of things about a supply recession that are not as bad as a demand recession, but there is one problem: we don't have them very often, so we're not prepared. There are many well-understood ways in which government can step in and be the demand that is missing (e.g. infrastructure spending) or ameliorate the affects of low demand (e.g. unemployment benefits). We don't have very many ways for government to step in and be the supply that is missing; we have the Strategic Petroleum Reserve (already being used) and the government has some food supply, but for just about everything else the government cannot provide the supply.

As to your second question, right now the economy is in a very fragile state, so it is much more vulnerable to any shocks, for example if China invaded Taiwan or something. So many things are not working well, from a supply point of view, that there's not much slack to deal with fresh problems. Whether or not we get another big shock probably determines the answer to your second question.

Feels mild. Feels like it's something other than a typical recession.

I've worked through two other crashes before this one, the dot-com in the late 90s and the GFC.

So far this one feels different in the sense that people aren't getting laid of. Demand still seems to exist for software engineers.

Neither of the previous crashes involved high inflation either.

2008 had a more explosive feel to it for sure. 2022 has a continuation-effect to it due to COVID, so it feels to me like some of the shock has been dampened.

Also, people with experience in relevant fields said they saw 2008 coming. The same is true recently, except the number of people who saw "this" coming this time around are easily in the millions, and many of them have little experience.

To me, these factors make recent events feel more like a shakeout. There are a lot of very strong, growing companies out there that are solving huge problems. There are some headwinds but I don't see those problems lasting in the longer term against such determined work and high levels of innovation.

I'd compare late 2008 to early 2020 for sure though. I remember getting stopped out of some positions and thinking, "damn I just lost a lot of my savings" and then things got worse and worse from there. Afterward I felt like some kind of f*cking genius for having set those stops! It was ridiculous.

If there's a recession from here on out, I would guess it's more of an optimistic (?) recession in which a new zone of economic support is found. I see perma-bear types still being perma-bears, but the more educated perma-bears are starting to show signs of FOMO. Much of the negative sentiment is baked-in and overbaked-in. It's fine to be a critic but a really good critic is educated in nuance, knows their emotions, and understands the value of both fundamentals and technicals.

Once medium-term support is established we'll continue the super-super-cycle on upwards IMO. I'm glad to see that climate change narratives are taking root recently and hope our kids all have a better way of life than we did, moving into the coming decades.

BTW right now would be a phenomenal time to study investing and trading. By the time the principles really start sinking in we'll probably be coming off a double bottom or developing some other obvious ranging pattern. ;-) Bears who want to believe in the great collapse will get caught in really epic mean-regressions.

My take: look for financial greed running amok. I can recall a few years prior to 2008 I contacted someone in one of the online dating sites; she was too busy closing real estate deals to go out with me. Another one did, a Russian expat who wanted to talk to me about where else to buy - she had just refinanced her condo and was looking to buy more. Those two events, maybe around 2005-ish, told me that things were not going to end well.

Prior to that time, just before the turn of the century, I was working on an expert system middle tier for a bank (y2k) while half the workers around me were spending weekends bundling some kind of financial instrument which combined risky loans with good ones; the bank was hustling those. Little did I realize then that this was what was fueling the real estate boom which I encountered a few years later. Also did not see, at that time, just how that game would bring down the economy.

So...look around. Anything like that going on now (well, in the previous few years)?

Remember "too big to fail". Anything like that now? I think that the fed chair back then spoke of "irrational exuberance".

This is more akin to the 1991 recession or the weird 1997/1998 not quite recession. 2008 was multiple houses of cards that were built in the belief they were insulated from external risks collapsing due to tight interdependencies which then caused the ensuing recession.

I run a software consultancy. Demand is up. We’re hiring like crazy. I’m waiting for the other shoe to drop but so far the real economy seems sound. The repeated supply shocks seem to have given inflation legs. Raising interest rates will hopefully bring it under control. Seems that the inflation rate dipped recently, still higher than we’d like but going down not up. Of course this means prices go up more slowly not that they stop going up. The labor market seems to still be quite strong. That’s a good sign. Watch for falling consumer confidence. That’ll be our harbinger of doom.

Compared to 2008 this seems less terrifying and apocalyptic.

2008 had an oil cost surge and some foods were becoming usually expensive but not all. Oil had peaked in cost of about $140 per barrel or just shy of it and financial reporters and big banks were saying things like "its going to $300" sometime early that year. Just like then, financial commentators were saying the oil costs were going to never stop going up probably reaching $300 a barrel. It was about of month to find that the opposite was true just like the last time.

Oil was just another asset to play with and I played with it, got bored and sold it. I made a little money in royalties and didn't take a big loss on it.

