The economy is doing super great and that is the problem. The old trick was to pump up the rates until unemployment increases and demand drops. They tried it and it's not working.
Hell I’ve tried those just to get some income coming in, but nothing. They claim “fast hiring process”, and then it’s two weeks later and I just see the same damn positions reposted.
Interesting. There might be an incentive to reject overqualified candidates who the hiring manager might deem to much of a waste of time to train if they are likely to end up leaving within a short amount of time. But I was just making a tongue in cheek comment about how different roles experience different supply and demand.
Yeah, there were a lot of near retirement workers who had their 401k/pensions wiped out by the financial crisis. I've met quite a few who pushed back retirement 7-10 years to rebuild their savings. Now that bond rates are up, they're headed for the exits en masse.
The industry that wasn't affected by a large demographic of near retirees was technology. Because age discrimination was built into the culture. Not a lot of old programmers sticking around. They get RIFed right outta here. So while there is a shortage on teachers, nurses, trades, and police there is a surplus of junior and mid-career tech workers.
> but you can't look around and tell me most people feel the economy is doing super great right now.
Consumer confidence (Conference Board) present situation index is the highest its been in two years, even though not at the extreme highs it was sitting at pre-COVID, but, yeah, I can tell you exactly that, with pretty strong evidence.
Are most people in a precarious situation as is the norm in a mostly-capitalist economy? Yes. But that’s part of the long-term baseline.
One is the sum total of goods and services. Measuring it is always a bit dicey but the metrics are doing reasonably well.
The second is how much money people have, in terms of its ability to buy stuff. That can be subjective, especially when the objective measures are contradictory, as they are now.
Ideally the two would be somewhat correlated. When the first definition is doing great and the second isn't, people get cranky because their work isn't bringing them wealth and stability. That is a systemic problem that goes even beyond today's economy.
> Yes, problems exist. Essentials such as housing, education, and health care are still too expensive; wages could be growing faster; and last year’s inflation is still baked into today’s prices.
I suspect this is where the disconnect between the public perception and the data exists.
Something about two quarters consecutive quarters of negative gdp growth was the original definition, it happened, and they said recession means something else.
“They” haven’t changed any definitions, I don’t think there’s even a “they,” and there was not a recession by any definition of recession.
The fed tried hard to induce one because of wage growth and inflation, but failed to do so. Companies in tech specifically fired a ton of people in preparation, but that doesn’t make a recession - just bad business judgement. Tech leadership has never been super sharp to begin with.
National Bureau of Economic Research declares recessions in the USA. Always have.
If they don't say it's a recession, it isn't one.
------
What is consistent is that the economists there declare recessions way too late in practice. I think they declared a recession dated in 2007 in the year 2009, when we were already recovering.
So what we have are a bunch of internet bloggers who try to call a recession before the experts. But all that happens in practice is that the bloggers call a recession every 3 months since 2010 hoping that they're correct today.
-----
If we are in a recession today, we will know for sure maybe next year. That's just how it works on this issue, and it's premature to call it any sooner.
"What Senator Clinton has said is that of course economists have a technical definition of recession, which is two consecutive quarters of negative growth"
Brian Deese, 2008
"As Secretary Yellen said on Sunday, two negative quarters of GDP growth is not the technical definition of a recession"
Brian Deese, 2022
Brian Deese, in 2022, was Joe Biden’s National Economic Council Director.
That's not redefining it? Are you redefining redefine?
Senator Clinton, who was not and is not an economist, was simply wrong. Contrary to the “Hillary was right about everything” folks, that’s actually not an uncommon thing for her.
> That's not redefining it?
No, someone getting the definition wrong and someone else getting it right is not a redefinition.
A) Many words have multiple definitions, different people may use different definitions at different times. Any sentence that starts with "the definition of..." implies a uniqueness which likely doesn't exist in natural language.
B) Many people define recessions as you said, as two consecutive quarters of negative GDP growth. Deese 2008 was one, apparently, and Deese 2022 was not.
C) The US commerce department started using the NBER to set recessions in the 1960s.
> A definition of a recession commonly used in the media is two consecutive quarters of a shrinking gross domestic product (GDP). In contrast, the NBER defines a recession as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales" [1]
So I guess Deese redefined what Deese thought (as people sometimes do over 14 years) but neither the NBER, nor economists at large, did any redefinition.
What is the definition of a recession you’re operating under? The typical definition is two consecutive quarters of negative gdp growth. We’ve not seen that since 4q19 and 1q20, then not since the “Great Recession.”
Q1 and Q2 of 2022 were negative growth. The past 4 quarters were not and Q2 of 2022 was just barely. So technically there was a brief recession in H1 of 2022. Right now there is no clear sign of a recession as per definition.
I think recessions are also widely misunderstood as being a binary thing. Like going from "everything is A-OK" to "OMG it's all going to shite". There can be a recession which people barely feel. It's not like an event horizon from which there is no turning back.
There's also been a ton of quietly revising numbers down months later. I don't think GDP has revised down negative much yet, but stuff like unemployment and hiring numbers have been extremely volatile and sometimes revised to complete opposites (strong positive to strong negative numbers) months after the fact.
> "Economy faces risks, not recession: Bernanke" (2007-11-08)
> "Federal Reserve Chairman Ben Bernanke told lawmakers on Thursday the U.S. economy did not appear headed for recession, but warned growth could prove weaker than expected and inflation higher."
Assume you have a product (x) that you are considering building. If you can get to market quickly, you can maybe grow revenues or whatever.
X will take 48 person-months to complete
48 person months is 48 months with 1 persons
48 person months is 24 months with 2 persons
48 person months is 12 months with 4 persons
etc
When time to market is critical, companies will often choose to "buy time" by paying people to cut the time requirements. The math isn't as linear as I've suggested, but most of the time, for most of the projects, you can increase velocity made good by adding people to a project.
this seems like a plausible guess about what mensetmanusman meant but usually people refer to this as 'demand for labor' rather than 'demand for time' so i'm not sure
Basically: between the added communication/management overhead and the training/ramp-up needed, "buying time" this way can end up costing time. If more of these MBAs calling the shots read The Mythical Man-Month we'd have a less schizophrenic economy and maybe even world peace.
probably ramping up to two or four humans will save you time tho, maybe even reduce the number of person-months; the humans have complementary skills, and are better at spotting design errrors and bbugs in others' work than in their own
You should really read the book listed. It only saves time when work on a project is parallelizable, and only if the communication needs between folks is low. It's not a matter of folks fighting, it's a matter of the amount of context needed to coordinate work. Often more people on a project results in the project moving slower, not faster.
