The next U.S. recession

[pete6032]

We've been hearing a lot about how a recession may be on the horizon for the U.S. A brief summary of the current situation:

• The war in Ukraine and profiteering by the U.S. fuel oligopoly is contributing to record high gasoline price.
• The housing market is "overheated" but cooling quickly.
• The Federal Reserve enacted the largest interest rate increase in the last quarter century earlier this week to combat inflation, which is at its highest rate in decades.
• The pandemic, which was mostly under control in the U.S. through 2021 is now sneaking back and cases are on the rise in some states while plateauing nationally. The rise of at-home testing is a welcome tool for Americans to test themselves, but there are growing concerns that at-home tests are contributing to significant undercounting of cases. Abroad, Chinese lockdown policies are raising concerns of larger impacts on the global economy.
• The stock market is now a bear market.

At the same time, unemployment remains low and job growth is moderate to strong. So what are your thoughts on the next recession? Are we headed there now? If not now, when?

 

[K1052]

The economy is in such a weird and arguably unprecedented spot it is very difficult to make predictions. Goods consumption is cratering but services consumption is headed up fast. Unemployment remains low, participation ticking up. Stocks in the dumper. Energy way up due to war. If there is a comparable period I'm not aware of it. I'm intensely skeptical the Fed can really fix a supply side energy crisis by raising rates but that's what's being demanded so they're delivering.

Economists who are strutting around that they pegged things right mostly got lucky for the wrong reasons or laid out ever possible scenario so it would be nearly impossible to be "wrong" (Summers).

 

[Pens1566]

Already in it ... #s just aren't official yet.

 

[NWRMidnight]

Already in it ... #s just aren't official yet.

I think we have really been on a recession since February 2020 since it was announced we fell in to a recession at that time. Then the pandemic hit where people where able to put off mortgages, rent, loans, credit card payments, etc. (Yes, even the stimulus money) Which didn't really take us out of a recession, it just artificially kept the economy going using the only means possible.

This last year looked like we where not in a recession because many people used my money saved during the pandemic (those that could afford to save. Then there are those who where using credit because of the near zero federal interest rates, allowing for lower interest loans and slightly lower credit card rates (can't rule out all the no interest promotional purchase offers these same banks offer as well). As well as those irresponsible people who just didn't pay their bills. This all helped spark the current inflation.

It is all an artificial economic bubble that covered up, delayed, prolonged (use what ever term fits) a recession that we fell into 2 months before a pandemic that millions lost their jobs, and thousands of businesses shut down. That is not a recipe to bring a country out of a recession, it's ba recipe to sink them farther.

Of course, 2019's economy was also artificially stimulated and heald up.. which is why we fell into the recession in 2020 (February), instead of 2019.

The stock market crashing shouldn't be a surprise either. What else would any expect when the feds/government has been throwing billions into it since 2019?

 

[hal2kilo]

Already in it ... #s just aren't official yet.

Same with calling the bear market. About 2 months late.

 

[vi edit]

Corporate grift, stock buybacks, CEO compensation and profits up. People being squeezed into oblivion on housing, gas and food. Maybe at some point we'll figure out that corporations aren't our friends.

 

[akugami]

Corporate grift, stock buybacks, CEO compensation and profits up. People being squeezed into oblivion on housing, gas and food. Maybe at some point we'll figure out that corporations aren't our friends.

Sir, you do realize corporations are people too? I will not sit here idly while you demonize faceless monolithic uncompassionate corporations. It only seems like they're trying to make wage slaves out of the common man. I'm sure these corporations have an endgame where we all live happily ever after.

 

[Brainonska511]

Corporate grift, stock buybacks, CEO compensation and profits up. People being squeezed into oblivion on housing, gas and food. Maybe at some point we'll figure out that corporations aren't our friends.

Corporations are not our friends, but they aren't the reason for high housing costs. We're squeezed on housing (and gas) because incumbent land owners don't want to allow more housing to be built in their communities and we continue to force sprawl that does not support transportation other than personal automobile.

 

[Zorba]

Corporations are not our friends, but they aren't the reason for high housing costs. We're squeezed on housing (and gas) because incumbent land owners don't want to allow more housing to be built in their communities and we continue to force sprawl that does not support transportation other than personal automobile.