Buying something and flipping it with credit has inflationary effects because whenever money is borrowed from a financial institution it has to create that money in checking accounts. There is no vault that has loads of hundred dollar bills. It is simply created on a ledger, but that's a whole other story. Anyway the money gets spent by the general public and more often because what they buy they flip for a profit to the greater fools. Billionaires are famous for not wanting to spend their money, so that their high score in the money game is better than if they did. Only if spending money to make even more is their thing. But if houses are bought and sold more often, with the intention of doing so at a profit the little guy has a ton of hot cash and that makes milk, gas, rent, bread, and a ton of things much more expensive. That was the case then and now. Now people aren't just flipping houses, they flip used cars and sell them at a price higher than the MSRP on a new one (the MSM said this).

People are much more likely to fall for financial scams now. Look at all the people that thought it was possible to earn 17% indefinitely on a savings account. Why? Because crypto magic and my cousin is doing it. But actually, that has never happened (savings account with that kind of return). If I knew about it, I would have warned people. I only found out about it after it blew up. I expect to hear and see more of this "if I knew I'd had said something" blow ups in the future but not with my peers because I don't think any of them would fall for it.

I've tried to think of a time that is similar to this in terms of economic issues and I can't really find anything close. The disruption of global trade and supply chain issues are more akin to a siege economy (look to Cuba for how this works out), than just a downturn.

Recessions are normal. Growing up I saw a recession in the 80s that was pretty bad, there was unemployment, and high costs. 91 was a kind of slump.

Greed and magic thinking with lucky charms like bitcoin making people millionaires overnight is probably going to revert below the mean very soon.

Rent is soaring, car prices cannot keep going up or people will not be able to work at their job any more because cars do wear out and need replaced. So that is why we are in the eye of the storm. Other parts of the world are in the storm's worst part. Some are coming into it slowly. Sooner or later something is going to break that will be unfixable. There was no talk of nuclear war in 2008 with anyone. No one was telling New Yorkers to tune into internet news in case of a nuke detonating there.

There was no new morality, accept it or else mentality.

My dad told it to me like this. When your neighbor is out of work it is a recession. When you are out of work it is a depression.

I start a new job on Monday.

2008 was a completely different story. If you had a job, any job, you felt lucky.

For me it's altered somewhat by personal life changes that occurred in both times, in that I secured myself well in 2007/8 and unsecured myself in 2021/2. I imagine many people have similar life situations that skew their perception of the zeitgeist.

That said, the 2008 recession seemed somehow more "fake" to me despite the results being more abrupt and obvious - domestic manufacturing and production being the most sudden and visible, with entire swaths of America suddenly shut down, abandoned, paranoid, desperate. But nobody could really tell you why. Sure, smart pundits would talk your ear off about banks lending more than people could pay and housing prices and such, but to the regular person, why would that suddenly make their job not exist and gas prices rise? It made no sense. And then it got fixed, sort of, with a "new normal" of working 2 or 3 part time jobs and still not having affordable healthcare despite hope and change - in many cases, healthcare plans suddenly became a charge that hadn't been a consideration before.

It was a long slog, and was only slightly beginning to perk up by the time 2016 rolled around and frothed everyone up one way or the other ideologically, then things started to get pretty good, but half the country insisted it was false and that everything was horrible and getting worse and only removing the President could fix it. Then pandemic, ousting of that President, and more pandemic, and war, and housing shortages as population outpaces supply in desirable areas, and people are forced into "the bad parts of town" and tell the Internet how much they love it and how it's not that bad even as they install expensive surveillance and rarely leave their fortified homes.

This recession? I mean, not a recession, because that's not a well defined term and has multiple factors and it's not a recession this time if we don't say it is? This time? It seems inevitable, slow paced, easily fixed (although nobody knows how). It seems more real than the last one, because we can point at why, but it also hasn't effected many lives too abruptly. Yet.

I was in college in 2008, got my first job doing support for a local ISP for ~$11/hr. I loved the work but hated the pay, which lead me to pursue starting a company (Which didn’t take off) so I relocated and started a pretty good career.

At the time did I feel anything? With nobody to support and living with my parents that would be a resounding no. But I do remember the vibe was pretty gloomy as I worked side by side with much older, more experienced people somewhere between the ends of their careers and retirement, who had to settle for an hourly paycheck.

IMHO we aren’t anywhere close to that situation. But even if it were, it might be a blessing in disguise. I guess it just depends.

This seems very 2008. There was this belief in the summer time that everything was going to be fine, the stock market would just keep going up and up. You could tell something was amiss in the housing market, but no one wanted to give you the bad news. The first clue that I had something very bad was happening was the first episode of Planet Money that aired in Sept 2008. It outlined exactly our problems. I don't think anybody right now really wants to consider what inflation is doing, address the corresponding lack of real wage growth, how large institutional real estate investors will be affected by an even small down turn that will happen with increased fed rates, the fact that people are cutting back on spending due to the increased costs of energy. FAANG / Fortune 500s have been sounding the alarm bells. I don't think this will be as bad as '08, but I also think it will be a lot uglier than the general consensus right now.