If the project isn't parallelizable, it doesn't matter if you're adding 1 or 10, it's going to slow things down. Even if the work is parallelizable, if you add 1-3 people after the project is already delayed, it may still slow the project down, especially at first, because each of those people are going to need to be brought up to speed. Depending on the complexity of the task, the experience of the people, their understanding of the project, etc, it can either help or harm the project.
There's a lot of nuance around whether or not adding folks to a project will make it faster or slower, and that's what the book is emphasizing. It's not a hard and fast rule of "don't add people to a project".
The parent's comment didn't have any of that nuance. Just "more people can help spot errors and help with design" and the only issue they mentioned was "if they can avoid fighting". Neither of those things are what the book describes.
You know you’re dealing with amateur management when they think doubling people is going to linearly halve the time of a project. This completely ignores the varying skill sets, and difficulty in decomposing some tasks. Onboarding and ramp up is also very time consuming. Productivity of existing team members will drop, temporarily, as they onboard new people. Communications overhead is also very real.
Does anyone else have difficulty reconciling these Happy Days Are Here Again type articles, with the more somber slice of life type?
For example, I came across this article titled The Tragedy of Being a New Mom in America immediately after reading this article about the economy [0]. The contrast between 'everything is great' and 'everything is terrible' seems stark.
Real life everything still seems terrible. Prices are high, salaries are not adjusted to match, service and quality and availability of everything is worse. More things are broken and take longer to fix.
The issue is modern newspapers. They need to generate traffic and impressions so they go for what people click and what people click is not thoughtful, researched, and nuanced articles on what’s happening. What people click is bold titles and articles with strong arguable points made somewhat forcefully. That’s why you see jarring articles. What passes nowadays for journalists need an angle for you to read their rag.
The solution is to stop reading daily newspapers and focus on the few remaining publications which can still afford to stay afloat while doing quality work while they last.
I've been thinking about that lately. It seems like, depending on which source(s) you follow, you could easily convince yourself of either position: "everything is great" OR "everything is terrible". I find myself struggling to disambiguate which is more real. That's one big reason I recently started contemplating taking a cross-country trip across the US, by bus. That it, just head from NC to CA, then turn around and come back. I expect doing something like that would offer a real "ground truth" perspective of a large swathe of America.
The only problem is finding the time to do it. I think it would be a rewarding experience, but my $DAYJOB employer might not be as enthusiastic.
These aren't contradictions really. The economy contracting by 2% doesn't we're all doomed any more than an expansion by 2% means everything is perfect for everybody. The latter is generally better (or at least no worse) for everybody, but "better" doesn't mean "good" much less "perfect".
To me a lot of economists and forecasters this year have looked very much like technical analyst stock pickers, buying or selling a stock based on the shape of the price curve.
Except that the amount of economic data is far to low to make statistically safe predictions. How many previous times have we had a lockdown, followed by a war in Ukraine, followed by …
I just don't buy it. Everything is in limbo, house inventory is very low because no one sells their low interest mortgage. Commercial real estate is going to blow up any day. The stock market is buoyed by a few companies in AI craze. Startups are getting a lot less funding than before. Barely any IPOs in sight. Large investments are made by governments on borrowed money.
It seems to me that the only way things aren't awful, is because people are holding on for dear life and minimizing their burn rate. But the wall is coming, just very slowly.
That's just my impression, I'm not an expert. I would prefer being wrong.
I too would prefer being wrong, and I have a hard time reconciling the common position during the mass layoffs that they were aware of what's coming, yet simultaneously everything is perfectly fine.
If companies were wrong, shouldn't that be a gigantic concern they got away with laying off hundreds of thousands for no reason? If they're right, then articles trying to convince us everything is fine is surely alarming!
American Big Tech companies laying off highly paid specialized tech workers doesn't say much about the rest of the economy. We already knew that most of the Big Tech companies are houses of cards built around one core profitable business like Google's Ad business.
The rest of society has no problem finding jobs. The problem is that almost no jobs pay enough to buy housing in places millennials and Gen Z consider desirable.
The top quintile makes up a disproportionate portion of total consumption, so 1 laid off high-earning worker can have more second-order effects than 1 laid off middle-quintile earner.
Maybe. Or more people in the bottom quintile earned more, and hence were able to consume more (in aggregate) to offset the few in the top quintile that are consuming less.
The problem is that finding those jobs is hard, unless you live somewhere very expensive.
I could afford a house, easily, in Rural Kentucky, but good luck getting a job around there. Remote might change that game a little, but not as much as you'd think, and there would always be a huge sword of damocles dangling over your head about job security.
This was discussed in many threads during these layoffs. Specifically, people were upset that several companies were overhiring during the pandemic being overoptimistic on shaky grounds. But in spite of layoffs most of these headcounts remained higher than before the pandemic.
My take: everybody wants to foretell the future, and people on the two extremes are the most visible. Whereas in fact the present is so-so, not terrible, not excellent.
This time could be different of course, but there is a definite boom/bust business cycle. At least that is my impression after 50 years on this earth, and general study of history.
Generally the bust lasts 2 years, so if you can stretch it until then there is a good chance you'll make it.
Of course, that's not a guarantee. Some parts of the economy simply never recover, because their fundamentals have changed.
> house inventory is very low because no one sells their low interest mortgage.
Short term yes. I would 100% delay moving to a 2 bedroom bigger house and just make do with a slightly smaller house to avoid a 25% more expensive house having a 100% higher mortgage payment.
But if interest rates stay up for 2, 3, 5 years - more and more of those want to moves will just suck it up and do it.
