The Recession

[Vegas64 665]

A pull-back or recession is obviously coming, if not already here.

From what I have read recently, though, is that a lot of this stuff is confidence-based and the more we repeat the doom-and-gloom, to the posters point about the news and media, the worse we are doing for ourselves as it becomes a bit of a fulfilling prophecy to a degree. As anyone else heard that theory or is it complete snake oil?

I think the Target and Walmart earnings report of last week really got everyone scared and deeper into the recession is inevitable mindset, but I think we've all long known this was coming in the middle innings of the "inflation is transitory, no wait, it's not" days of a few months ago.

[Captainant 27,466]

8 minutes ago, Vegas64 said:

A pull-back or recession is obviously coming, if not already here.

From what I have read recently, though, is that a lot of this stuff is confidence-based and the more we repeat the doom-and-gloom, to the posters point about the news and media, the worse we are doing for ourselves as it becomes a bit of a fulfilling prophecy to a degree. As anyone else heard that theory or is it complete snake oil?

I think the Target and Walmart earnings report of last week really got everyone scared and deeper into the recession is inevitable mindset, but I think we've all long known this was coming in the middle innings of the "inflation is transitory, no wait, it's not" days of a few months ago.

I think there's something to the "it's all in our heads!" argument, but I view it from the other angle. The current state of our hyper-inflated market valuations and stock prices is the direct result of everyone buying into the cult of confidence in the market. I laid it out clearly in the Elon DT thread, but there's been a ton of stock price pumping and movement that's not based in fundamentals or revenue or anything tangible.

That's what a bubble is - and the bubble pops once everyone stops sharing the delusion that something is ACTUALLY worth more just because someone else wants to buy it. Same phenomena that's driving crypto too.

[Neonmoon 38,127]

14 minutes ago, Vegas64 said:

A pull-back or recession is obviously coming, if not already here.

From what I have read recently, though, is that a lot of this stuff is confidence-based and the more we repeat the doom-and-gloom, to the posters point about the news and media, the worse we are doing for ourselves as it becomes a bit of a fulfilling prophecy to a degree. As anyone else heard that theory or is it complete snake oil?

I think the Target and Walmart earnings report of last week really got everyone scared and deeper into the recession is inevitable mindset, but I think we've all long known this was coming in the middle innings of the "inflation is transitory, no wait, it's not" days of a few months ago.

Consumer confidence index is a thing. Enough scary things happen, the CCI will because a self-fulling prophecy. But it doesn't happen in a vacuum, the negatives vibes are initially built on inflations reports, jobs reports, etc.

[Vegas64 665]

13 minutes ago, Captainant said:

I think there's something to the "it's all in our heads!" argument, but I view it from the other angle. The current state of our hyper-inflated market valuations and stock prices is the direct result of everyone buying into the cult of confidence in the market. I laid it out clearly in the Elon DT thread, but there's been a ton of stock price pumping and movement that's not based in fundamentals or revenue or anything tangible.

That's what a bubble is - and the bubble pops once everyone stops sharing the delusion that something is ACTUALLY worth more just because someone else wants to buy it. Same phenomena that's driving crypto too.

Great post. Agree, it seems to cut both ways, and on top of what you said there is an apparent lagging or trailing indicator syndrome in that what we pump and dump in a bubble and/or pop the bubble today, we won't feel the full effect until X months later.

[Vegas64 665]

Also, for a bit of good-ish news?

For the first time since 1976, US economic growth is expected to outpace China. Due to covid lockdowns, China’s GDP is only expected to grow 2% this year, while the US GDP is projected to grow 2.8%.

[Nice Guy Eddie 13,414]

I've noticed a few people, especially on Right, want to point out that we are in a Recession. They're technically 100% correct but this feels like no one other recession in recent history. 

Yes, the GDP has dropped for 2 straight quarters so we hit the definition of a recession but it comes on the heels of 6 straight strong quarters. Q2's GDP is 1% higher than Q3 2021. 9 whole months ago.  Q4 2021 growth was just so strong we couldn't maintain that level.

If I'm a salesman who had 6 straight months of strong commission incomes increases and then 2 months of slight drops, I may not like my income drop but I'm still doing much better than before.

Edited July 31, 2022 by Nice Guy Eddie

[elfenix 34,171]

18 minutes ago, Nice Guy Eddie said:

They're technically 100% correct

there's no hard technical definition of a recession per the bureau that decides this.  and, apparently, hasn't been one for decades, or ever. 

the great recession started in december of 2007 but Q2 2008 was positive so the old two straight quarters of contraction wasn't reached until the end of 2008. 