Yeah, nothing at all to do with 3% mortgage rates for 2 years driving demand to insane levels. Amazing how the housing shortage has quickly settled down at 6% interest.

Yeah more housing is needed, especially in some places. But the lack of housing is not what caused the market to go up 20% YOY.

 

[Brainonska511]

Yeah, nothing at all to do with 3% mortgage rates for 2 years driving demand to insane levels. Amazing how the housing shortage has quickly settled down at 6% interest.

Yeah more housing is needed, especially in some places. But the lack of housing is not what caused the market to go up 20% YOY.

Mortgage rates may have helped, but fundamentally, there is not enough housing. That's why rents have continued to rise after the brief dip in demand from COVID, and why every home in a desirable area could get tons of bidders who would bend over backwards to secure the house.

 

[Exterous]

Well thankfully we have Crypto which is supposed to be a safer bet when inflation is high and the stock market crashes. So it must be doing pretty well right?

 

[K1052]

A substantial amount of the pandemic housing run up is tied to the shift from office work to wfh/hybrid. People went looking for more space so single family home prices went to the moon. The people buying our house are both on hybrid and wanted their own work spaces.

 

[Exterous]

We've been hearing a lot about how a recession may be on the horizon for the U.S. A brief summary of the current situation:

• The war in Ukraine and profiteering by the U.S. fuel oligopoly is contributing to record high gasoline price.
• The housing market is "overheated" but cooling quickly.
• The Federal Reserve enacted the largest interest rate increase in the last quarter century earlier this week to combat inflation, which is at its highest rate in decades.
• The pandemic, which was mostly under control in the U.S. through 2021 is now sneaking back and cases are on the rise in some states while plateauing nationally. The rise of at-home testing is a welcome tool for Americans to test themselves, but there are growing concerns that at-home tests are contributing to significant undercounting of cases. Abroad, Chinese lockdown policies are raising concerns of larger impacts on the global economy.
• The stock market is now a bear market.

At the same time, unemployment remains low and job growth is moderate to strong. So what are your thoughts on the next recession? Are we headed there now? If not now, when?

Not to mention the large chunk of the world staring down the barrel of food shortages and economic disruptions in excess of of what we're likely to face. High chance of a lot of geopolitical disruptions which is rarely good

 

[vi edit]

Corporations are not our friends, but they aren't the reason for high housing costs. We're squeezed on housing (and gas) because incumbent land owners don't want to allow more housing to be built in their communities and we continue to force sprawl that does not support transportation other than personal automobile.

https://www.washingtonpost.com/business/interactive/2022/housing-market-investors/

They are consuming housing at a rapid rate.

 

[manly]

Already in it ... #s just aren't official yet.

This wouldn’t surprise me since Q1 surprised with a small decline in GDP, and forecasts for Q2 have been slashed to near zero.

Recessions are often self-fulfilling prophesies, as CEOs lose “confidence” way before the consumer does.* Look at the hiring freezes and layoffs in big tech, despite near record profits for the largest players. The consumer is propping up the U.S. economy as they always do, but inflation and layoffs will ultimately kick the leg(s) out from that stool.

* As just one example, Elon Musk wanted to jettison 10% of his white collar staff despite reasonable projections they will sell 1.5M new vehicles this year, at inflated prices. Did his Twitter adventure result in actual demand destruction, or is he overreacting to Shanghai’s disastrous COVID lockdowns that are likely temporary?

 

[K1052]

This wouldn’t surprise me since Q1 surprised with a small decline in GDP, and forecasts for Q2 have been slashed to near zero.

Recessions are often self-fulfilling prophesies, as CEOs lose “confidence” way before the consumer does.* Look at the hiring freezes and layoffs in big tech, despite near record profits for the largest players. The consumer is propping up the U.S. economy as they always do, but inflation and layoffs will ultimately kick the leg(s) out from that stool.

* As just one example, Elon Musk wanted to jettison 10% of his white collar staff despite reasonable projections they will sell 1.5M new vehicles this year, at inflated prices. Did his Twitter adventure result in actual demand destruction, or is he overreacting to Shanghai’s disastrous COVID lockdowns that are likely temporary?

There is certainly an argument that if there is a recession these kind of executive vibes, in some cases in total opposition to actual financial performance, will be a signifiant contributor.