The monthly payment is important one. Not the price... So either the wages have to go up or the property prices go down. Or mortages extend an other 10 or 20 years.
That is the idea yes. Over the long term everything converges to monthly payment. If someone has $1000 to spend on a house - they ultimately don't care if its a $300,000 house with a 2% APR loan, or a $200,000 house with a 10% APR loan (math made up and not exactly correct).
The problem is people are very very happy when they can make some cash off a move. People are very very sad when they are underwater. To all the people that paid $250-$275k for the house above? They are going to delay for a very long time before they sell for 200k. Likely long enough that inflation will slowly bring up the value.
People are very emotional about this and do not make wise economic decisions. For example - the finances of the time may mean that the house they are both selling and buying are 30% down. But it's a real feel bad, and losing money in a house is enough to stop many people from moving. a 30% gain where the seller both makes money on their sale AND ends up paying way more in total? It feels good and people jump on that instantly. (And the way down payments work, its generally easier for someone with limited liquid assets to to the sell + buy when the market is up 30%, vs when the market is down 30%).
How do HELOCs enter into this? I'm assuming many are now trapped into one of those that they were lured to during low rates? That is, it isn't just down payments and moves, but people that were close to owning getting trapped in monthly payments?
I think either HELOC or a very low down payment mortgage (0% down VA loan) run this risk. Say you buy a house for 300k with 0 down. After 3 years of living there, you still owe something like $280k. If the price fell to 200k.. you would need to come up with 80k to move (PLUS whatever the new down payment is). But odds are very good if you took a 0 down payment mortgage, you aren't able to easily scrap together 80k to cover it.
Makes sense. Also, I realize you can view a HELOC as basically a move into the same location. That is, whether a house has a HELOC or a new mortgage doesn't really matter, and both are likely driven by the same dynamics.
Another factor that is commonly overlooked which keeps prices from falling: the price only needs to be affordable to buyers.
When supply is very low, you only need a small group of buyers being able to afford sustained high prices. It doesn't matter if the general public can't afford a 400K home. Only buyers need to be able to afford it, and you'll always have a group that can.
in theory yes, but if you own a home with a lower mortgage rate, are you really gonna lower the price of your house, so that you can then buy another home with a higher rate? you may just stay with your lower rate
I would expect other factors to play in a little more, but I can't say they will. (Size, location, etc.)
That is, I don't think moving is usually driven just by prices. Is it? Investing largely is, but investment firms buying up neighborhoods is its own problem.
If price was never an issue, people would generally move a lot more. Move to be closer to school. Move to be closer to a new job. Obviously moving is a PITA and you have things like maybe moving further way from a family etc.. but we can see when the market is rising that quite a lot of people move.
But a lot of these moves are just improvement moves. Move to a bigger place to have more room for kids. Move to a smaller place to save on mortgage for empty nesters. Move to make your 1 hour work commute 15 minutes. People would love to make these moves, but if the money doesn't line up - it isn't going to happen. Very few of these are REQURIED moves.
For sure required moves exist. Live in a studio and have a kid or two. Get a very good job 1000 miles away. Graduate college. But these are not "most" moves.
Makes a ton of sense. My mental model is that I only consider moving for utility reasons, but I think it is undeniable that that is not the main driver there. Would be neat to see full breakdowns on these numbers, but I fully expect what you are describing.
Has some actual numbers that are interesting. Moves slowing down as you age lined up fairly similar to my path, I think my entire life moves were at like:
21, 22, 23, 28, 30, 33, 37...
and I may not move again, or if I do I would see it as 10+ years out.
The challenge is that higher interest rates increase the total cost of buying. Standard demand curves tell us that the quantity demanded at a higher cost is lower.
In a typical market, an increased cost is balanced by sellers increasing the quantity they sell. However since housing is almost exclusively bought with loans, and the current increase in cost is driven by interest rates payed to mortgage brokers rather than the cost of the home passed onto the seller, we don't see the same increase in supply relative to the cost of buying that we would expect in a market not driven by loan dynamics.
Tl;Dr: Higher interest rates increase costs to buyers without increasing profits for sellers, reducing the total number of units selling at a given price.
Makes sense. I was assuming the idea was that you could nudge long term prices a little bit. But I do have to consider that houses are largely bought on loans now.
I'd guess that the automobile market is similarly impacted, just has a larger buffer in the used marketplace to eat in some of the negatives?
Is there a viable path to lower costs on housing? :(
The hypothesis in much of the rest of this thread is that rates going up make it harder to change loans for people. Having pricing go down would similarly make it harder, as they would be taking a haircut on equity. Right?
What does “changing loans” mean? Some people might lose equity if they bought when prices were highest. But they would also be able to buy at a cheaper price. Either way, maintaining a few people's equity is not society's goal.
The only reason a loan is harder to get when interest rates increase is because the monthly payment at a given principal goes up, and so the lender needs to see more income to trust the borrower will be able to pay. If the price goes down, and hence the principal goes down, then the monthly payment goes down, so the lender needs to see less income to trust the borrower will be able to pay.
Read the rest of the branch from my opening post. I'm not necessarily claiming that as my hypothesis, but the one that seems common among the replies.
Basically, bottom line is people care about monthly payments. Interest rates going up means that the same houses have higher payments. You /could/ expect that prices going down would be enough to keep people happy to move. That is indeed what I was asking at the open.
However, stock going down means existing values goes down, which is just another form of trap for people. Specific trap being that many moves are leveraged on older equity, but to get out of the old loans will now require more cash.
This is largely because older equity was also under a leveraged loan. In markets that are not so heavily loan driven, the existing assets are straight forward to manage and convert into down payments on new properties. Housing is specifically not that.
Only a very small portion of people who bought at the peak would be “trapped” - i.e. underwater on their loans such that they would have to pay to sell the house.
The vast, vast majority would be more mobile since homes are cheaper, and the cheaper something is, the less money you need to buy it.
The government gave a gift to many people in the last 20 years of keeping interest rates near zero and pulling forward all that price appreciation. Unfortunately, the future generation might not want to expect the same treatment.