Edited July 31, 2022 by elfenix

[George Clooney 378]

8 minutes ago, elfenix said:

there's no hard technical definition of a recession per the bureau that decides this.  and, apparently, hasn't been one for decades, or ever. 

Jean Baudrillard is smirking somewhere rn.

[elfenix 34,171]

1 minute ago, George Clooney said:

Jean Baudrillard is smirking somewhere rn.

not an economist.

[Nice Guy Eddie 13,414]

4 minutes ago, elfenix said:

there's no hard technical definition of a recession per the bureau that decides this.  and, apparently, hasn't been one for decades, or ever. 

the great recession started in december of 2007 but Q2 2008 was positive so the old two straight quarters of contraction wasn't reached until the end of 2008. 

Whether someone disagrees with it, it’s fair to acknowledge that 2 quarters of gdp contraction is the closest we have to a standard definition, even with inherent flaws with measuring percentages. And it’s not like there is something magical about the end or start of a quarter. It’s just another day but we have to measure time somehow.

and I don’t think we, as a country, are suffering financially. I 100% agree that inflation is hurting people with low discretionary income but does anyone actually see empty stores, restaurants or bars? And are people losing their job en masse? Most current large layoffs are with companies that grew too fast over the pandemic or made other poor decisions.

but time can prove me wrong and perhaps we will all be in bread lines next spring. I don’t claim to know the future.

[George Clooney 378]

3 minutes ago, elfenix said:

not an economist.

Lol

[TwiceHorn 31,283]

On 5/22/2022 at 8:18 AM, Judge Roybeanbag said:

The timing of all these crashes is just exquisite.   I started college in 1984, crash in 1987, job market sucked when I graduated.   The 1990s were good (thanks a lot, Clinton), had kids in ‘96 and ‘98 and started my good earning years, crash in 2000.  Wiped out half of my retirement savings.  Repeat in 2008.   Now, I was magically close to the number I needed to retire and bam! I’m gonna have to work until I die, unless we get some quality nationalized healthcare.  

We are on the same timeline, except for kids.

Were you heavily invested in tech?  I've just had diverse, low-fee mutual funds and never sold out, just rode it out.**  And I have been fine.  Without kids, though, my savings rate has probably been a little higher.  But, while you were having kids, I was being an alcoholic and getting sober and that throttled things back a bit.

**I did think the dotcom balloon was utter bullshit, but finally decided to join in with a small fraction of my savings.  It doubled in rapid time, then declined to about 20% of the original investment and took about 7 years to recover, much much slower than everything else.  I can see if you were more exposed to tech in 2000, and finance in 2008, you got cornholed.

[elfenix 34,171]

21 minutes ago, Nice Guy Eddie said:

Whether someone disagrees with it, it’s fair to acknowledge that 2 quarters of gdp contraction is the closest we have to a standard definition, even with inherent flaws with measuring percentages. And it’s not like there is something magical about the end or start of a quarter. It’s just another day but we have to measure time somehow.

and I don’t think we, as a country, are suffering financially. I 100% agree that inflation is hurting people with low discretionary income but does anyone actually see empty stores, restaurants or bars? And are people losing their job en masse? Most current large layoffs are with companies that grew too fast over the pandemic or made other poor decisions.

but time can prove me wrong and perhaps we will all be in bread lines next spring. I don’t claim to know the future.

overall personal consumption expenditure is mildly up ($36 billion).  so they're still bustling.  goods spending has dropped overall this year by -$66 billion but was turbocharged in the second half of 2020 and through 2021 while services got smashed.  services is up this year by $145 billion so the expected process of goods and services going back toward the pre-pandemic mix is happening. 

the biggest negative was a drawdown in inventories of -$107 billion.  total contraction was -$46 billion so the inventory drawdown was well over double that amount. 

1/3 of the contraction thus far this year is government spending. 

https://www.bea.gov/sites/default/files/2022-07/gdp2q22_adv.pdf

 

edit: looking at those Q1 numbers the main driver was exports falling a bit while imports boomed.  overall contraction of -$78 billion while the trade balance moved -$194.6 billion.  next biggest negative number was national defense spending at -$20 billion. 