 

[vi edit]

Yeah and add to it media outlets pushing "oh there may be a recession so here's things you should do to prepare..."

#1 spend less

I'm not an economist but that I think that may be contributing factor that helps cause a recession.

 

[hal2kilo]

Yeah and add to it media outlets pushing "oh there may be a recession so here's things you should do to prepare..."

#1 spend less

I'm not an economist but that I think that may be contributing factor that helps cause a recession.

You are not getting it. The big wall street guys want this badly. Just watch Jimmy Cramer.

 

[vi edit]

Oh for sure. You always win when can make money on both ends of an economy. These guys are going short on their portfolio and riding the wave.

 

[Brainonska511]

https://www.washingtonpost.com/business/interactive/2022/housing-market-investors/

They are consuming housing at a rapid rate.

The amount of money is a drop in the bucket compared to the size of the housing market.

And if you wanted to undercut them, build more housing. It would make prices fall - these corporations even admit that is the biggest risk in these "investments" they are making.

 

[pmv]

Not just the US

Thousands march in London over cost of living crisis

Demonstration organised by TUC calls on government to make ‘better deal’ for people struggling to cope with soaring inflation

www.theguardian.com

"Workers have lost an average of almost £20,000 in cumulative earnings since 2008 because pay has not kept pace with inflation, the TUC said, adding that it was the biggest loss of “real wages” since the 1830s."

I remember the good-old-days, when the big fear was a return to the 1930s.

 

[MrSquished]

A substantial amount of the pandemic housing run up is tied to the shift from office work to wfh/hybrid. People went looking for more space so single family home prices went to the moon. The people buying our house are both on hybrid and wanted their own work spaces.

That was a huge factor.

A lot of people came running back to the city though, well people that didn't buy but moved out and rented. NYC rental prices are insane again. They need to build a shit ton of housing in NYC.

I am on an FB group created right when Covid started for NYC people to make inquiries and discuss where to move outside the city, give tips, etc...

Most were folks with kids, and many are happy, but definitely a decent amount of folks with buyer's remorse. They moved to the quiet burbs and hate it.

 

[K1052]

That was a huge factor.

A lot of people came running back to the city though, well people that didn't buy but moved out and rented. NYC rental prices are insane again. They need to build a shit ton of housing in NYC.

I am on an FB group created right when Covid started for NYC people to make inquiries and discuss where to move outside the city, give tips, etc...

Most were folks with kids, and many are happy, but definitely a decent amount of folks with buyer's remorse. They moved to the quiet burbs and hate it.

Newark and Jersey City are going to look like Tokyo in 20 years and NYC NIMBYS will still be screaming at a community board that a 10 floor building for homeless gay veteran amputees next to a tunnel vent stack breaks “neighborhood character” or something. NY will be the last state that ever fixes housing policy, if they even bother trying.

 

[MrSquished]

Newark and Jersey City are going to look like Tokyo in 20 years and NYC NIMBYS will still be screaming at a community board that a 10 floor building for homeless gay veteran amputees next to a tunnel vent stack breaks “neighborhood character” or something. NY will be the last state that ever fixes housing policy, if they even bother trying.

Adams is a full of shit egotistical wanna be celebrity. He said he will build build build build but he is a joke of a politician and full of shit.

I work in Jersey City sometimes. The amount of skyscrapers that have gone up in the last 8 years downtown is quite something. But there is just construction everywhere. Where they can knock down a single family and put max a two family, they do it and sell two condos. They buy a home on a full 25x100 lot for 550K on average but up to 700K on this one street, knock 'em down then put the two units up. Where they can put up mid-rise buildings they do. This historic building got gutted in JC Heights and they put in like 20 something rentals, higher end. The smaller 1BR at 550 sq feet start at $2100, the bigger ones at $2,800. 2BR around $3800. The penthouses almost 1900 sq feet with private balconies and NYC vies, $5700. All rented but one, in one month. That's not downtown JC either.

Also now the JSQ area is blowing up. Got the two Kushner towers, fuck that guy, plus there are multiple 30+ story buildings going up and others in already approved to go stages. The more residential parts of JSQ will not be zoned like that but the areas near the PATH station are fair game.

There are also parts of Historic Downtown JC that are untouchable, but other than that, it's all going up.