This feels like a corollary hypothesis? I'd love to see details, but from all the numbers I've seen, a majority of people have their equity largely converted into leveraged debt. It is more than a little terrifying, honestly.
This is the worst of it. My partner and I want to buy our first house but the market feels perpetually in limbo and it feels like there's no clarification or end of the tunnel in sight.
It feels like horrible timing, but then again they also say you can't time the market so maybe we just buy now.
Everything is ratcheting down a notch and the 'premium consumers' are driving all of the economy right now. We don't see contraction in overall spending because when someone suddenly is too poor to afford stuff the richer people above them are also getting poorer and changing their spending habits to pick up the slack. Walmart has noticed this and called it out in their earnings reports IIRC--they see richer people are frequenting their stores and spending more money which is making up for the poorer people that can't afford to shop at even Walmart anymore.
So you have the incredibly wealthy people that have actually gained massively as they've been able to gamble on the market in the short term--they aren't changing any habits. But the folks just below them who previously might have bought his and her matching Teslas without a second thought are now looking at their slightly diminished wealth and deciding maybe we settle for just one new Chevy Volt for now. They're pulling up the slack for the former Volt buyers who are now looking at their shrinking savings and deciding, no new Volt this year we're going to get a 3 year old used car. You can follow this ratcheting down all the way to the very bottom level where unfortunately the poorest/lowest levels are just being completely written out and dropped from the economy entirely. The big picture looks like nothing is wrong but the composition of who is spending is changing a lot.
How do they know the income of their shoppers? I'm very curious of the technique they use to come to this conclusion. Although I can guess of some methods they might have available.
They have random sampling surveys for their customers that offer gift cards and cash. Every time I check out at brick and mortar stores I'm accosted by the cashier to go online and fill out a survey on the receipt. It's how they also track if cashiers and associates are having good customer interactions.
Speaking of the rich, I found this video interesting about luxury goods right now. Patrick Boyle has some other good videos on YouTube, as well. https://www.youtube.com/watch?v=wH6pF-gXbuw
>We don't see contraction in overall spending because when someone suddenly is too poor to afford stuff the richer people above them are also getting poorer and changing their spending habits to pick up the slack.
How does this make sense? Total spend = poor spend + rich spend. Poor spend decreases. Then rich spend has to increase.
If total spend is staying the same, then some group has to be spending more if people at the bottom are dropping out.
I think what you might be trying to say is the spend at the very top is increasing, offsetting the decrease in spend for everyone below.
They explain it in the second paragraph with examples. People are shifting which bucket they're in. So the spend in a given bucket mostly isn't changing, it's a different set of people in that bucket.
It's what people mean when they refer to the "vanishing middle class".
In that case, the spend in the top bucket must come down since no one is shifting into that bucket, therefore total spend still has to come down (if the premise was true).
> > > > So you have the incredibly wealthy people that have actually gained massively as they've been able to gamble on the market in the short term--they aren't changing any habits.
Some are going up and some are going down, it's the middle that's vanishing.
No the very top bucket has not lost any money in the economic downtown, and actually they've gained significant wealth (because they can take aggressive and short risks on falling stock prices). See this: https://www.oxfam.org/en/press-releases/ten-richest-men-doub...
The very top (folks like bezos, musk, etc.) never loses and never had to change their habits. If anything their spending has increased as their wealth increased and they made deals on property, toys, art etc. being sold at cheaper prices by less rich people dropping down a class.
This is anecdotal, but a lot of my peers who graduated around 2009 are living way below their means because they know it's realistic to be hit by a major stock market drop along with losing their job, which might not be recovered for months, if not years. So it truly could be a "delayed" effect where a lot of the upper middle class can ride it out 6 months - 2 years, but then it really hits.
It depends on what assets you were expecting to buy. If you already owned land, did not need daycare, locked into low property taxes by law, did not need to spend for higher education/certifications/etc, yes.
If you were expecting to buy a home with certain qualities in a certain location, then you might have experienced a loss (in terms of material expectations of quality of life) worth tens of thousands, if not hundreds of thousands of dollars during the last few years.
Your numbers leave out fuel/utilities and rent/housing increases.
I can tell you that I kept every receipt, virtual and paper, starting July 1st 2021 and going through December 31st 2022. Running the numbers in March when I got around to it:
My cost of living (with my lifestyle not changing!) went up 20.94% over those 18 months.
It's gone up more since then but I don't know exactly how much - say, 5%-10%
Our economy is "doing fine" because we've printed and spent 10 trillion dollars. That bill will come due, along with the bill for the other 20 trillion dollars we've printed and spent over the previous 20 years.
If you're over 65 and live an average lifespan all this won't matter much to you. If you're under 45 and middle class (or lower down) you'll never retire, but your grand-kids might.
> If you're under 45 and middle class (or lower down) you'll never retire, but your grand-kids might.
This seems like scare mongering. Especially for people under ~35, that would likely be able to ride out economic problems. Not everyone has all their money in cash, lol. On top of investments, lots of middle class people own their house by age 50, and you can retire quite more easily with a paid for house.
It also seems to me that these labor shortages aren't going away. There may be an ups and downs, but I'd be very surprised to go another 20 years without a covid-like jobs shortage, where businesses didn't seem fazed to throw money and benefits at the problem.
An economic downturn isn't even really needed in the aftermath, or excessive inflation. We've had times where the average joe has prospered. Lots of really wonky things were done in the economy to cause COL increases. We gassed up the real estate market for very little reason. That's a big driver of the inflation, or especially cost of living.
Also, it seems that there are market forces that caused the inflation in cost of products. I think cost of living can go down without deflation, but I could be wrong. If companies are overcharging, that could leave room in the market. It's already eroded their position, since many products are now similar in cost to premium products, yet lower quality.
> Dear lord, we should be thanking the gods that libertarian techbros are not running the economy.
Last I remember they were though, all the VC money (things that keep the US relevant outside of military) were in the hands of a few who have been techo-bro'ing it up with scams like NFT and AI (via LLMs) as the next big savior of the economy.