 

20 minutes ago, George Clooney said:

Lol

i don't have anything real to contribute so i'm going to discuss french philosophy. 

apt for george clooney.

Edited July 31, 2022 by elfenix

[Nice Guy Eddie 13,414]

Everyone’s situation is different but there’s a lot of overreacting with the economy.

yes, the stock market is down. The s&p 500 is down 14% from Dec. 31. Ouch for anyone with money in the market. But only down 6% for the past 12 months. Finally it’s up 66% for the last 5 years for an annualized return of 10.75% even counting the recent downturn.  We all fall prey to normalizing a new all-time high as the new basis point.

[George Clooney 378]

6 minutes ago, elfenix said:

i don't have anything real to contribute so i'm going to discuss french philosophy. 

apt for george clooney.

You can just admit you haven't read any of his works. He, like most post structuralist philosophers, offered little to believe in yet still offered more than all but maybe ten economists to ever live. The point is the lack of a clear definition of recession signifies how useless it is to read, formulate, or debate economic theory altogether. Not sure why I still bother to spend time in this dull abyss.

[Judge Roybeanbag 11,810]

3 hours ago, TwiceHorn said:

We are on the same timeline, except for kids.

Were you heavily invested in tech?  I've just had diverse, low-fee mutual funds and never sold out, just rode it out.**  And I have been fine.  Without kids, though, my savings rate has probably been a little higher.  But, while you were having kids, I was being an alcoholic and getting sober and that throttled things back a bit.

**I did think the dotcom balloon was utter bullshit, but finally decided to join in with a small fraction of my savings.  It doubled in rapid time, then declined to about 20% of the original investment and took about 7 years to recover, much much slower than everything else.  I can see if you were more exposed to tech in 2000, and finance in 2008, you got cornholed.

To be honest I’m only down about 17% this year.  Just sucks because 130K or so is a lot of money and it evaporated.  I did learn to diversify over the years and so real estate and cash are fine.  Just the investments that suck.  Here’s the other shitty thing.  In terms of dollars, I could retire now, I have the funds.   Healthcare, not so much.  I have one medication that runs $12k per month.  Yes you heard that correctly.  Takhzyro is $12k. per month.  So I have that to pay for the rest of my life   

Edited July 31, 2022 by Judge Roybeanbag

[Voldemort86 2,259]

18 hours ago, Judge Roybeanbag said:

To be honest I’m only down about 17% this year.  Just sucks because 130K or so is a lot of money and it evaporated.  I did learn to diversify over the years and so real estate and cash are fine.  Just the investments that suck.  Here’s the other shitty thing.  In terms of dollars, I could retire now, I have the funds.   Healthcare, not so much.  I have one medication that runs $12k per month.  Yes you heard that correctly.  Takhzyro is $12k. per month.  So I have that to pay for the rest of my life   

Ouch. Sorry to hear that.

big pharma causes so much pain and suffering. They get away with all of it too.

[Nice Guy Eddie 13,414]

18 hours ago, Judge Roybeanbag said:

To be honest I’m only down about 17% this year.  Just sucks because 130K or so is a lot of money and it evaporated.  I did learn to diversify over the years and so real estate and cash are fine.  Just the investments that suck.  Here’s the other shitty thing.  In terms of dollars, I could retire now, I have the funds.   Healthcare, not so much.  I have one medication that runs $12k per month.  Yes you heard that correctly.  Takhzyro is $12k. per month.  So I have that to pay for the rest of my life   

I hope something changes on the meds. That would be a tough nut to meet each month.

I wouldn't sweat the 17% too much. I'm basically in the same boat (percentage and amounts.) For every recession, the stock market recovers relatively quickly.

[babysdaddy 2,718]

20 hours ago, Judge Roybeanbag said:

To be honest I’m only down about 17% this year.  Just sucks because 130K or so is a lot of money and it evaporated.  I did learn to diversify over the years and so real estate and cash are fine.  Just the investments that suck.  Here’s the other shitty thing.  In terms of dollars, I could retire now, I have the funds.   Healthcare, not so much.  I have one medication that runs $12k per month.  Yes you heard that correctly.  Takhzyro is $12k. per month.  So I have that to pay for the rest of my life   

I just read about hereditary angiodema and I'm sorry you have to deal with that shit.  

[MissingInAction 24,824]

 

 

[Biff Tannen 45,499]

[Satchel 6,908]

Well, looks we may have to wait a bit for the recession since the economy created double the number of jobs forecasted at almost 600k and the unemployment rate fell to its lowest point since forever.