My comment might be irrelevant but in 2008, I couldn’t even get a job as a waiter. I was job hunting for over a year. This doesn’t seem like 2008… yet.

I work at a Fortune 100 company and they are laying people off and have stopped hiring, even internal transfers can’t happen. So this tells me that it might get worse before it gets better. Either way, life goes on.

I was 19 at the time and had only recently entered the workforce. I lost my part time, minimum wage job that year. Otherwise I didn't notice any significant impact on my life or the lives of my family and friends. At the time it seemed like people were overreacting. I remember being baffled that they had declared a recession. It was only years later that I even understood how bad it was.

I don't know enough about economics to have any clue how this is going to shake down.

This is nothing like 2008. Back in 2008 the mood was much more dire- I remember walking through malls and picking up amazing deals. Like 80% off. If you had expendable income, you were saving it because you may not have a job tomorrow. Everyone else was worried about how they were going to make their next mortgage payment.

As for me, I was stuck in a house that lost 50% of its value. I had just purchased in 2006 so I could not sell and I wanted to move. I didn’t end up leaving until 2012 at which point I was still 30+% underwater and so happy I could short sell without incurring taxes on the difference thanks to legislation.

Now prices are going up- like crazy. Salaries in our industry are skyrocketing. It’s impossible to buy large consumables at any price - cars are selling for multiples over sticker! In 2008 you could buy anything you wanted at a discount if you had cash.

So no this feels nothing like 2008 for me.

They are nothing alike.

The job market was very tight in 2008, people were losing their jobs then not being able to get a job anywhere doing anything. Not an exaggeration. My friend who made minimum wage at fast food place at the time said there would be at least five people a day coming in asking for a job application. The restaurant wasn't accepting any applications.

At the intangible level, 2008 had a dark cloud overhead, right now doesn't.

Got my first job just before it hit and so got to see wholesale layoffs right at start of career. Many people I knew lost a lot of money from the market crash too.

There was a much higher level of general anxiety then, which I'm not sensing as of yet.

So we're not meaningfully in a recession yet, I feel. But we're due for one, so this is prob the beginning.

The last one sucked, having graduated from college in 07, and buying a condo in 08, I felt the pain of it.

This one does not feel so bad, but the things that have happened leading up to it feel much worse, and we might look back and say at this time we shouldn’t have even called it a recession, because it might get far worse.

You can’t just shut down the economy and give people tons of free money and not have there be serious consequences.

All we can do now is try to do hard things and make sacrifices that will enable our grandchildrens’ lives better.

2008 was scary, people were losing their homes, prices halved - big firms went out of business

2020 was scary - global pandemic, no vaccine - people out of work

2022 doesn't feel like that - there's inflation but no impending sense of doom

I was a grad student in 2008-2009 and had barely any assets in my name. Yet, I felt gloom everywhere, which got me scared really badly. The current recession feels nothing compared to that. I want to emphasize the word "feels" here. 2008 crisis was about the liquidity in the financial markets. [As an aside, you will see tons of research in finance and economics about liquidity risk around this period.] Money was tight and investors were spooked about the financial health of all the major financial institutions. Trillion became the new billion with all the money the treasury pumped into the banks. But common man got shafted big time. All of this was very sad and scary.

Graduated college right at the start of 2008. This is nothing like it. Nobody was hiring back then. Layoffs for everyone. Wage freezes for several years. It felt really ominous, like people were legit afraid of economic collapse because of how toxic assets covertly based on real estate had tentacles in everything.

This is temporary inflation from the Russian invasion of Ukraine exerting upward pressure on gas and grain prices, right as post-COVID supply chains were starting to unwind and unlock inventory. It's already easing. This doesn't feel similar at all.

If you worked in finance, 2008 was terrifying. It felt like all the banks might go under. You might say "FDIC", but they don't have enough to cover a system wide problem. Plus lots of money was in money market accounts which people thought was safe... until it wasn't. Many companies were reliant on short term loans "commercial paper" which dried up. It felt like dominoes were about to start falling....

Many people lost jobs, good people in good jobs.

Current situation doesn't feel remotely as bad, like not even in the same ballpark.

Something which I think is unaddressed is the high participation of pension funds in what has been a very frothy stock market/PE market. We're already seeing the main growth stocks take big corrections in the face of central bank rates and the end of mass QE, and this comes at a time when large portions of the workforce approach retirement age. Already, the most exposed start ups (gig economy) are rapidly scaling back operations, and I think there are many more tech sectors that will face the same in the coming 2 years. That will equate to a significant destruction of value right when withdrawals should be ramping up. This shortfall will have to come from public funds and will still lead to a drop in consumption for a significant part of the population.