When in reality this comes down to a very simple distortion of monetary policy that as someone said has never really equated to more than Ivy league Astronomy and tea leaf reading by way of the Federal Reserve; who have admitted they do not know how to solve this at all. Which if you see is clear as they are raising interest rates when the debt to GDP ratio has been over 100% even before COVID, which means we can never pay it off.
Lastly, I want this to happen now; you people have lived so far outside of reality that unless this starts to affect you directly you will never consider an alternative: not only are fiat monetary systems doomed, but unless we get serious about building an exit from this we might have to deal with not just climate change, and warfare all at the same time, but if left to the nation-state model we are currently on, a Global ruinous monetary system in a multi-polar World where the quality of Life is so bad that people's desperation gets to levels only seen in sub-Sahara Africa or the Middle East. That is a volatile mix that in theory we have never really diverted from since 2008.
If tech workers here proudly boast here about only really doing like 10 hours of actual work, and browsing HN all day than I should hope that by now you realize why that was a fool's errand and apply your efforts accordingly as this cannot be solved otherwise.
This isn't about being a 'doomer,' hell I wish I was wrong about all of this but including the war in Ukraine I'm going on 5 of 5 predictions so far.
My last one is based on the notion that if you are a millennial or younger all you've been exposed to is this perpetual grift and they wonder why the life expectancy has fallen, along with quality of Life and the biggest cause of death in the US for this age group is now overdose from Fentanyl.
If the goal was to see a drastic drop in population like in Japan's post bubble economy than mission accomplished, but if it was to some how finding a way to motivate people to become multi-planetary or some other lofty goal, most couldn't care less because they see everything from the lens of 'we will just fuck things up there like we did here.' And that is what I'm seeing from Gen Z, they are so apathetic and perhaps rightly so, that I don't know what will get them motivated until it's too late.
All assets were also inflated. Anyone who stayed invested in something reasonable (example, S&P index fund) is up at least 40% since 2020, so it all works out. People who invested aggressively have done way better obviously. We’re single digit percent away from the 2021 high.
It's very strange to me how sentiment on the American economy is still so poor. Yes, the economy is worse than the bubble fueled mania of 2021, or the 2012-2019 years, but guess what? There were massive economic dislocations due to COVID and the related supply chain issues. I don't think that's the reasonable baseline to compare to. If you compare to similar high GDP countries (UK, Germany, France, etc) or high growth countries (mostly China), we are doing amazing.
This country has unique economic advantages due to natural resources, geography, and the ability to integrate both skilled and unskilled workers. I think it's hard to form a consistent Doomer thesis about America being a laggard when it comes to economic growth - unless you are comparing only to America's own best years.
The market detached in 2020 from the economy and that's why we had a K type recovery. Its like Whose Line is it Anyways? Everything is made up and the points don't matter.
> The Federal Reserve itself projected hundreds of thousands of job losses by this December
It's funny that the Atlantic was accusing the Federal Reserve of trying to cause an "Artificial Recession" last December [0].
Now inflation is down, but unemployment is below the Fed's original projections, you'd think that would be a good thing, but now actually they're the ones that are "Doomers." Modern journalism everyone.
Derek Thompson, the author of the article, is an embedded Capitol Hill hanger-on, and a self-proclaimed politically progressive. It's entirely tone deaf of him to write such an article, and yet here we are. People like him look at the statistics of the historically lowest trust in the press, and blame online conspiracy theories, or similar, yet they fail to look at their own political biases, and examine their writing from the perspective of journalistic integrity, to realize where the blame lies.
The article itself is the classical piece of "who are you going to trust, The Atlantic or your own lying eyes" propaganda. the only supporting argument for his assertion of "vibrant economy" are select official statistics, where's the concerns of general population are dismissed on grounds of delusion. as an aside funny thing from the article, he says that half of the u.s. population think that u.s. is in recession but in the immediate next paragraph he says "discounting opinions of tens of millions of Americans." u.s. population is 330 million, so it would be discounting the opinions of hundreds of millions. but I'm sure that was an honest mistake. how about you leave your dc apartment, Derek, and actually interview some people and find out why they think that the economy is doing bad. and then having thus catalogued the grievances, explore them individually and the systemic effects that they might have on subjective experience of economic stability. you know, journalistic work.
it's an opinion piece written from the couch, dismissing the concerns of half of the u.s. population by quoting metrics without an attempt to get to the core of the issue.
Exactly. Half of Americans feel like they're in a recession because they're actively experiencing the financial/economic struggles reminiscent of one. Naturally, the corporate-owned media are eager to ignore this - almost as if they and their corporate owners have a vested interest in fleecing literally everyone else, the rest of society and economy be damned.
Where does creative destruction fit in here? We are used to discussing things in terms of "good" and "bad", but what are the consequences of a boom that doesn't seem to be busting?
I liken it to artificially staving off wildfires in a forest that thrives on them. Over time your overhead builds up, there's diminishing returns, and then the fires happen and they're catastrophic.
Nothing is allowed to die in the US economy anymore. Everything is too big to fail. All that does is move risk into the systemic realm and make the entire system more brittle. That, and it stagnates development. You can fudge numbers to say the US economy is doing better than ever while people can't afford to live in a dwelling for only so long. The reality on the ground is very different than the GDP numbers. Something will give.
The US is headed for recession. Houses are half a million dollars, a weeks worth of groceries per person is like 60 bucks, you can't rent an apartment for under 1000 bucks most places, even rural ones, Human beings are getting priced out of the economy across the board. What good is an economy that human beings can't participate in? Isn't the point of an economy to distribute resources to the people in the world?
The current state of affairs is simply not viable. Something will give. The longer we let this charade continue and escalate the worse the fallout will be.
133 comments
[ 3.2 ms ] story [ 214 ms ] threadDont they predict like 15 out of last 3?
Maybe we're not officially in a "recession" but you can't look around and tell me most people feel the economy is doing super great right now.
Sometimes this requires a reframing of what one’s talents are when applying for jobs outside what one might consider a normal window.
Also, I might recommend getting a recruiter to work for you to throw more mud on the wall so to speak.
The industry that wasn't affected by a large demographic of near retirees was technology. Because age discrimination was built into the culture. Not a lot of old programmers sticking around. They get RIFed right outta here. So while there is a shortage on teachers, nurses, trades, and police there is a surplus of junior and mid-career tech workers.