[Voldemort86 2,259]

3 minutes ago, Satchel said:

Well, looks we may have to wait a bit for the recession since the economy created double the number of jobs forecasted at almost 600k and the unemployment rate fell to its lowest point since forever.

If inflation recedes, what the hell will the GOP talk about now?  Are they tired of winning yet? Especially after what happened in Kansas?

[jimmyjazz 45,560]

4 minutes ago, Voldemort86 said:

If inflation recedes, what the hell will the GOP talk about now?  Are they tired of winning yet? Especially after what happened in Kansas?

There's always the price of gas.  It won't drop commensurate with any drop in inflation, it will lag.

[The Hot Dog Buffet 1,291]

5 minutes ago, Voldemort86 said:

If inflation recedes, what the hell will the GOP talk about now?  Are they tired of winning yet? Especially after what happened in Kansas?

The talking point will be that people finally ran out of money from their stimulus checks. Seriously.

[Underdog 28,457]

There’s always Hunter’s laptop to fall back on. 

[Neonmoon 38,127]

Inflation will be the talking point. If it climbs to 10+% next month. 

[Brisketexan 104,628]

14 minutes ago, jimmyjazz said:

There's always the price of gas.  It won't drop commensurate with any drop in inflation, it will lag.

Isn't it more likely to lead?  Being that fuel is a driver in increased prices for a shitload of stuff?  Fuel goes down, then the things that depend on it follow?

I'm not an economist.  I just have trouble impressing women, much as economists do.

Edited August 5, 2022 by Brisketexan

[jimmyjazz 45,560]

In my experience, gas shoots up fast and drops more slowly.  I would love to be proven wrong, though.

[The Hot Dog Buffet 1,291]

39 minutes ago, Neonmoon said:

Inflation will be the talking point. If it climbs to 10+% next month. 

I'm expecting a nice drop.

[High Plains Drifter 10,977]

 

51 minutes ago, Neonmoon said:

Inflation will be the talking point. If it climbs to 10+% next month. 

 

 

but with this jobs report, the fed will be able to act relatively aggressively.

 

 

[High Plains Drifter 10,977]

1 hour ago, Satchel said:

Well, looks we may have to wait a bit for the recession since the economy created double the number of jobs forecasted at almost 600k and the unemployment rate fell to its lowest point since forever.

 

 

Thanks Obama Biden!

 

(every dem should be shouting this news from the rooftops)

 

[tx 3 putt 76,401]

45 minutes ago, jimmyjazz said:

In my experience, gas shoots up fast and drops more slowly.  I would love to be proven wrong, though.

 

you are 100000% correct

jobs seem to be going up and gas going down, looking good ?

[elfenix 34,171]

1 hour ago, jimmyjazz said:

There's always the price of gas.  It won't drop commensurate with any drop in inflation, it will lag.

month over month inflation measure is going to be interesting with gas prices falling precipitously from their high in mid june.  dropping like a rock instead of a feather right now.  YoT inflation if the MoM was 0 would be 7.86% for july.  gas prices are falling so hard they might drag the MoM to negative. 

what i'm saying is that you have the relationship between gas prices and inflation backward. 

Edited August 5, 2022 by elfenix

[jimmyjazz 45,560]

5 minutes ago, elfenix said:

what i'm saying is that you have the relationship between gas prices and inflation backward. 

I might have the relationship backwards, but to your point I have one source that says gas (GASO) dropped 12% in the last day or so.  Like I said, I'd like to be wrong.  I retract my statement until further information becomes available!

[elfenix 34,171]

18 minutes ago, jimmyjazz said:

I might have the relationship backwards, but to your point I have one source that says gas (GASO) dropped 12% in the last day or so.  Like I said, I'd like to be wrong.  I retract my statement until further information becomes available!

inflation lags gas (well, fuel generally) as it's a major driver of inflation.  YoY gas is still up, but MoM it's down (been watching AAA)

[jimmyjazz 45,560]

1 minute ago, elfenix said:

inflation lags gas (well, fuel generally)

That's the differentiator I was aiming at.  Price at the pump lags oil prices, and those oil prices have a big say in cost of goods.  Of course, fuel does also, but that's only part of the equation.

[pronghorn 44]

those employment reports keeps killing R narrative about a recession and worse economy ever under Biden.