Consumer confidence (Conference Board) present situation index is the highest its been in two years, even though not at the extreme highs it was sitting at pre-COVID, but, yeah, I can tell you exactly that, with pretty strong evidence.
Are most people in a precarious situation as is the norm in a mostly-capitalist economy? Yes. But that’s part of the long-term baseline.
One is the sum total of goods and services. Measuring it is always a bit dicey but the metrics are doing reasonably well.
The second is how much money people have, in terms of its ability to buy stuff. That can be subjective, especially when the objective measures are contradictory, as they are now.
Ideally the two would be somewhat correlated. When the first definition is doing great and the second isn't, people get cranky because their work isn't bringing them wealth and stability. That is a systemic problem that goes even beyond today's economy.
I suspect this is where the disconnect between the public perception and the data exists.
Something about two quarters consecutive quarters of negative gdp growth was the original definition, it happened, and they said recession means something else.
https://www.statista.com/statistics/188185/percent-change-fr...
“They” haven’t changed any definitions, I don’t think there’s even a “they,” and there was not a recession by any definition of recession.
The fed tried hard to induce one because of wage growth and inflation, but failed to do so. Companies in tech specifically fired a ton of people in preparation, but that doesn’t make a recession - just bad business judgement. Tech leadership has never been super sharp to begin with.
If they don't say it's a recession, it isn't one.
------
What is consistent is that the economists there declare recessions way too late in practice. I think they declared a recession dated in 2007 in the year 2009, when we were already recovering.
So what we have are a bunch of internet bloggers who try to call a recession before the experts. But all that happens in practice is that the bloggers call a recession every 3 months since 2010 hoping that they're correct today.
-----
If we are in a recession today, we will know for sure maybe next year. That's just how it works on this issue, and it's premature to call it any sooner.
Nope, that was never the official definition, that was a convenient approximate rule of thumb.
Brian Deese, 2008
"As Secretary Yellen said on Sunday, two negative quarters of GDP growth is not the technical definition of a recession"
Brian Deese, 2022
Brian Deese, in 2022, was Joe Biden’s National Economic Council Director.
That's not redefining it? Are you redefining redefine?
> That's not redefining it?
No, someone getting the definition wrong and someone else getting it right is not a redefinition.
B) Many people define recessions as you said, as two consecutive quarters of negative GDP growth. Deese 2008 was one, apparently, and Deese 2022 was not.
C) The US commerce department started using the NBER to set recessions in the 1960s.
> A definition of a recession commonly used in the media is two consecutive quarters of a shrinking gross domestic product (GDP). In contrast, the NBER defines a recession as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales" [1]
So I guess Deese redefined what Deese thought (as people sometimes do over 14 years) but neither the NBER, nor economists at large, did any redefinition.
[0] https://www.washingtonpost.com/us-policy/2022/07/27/who-deci...
[1] https://en.wikipedia.org/wiki/National_Bureau_of_Economic_Re...
Then politics happen and didn't want to name things as they are.
https://www.statista.com/statistics/188185/percent-change-fr...
I think recessions are also widely misunderstood as being a binary thing. Like going from "everything is A-OK" to "OMG it's all going to shite". There can be a recession which people barely feel. It's not like an event horizon from which there is no turning back.
> "Federal Reserve Chairman Ben Bernanke told lawmakers on Thursday the U.S. economy did not appear headed for recession, but warned growth could prove weaker than expected and inflation higher."
https://www.reuters.com/article/us-usa-bernanke-idUSWBT00789...
If only all our companies weren’t run by the same monoculture of ivy grads with the same excel sheets taking orders from the moves of the Fed.
is there like a market where i can buy a couple of years, new in box, to add to my life
X will take 48 person-months to complete
48 person months is 48 months with 1 persons 48 person months is 24 months with 2 persons 48 person months is 12 months with 4 persons etc
When time to market is critical, companies will often choose to "buy time" by paying people to cut the time requirements. The math isn't as linear as I've suggested, but most of the time, for most of the projects, you can increase velocity made good by adding people to a project.
If only it were that simple: https://en.wikipedia.org/wiki/Brooks%27s_law
Basically: between the added communication/management overhead and the training/ramp-up needed, "buying time" this way can end up costing time. If more of these MBAs calling the shots read The Mythical Man-Month we'd have a less schizophrenic economy and maybe even world peace.
if they can keep from fighting
There's a lot of nuance around whether or not adding folks to a project will make it faster or slower, and that's what the book is emphasizing. It's not a hard and fast rule of "don't add people to a project".
The parent's comment didn't have any of that nuance. Just "more people can help spot errors and help with design" and the only issue they mentioned was "if they can avoid fighting". Neither of those things are what the book describes.
For example, I came across this article titled The Tragedy of Being a New Mom in America immediately after reading this article about the economy [0]. The contrast between 'everything is great' and 'everything is terrible' seems stark.
[0] https://www.wsj.com/articles/mothers-mental-health-women-pos...
The solution is to stop reading daily newspapers and focus on the few remaining publications which can still afford to stay afloat while doing quality work while they last.
The only problem is finding the time to do it. I think it would be a rewarding experience, but my $DAYJOB employer might not be as enthusiastic.
Except that the amount of economic data is far to low to make statistically safe predictions. How many previous times have we had a lockdown, followed by a war in Ukraine, followed by …
It seems to me that the only way things aren't awful, is because people are holding on for dear life and minimizing their burn rate. But the wall is coming, just very slowly.
That's just my impression, I'm not an expert. I would prefer being wrong.
If companies were wrong, shouldn't that be a gigantic concern they got away with laying off hundreds of thousands for no reason? If they're right, then articles trying to convince us everything is fine is surely alarming!
The rest of society has no problem finding jobs. The problem is that almost no jobs pay enough to buy housing in places millennials and Gen Z consider desirable.
They also have mich bigger savings cushions on average and can go through disruptions with little change to consumption.
I could afford a house, easily, in Rural Kentucky, but good luck getting a job around there. Remote might change that game a little, but not as much as you'd think, and there would always be a huge sword of damocles dangling over your head about job security.