[Longhorn_Fan68 33,843]

Just now, pronghorn said:

those employment reports keeps killing R narrative about a recession and worse economy ever under Biden.

[horn4life 3,755]

Hard to say we are truly in a recession when you are adding like 6 months of Donald Trump jobs production bragging in a single month.  Economy is overheated but a lot of this is sthe result of the usual GOP massive deficit creation under Trump and the mind boggling giving away free money to millionaires even if they did not need it as the FIRST financial action of the pandemic.  I know a guys whose company never wavered, and did better, he put close to $1.2 million in his pocket, without any need at all.

A good analogy now to what the economy is doing is sort of like trying to see Bruce Springsteen and Tickemaster's dynamic pricing.  The ticket says $50, but the demand says the ticket is now worth $250.  You could say fuck it, but you haven't been to a concert in forever, and you pull the trigger because damnit you want it!  Now gasoline is different, but that's largely the result of letting Russia and Saudi Arabia pump like crazy during the prior administration destroying the fracking industry.  It was a smart play that made both the Saudi's and Russian's a shit ton of money when the supply tightened after our production went offline.  But now the market is adjusting and consumption is being reduced from folks combining errands or other reduction of fuel use.  So prices are falling even though production is only marginally increasing.  Fuel was the single biggest driver of inflation this past year.  And still probably is today even with the price falling it's still a buck more that a year ago.  I sort of feel like the folks hurting the most are starting to say no, to those Springsteen tickets.

Right now I think we have a decent opportunity to have a very mild recession.  The reason I say this, is that I am beginning to see a LOT more inventory on the shelves at retailers.  Now that's not going to decrease meat and produce because of the semi-monopoly nature of those industries from the processing side.  But retailers and manufacturers are going to move the product on the shelves, and discounting price is how things ultimately are moved off the shelves.  OR... layoff and shutdowns if they do not move. I think the supply chain woes will result in too much inventory as things smooth out.  Real estate is already soft from interest rates pushing price and price reduction is around the corner if you want to move a house.  The dichotomy of rising first time employment filings rising and the employment numbers skyrocketing is interesting to be sure.  But folks who had covid check savlngs and seen that money evaporate, so they need work.  Some industries are laying off Real Estate related for sure. But retail and hospitality is still desperate for workers.  I am also now seeing more sales in the weekly grocery flyers.  Where 4 months about only 5 or 6 items were truly "on sale." 

Fed may pop a full percent, but I am more worried about them overshooting on the rate increases than anything at this point.  The lack of a coherent immigration policy also hurts us, especially on food price inflation. But that's another story

Edited August 5, 2022 by horn4life

[Hornius Emeritus 12,420]

3 hours ago, The Hot Dog Buffet said:

The talking point will be that people finally ran out of money from their stimulus checks. Seriously.

Wouldn't the Democrats simply respond that this simply means that the stimulus checks did what they designed them to do, which was to cushion people financially so that they didn't fall into complete ruin until the economy could turn around?

[South Austin 52,144]

3 hours ago, Brisketexan said:

I just have trouble impressing women

We know. Your wife has told us.

[elfenix 34,171]

22 minutes ago, Hornius Emeritus said:

Wouldn't the Democrats simply respond that this simply means that the stimulus checks did what they designed them to do, which was to cushion people financially so that they didn't fall into complete ruin until the economy could turn around?

the stims were spent a year ago. 

[Biff Tannen 45,499]

1 hour ago, elfenix said:

the stims were spent a year ago. 

Shit, most probably in the first couple of months.

[Hornius Emeritus 12,420]

2 hours ago, elfenix said:

the stims were spent a year ago. 

Two points:  1) That depends on each individual's situation. Mine, for example, went into savings and has not been spent  2) Even if the stimulus checks HAD been spent a year ago, that's not relevant to what the Republican messaging/talking point as posited by Hot Dog Buffet would be and what my proposed Democrat response to that messaging would be

[Fastbreak 3,959]

My company’s stock up was 12% on Friday. This recession is tough.

Tell me again Ted Cruz

[Voldemort86 2,259]

The overall amount of people in the workforce or percentage of folks working decreased in the last jobs report. The baby boomer generation is very back loaded. I’m not sure how many of them are retiring daily, but the last few years expedited many of them leaving the work force.

 

[Brisketexan 104,628]

We know. Your wife has told us.

The woman has the patience and forgiveness of a saint.