My take: everybody wants to foretell the future, and people on the two extremes are the most visible. Whereas in fact the present is so-so, not terrible, not excellent.
Generally the bust lasts 2 years, so if you can stretch it until then there is a good chance you'll make it.
Of course, that's not a guarantee. Some parts of the economy simply never recover, because their fundamentals have changed.
Short term yes. I would 100% delay moving to a 2 bedroom bigger house and just make do with a slightly smaller house to avoid a 25% more expensive house having a 100% higher mortgage payment.
But if interest rates stay up for 2, 3, 5 years - more and more of those want to moves will just suck it up and do it.
The problem is people are very very happy when they can make some cash off a move. People are very very sad when they are underwater. To all the people that paid $250-$275k for the house above? They are going to delay for a very long time before they sell for 200k. Likely long enough that inflation will slowly bring up the value.
People are very emotional about this and do not make wise economic decisions. For example - the finances of the time may mean that the house they are both selling and buying are 30% down. But it's a real feel bad, and losing money in a house is enough to stop many people from moving. a 30% gain where the seller both makes money on their sale AND ends up paying way more in total? It feels good and people jump on that instantly. (And the way down payments work, its generally easier for someone with limited liquid assets to to the sell + buy when the market is up 30%, vs when the market is down 30%).
When supply is very low, you only need a small group of buyers being able to afford sustained high prices. It doesn't matter if the general public can't afford a 400K home. Only buyers need to be able to afford it, and you'll always have a group that can.
That is, I don't think moving is usually driven just by prices. Is it? Investing largely is, but investment firms buying up neighborhoods is its own problem.
But a lot of these moves are just improvement moves. Move to a bigger place to have more room for kids. Move to a smaller place to save on mortgage for empty nesters. Move to make your 1 hour work commute 15 minutes. People would love to make these moves, but if the money doesn't line up - it isn't going to happen. Very few of these are REQURIED moves.
For sure required moves exist. Live in a studio and have a kid or two. Get a very good job 1000 miles away. Graduate college. But these are not "most" moves.
Has some actual numbers that are interesting. Moves slowing down as you age lined up fairly similar to my path, I think my entire life moves were at like:
21, 22, 23, 28, 30, 33, 37...
and I may not move again, or if I do I would see it as 10+ years out.
The challenge is that higher interest rates increase the total cost of buying. Standard demand curves tell us that the quantity demanded at a higher cost is lower.
In a typical market, an increased cost is balanced by sellers increasing the quantity they sell. However since housing is almost exclusively bought with loans, and the current increase in cost is driven by interest rates payed to mortgage brokers rather than the cost of the home passed onto the seller, we don't see the same increase in supply relative to the cost of buying that we would expect in a market not driven by loan dynamics.
Tl;Dr: Higher interest rates increase costs to buyers without increasing profits for sellers, reducing the total number of units selling at a given price.
I'd guess that the automobile market is similarly impacted, just has a larger buffer in the used marketplace to eat in some of the negatives?
Is there a viable path to lower costs on housing? :(
The only reason a loan is harder to get when interest rates increase is because the monthly payment at a given principal goes up, and so the lender needs to see more income to trust the borrower will be able to pay. If the price goes down, and hence the principal goes down, then the monthly payment goes down, so the lender needs to see less income to trust the borrower will be able to pay.
Basically, bottom line is people care about monthly payments. Interest rates going up means that the same houses have higher payments. You /could/ expect that prices going down would be enough to keep people happy to move. That is indeed what I was asking at the open.
However, stock going down means existing values goes down, which is just another form of trap for people. Specific trap being that many moves are leveraged on older equity, but to get out of the old loans will now require more cash.
This is largely because older equity was also under a leveraged loan. In markets that are not so heavily loan driven, the existing assets are straight forward to manage and convert into down payments on new properties. Housing is specifically not that.
If I'm misrepresenting that, please correct me.
The vast, vast majority would be more mobile since homes are cheaper, and the cheaper something is, the less money you need to buy it.
The government gave a gift to many people in the last 20 years of keeping interest rates near zero and pulling forward all that price appreciation. Unfortunately, the future generation might not want to expect the same treatment.
I don't think we have seen much yet, whatever the bulls say. It might take time to come, but I think we will see something pretty big eventually.
It feels like horrible timing, but then again they also say you can't time the market so maybe we just buy now.
Millennials are getting nonstop shit on, ugh
So you have the incredibly wealthy people that have actually gained massively as they've been able to gamble on the market in the short term--they aren't changing any habits. But the folks just below them who previously might have bought his and her matching Teslas without a second thought are now looking at their slightly diminished wealth and deciding maybe we settle for just one new Chevy Volt for now. They're pulling up the slack for the former Volt buyers who are now looking at their shrinking savings and deciding, no new Volt this year we're going to get a 3 year old used car. You can follow this ratcheting down all the way to the very bottom level where unfortunately the poorest/lowest levels are just being completely written out and dropped from the economy entirely. The big picture looks like nothing is wrong but the composition of who is spending is changing a lot.
Is there a link to this I can read somewhere? I’d be curious to see their analysis.
They're almost certainly paying for credit card, social media, and other data, and are able to correlate it.
How does this make sense? Total spend = poor spend + rich spend. Poor spend decreases. Then rich spend has to increase.
If total spend is staying the same, then some group has to be spending more if people at the bottom are dropping out.
I think what you might be trying to say is the spend at the very top is increasing, offsetting the decrease in spend for everyone below.
It's what people mean when they refer to the "vanishing middle class".
Some are going up and some are going down, it's the middle that's vanishing.
The very top (folks like bezos, musk, etc.) never loses and never had to change their habits. If anything their spending has increased as their wealth increased and they made deals on property, toys, art etc. being sold at cheaper prices by less rich people dropping down a class.
Imagine if you had $100k savings in the bank and you were suddenly required to pay a once-off tax of $20k paid off over 2 years. There'd be riots.
It's the same thing administered differently.
https://www.usinflationcalculator.com/inflation/current-infl...
4.7% in 2021
8% in 2022
4%????? in 2023.
if normal is about 2%.. we are looking at something like 11% "extra" inflation over 3 years. Which isn't nothing, but isn't 20%.
If you were expecting to buy a home with certain qualities in a certain location, then you might have experienced a loss (in terms of material expectations of quality of life) worth tens of thousands, if not hundreds of thousands of dollars during the last few years.
I can tell you that I kept every receipt, virtual and paper, starting July 1st 2021 and going through December 31st 2022. Running the numbers in March when I got around to it: My cost of living (with my lifestyle not changing!) went up 20.94% over those 18 months.
It's gone up more since then but I don't know exactly how much - say, 5%-10%
Our economy is "doing fine" because we've printed and spent 10 trillion dollars. That bill will come due, along with the bill for the other 20 trillion dollars we've printed and spent over the previous 20 years.
If you're over 65 and live an average lifespan all this won't matter much to you. If you're under 45 and middle class (or lower down) you'll never retire, but your grand-kids might.
This seems like scare mongering. Especially for people under ~35, that would likely be able to ride out economic problems. Not everyone has all their money in cash, lol. On top of investments, lots of middle class people own their house by age 50, and you can retire quite more easily with a paid for house.
It also seems to me that these labor shortages aren't going away. There may be an ups and downs, but I'd be very surprised to go another 20 years without a covid-like jobs shortage, where businesses didn't seem fazed to throw money and benefits at the problem.
An economic downturn isn't even really needed in the aftermath, or excessive inflation. We've had times where the average joe has prospered. Lots of really wonky things were done in the economy to cause COL increases. We gassed up the real estate market for very little reason. That's a big driver of the inflation, or especially cost of living.
Also, it seems that there are market forces that caused the inflation in cost of products. I think cost of living can go down without deflation, but I could be wrong. If companies are overcharging, that could leave room in the market. It's already eroded their position, since many products are now similar in cost to premium products, yet lower quality.
Last I remember they were though, all the VC money (things that keep the US relevant outside of military) were in the hands of a few who have been techo-bro'ing it up with scams like NFT and AI (via LLMs) as the next big savior of the economy.
When in reality this comes down to a very simple distortion of monetary policy that as someone said has never really equated to more than Ivy league Astronomy and tea leaf reading by way of the Federal Reserve; who have admitted they do not know how to solve this at all. Which if you see is clear as they are raising interest rates when the debt to GDP ratio has been over 100% even before COVID, which means we can never pay it off.
Lastly, I want this to happen now; you people have lived so far outside of reality that unless this starts to affect you directly you will never consider an alternative: not only are fiat monetary systems doomed, but unless we get serious about building an exit from this we might have to deal with not just climate change, and warfare all at the same time, but if left to the nation-state model we are currently on, a Global ruinous monetary system in a multi-polar World where the quality of Life is so bad that people's desperation gets to levels only seen in sub-Sahara Africa or the Middle East. That is a volatile mix that in theory we have never really diverted from since 2008.
If tech workers here proudly boast here about only really doing like 10 hours of actual work, and browsing HN all day than I should hope that by now you realize why that was a fool's errand and apply your efforts accordingly as this cannot be solved otherwise.
This isn't about being a 'doomer,' hell I wish I was wrong about all of this but including the war in Ukraine I'm going on 5 of 5 predictions so far.
My last one is based on the notion that if you are a millennial or younger all you've been exposed to is this perpetual grift and they wonder why the life expectancy has fallen, along with quality of Life and the biggest cause of death in the US for this age group is now overdose from Fentanyl.
If the goal was to see a drastic drop in population like in Japan's post bubble economy than mission accomplished, but if it was to some how finding a way to motivate people to become multi-planetary or some other lofty goal, most couldn't care less because they see everything from the lens of 'we will just fuck things up there like we did here.' And that is what I'm seeing from Gen Z, they are so apathetic and perhaps rightly so, that I don't know what will get them motivated until it's too late.
This country has unique economic advantages due to natural resources, geography, and the ability to integrate both skilled and unskilled workers. I think it's hard to form a consistent Doomer thesis about America being a laggard when it comes to economic growth - unless you are comparing only to America's own best years.
It's funny that the Atlantic was accusing the Federal Reserve of trying to cause an "Artificial Recession" last December [0].
Now inflation is down, but unemployment is below the Fed's original projections, you'd think that would be a good thing, but now actually they're the ones that are "Doomers." Modern journalism everyone.
[0] https://www.theatlantic.com/ideas/archive/2022/12/us-economy...
The article itself is the classical piece of "who are you going to trust, The Atlantic or your own lying eyes" propaganda. the only supporting argument for his assertion of "vibrant economy" are select official statistics, where's the concerns of general population are dismissed on grounds of delusion. as an aside funny thing from the article, he says that half of the u.s. population think that u.s. is in recession but in the immediate next paragraph he says "discounting opinions of tens of millions of Americans." u.s. population is 330 million, so it would be discounting the opinions of hundreds of millions. but I'm sure that was an honest mistake. how about you leave your dc apartment, Derek, and actually interview some people and find out why they think that the economy is doing bad. and then having thus catalogued the grievances, explore them individually and the systemic effects that they might have on subjective experience of economic stability. you know, journalistic work.
it's an opinion piece written from the couch, dismissing the concerns of half of the u.s. population by quoting metrics without an attempt to get to the core of the issue.
Nothing is allowed to die in the US economy anymore. Everything is too big to fail. All that does is move risk into the systemic realm and make the entire system more brittle. That, and it stagnates development. You can fudge numbers to say the US economy is doing better than ever while people can't afford to live in a dwelling for only so long. The reality on the ground is very different than the GDP numbers. Something will give.
The US is headed for recession. Houses are half a million dollars, a weeks worth of groceries per person is like 60 bucks, you can't rent an apartment for under 1000 bucks most places, even rural ones, Human beings are getting priced out of the economy across the board. What good is an economy that human beings can't participate in? Isn't the point of an economy to distribute resources to the people in the world?
The current state of affairs is simply not viable. Something will give. The longer we let this charade continue and escalate the worse the fallout will be.