Recession coming?

[Luv2play]

I would argue that the difference between my parent's generation and today is that the solid middle class then entailed a single earner family that could afford a nice house in a good neighbourhood, one or two cars replaced every three or five years, a vacation home and private clubs for sports or other activities.

Today all these things require both parents working. 

[BSR]

17 hours ago, EZEtoGRU said:

Technically we are in a recession.  However it really doesn't feel like a recession.  As others have noted, employment is strong...people are out and about doing things and spending money.  Restaurants are full.  Airplanes are full.  

I think inflation may well have already peaked.  Gasoline prices are falling quite a bit and that will put downward pressure on prices for other goods and services.  All other things being equal, I believe it will be a short/shallow recession.  Perhaps 2-4 quarters.  Of course various things could go pear-shaped to screw things up.  Pick your crisis:  Ukraine/Russia/Iran/COVID/Monkey Pox.  Those are difficult to predict.

Personally, I have made no changes to my investment strategy this year.

Maybe you don't feel like we're in a recession, but what matters is general sentiment.  Today's RealClearPolitics right track/wrong track average says that only 17.5% of Americans think we're headed in the right direction whereas a whopping 74.8% think America is on the wrong track.  Those are devastating numbers, clearly indicating that the vast majority of Americans do not share your optimism.

Yes, the unemployment rate is low, but the labor force participation rate is also low:  for June 2022 62.2%, 1.2 points lower than in February 2020 63.4% and far below the all-time high of 67.3%.

"I think inflation may well have already peaked" ... well, we've certainly heard that before, starting back in Jan 2021, again in Jun/Jul 2021 ("inflation is transitory"), yet here we are with a 9.1% inflation rate, the highest in 40 years.

I have an uneasy feeling that much of this so-called "recovery" was thanks to gobs of zero-interest lending (zero because interest rates were below the inflation rate for years) and mountains of investor cash.  Lending will surely tighten up; as I discussed in my previous post, investors might or might not cut off their firehose of cash.  If/when this flood of easy money dries up, then we'll know how "real" this recession is.

Edited July 30, 2022 by BSR
Typo

[+ keroscenefire]

51 minutes ago, BSR said:

Maybe you don't feel like we're in a recession, but what matters is general sentiment.  Today's RealClearPolitics right track/wrong track average says that only 17.5% of Americans think we're headed in the right direction whereas a whopping 74.8% think America is on the wrong track.  Those are devastating numbers, clearly indicating that the vast majority of Americans do not share your optimism.

I really do not want to get into a political discussion on the finance forum. But would just like to point out that Americans saying the U.S. is on the wrong track could have various causes beyond a pure gauge of the economy. For example, many people surely think the country is on the "wrong track" after the Supreme Court overruling Roe V Wade.

Certainly the economy contributes to those numbers but there are certainly other factors as well. 

[+ augustus]

On 7/29/2022 at 6:27 PM, Vegas_nw1982 said:

We may feel like we can't keep up with the Joneses as we watch more and more people around us buy more luxurious cars; bigger homes with central air conditioning, multiple bathrooms and garages; vacation homes; smart telephones; and, computers.  All these things were impossible for the Middle Class a generation ago.

Well said!!!   I know people who have nervous breakdowns because someone they know someone who has a house with 5 bathrooms and they only have 3 1/2.  It's utterly ridiculous.   So many are insecure jackasses.  

Edited July 30, 2022 by augustus

[BSR]

1 hour ago, keroscenefire said:

I really do not want to get into a political discussion on the finance forum. But would just like to point out that Americans saying the U.S. is on the wrong track could have various causes beyond a pure gauge of the economy. For example, many people surely think the country is on the "wrong track" after the Supreme Court overruling Roe V Wade.

Certainly the economy contributes to those numbers but there are certainly other factors as well. 

True enough, but to quote the immortal wisdom of James Carville, "It's the economy, stupid!" (no, I'm not calling you stupid, LOL).  Although people do consider a number of non-economic issues in their right track/wrong track view, I think the economy has always been and will always be the overriding concern of the vast majority of Americans.

Edited July 30, 2022 by BSR
Wording

[+ Bryan Dube]

Many companies are pulling back or freezing hiring altogether for white collar jobs right now. I say this as someone who freelances and has heard this from multiple recruiters lol. 

[+ sync]

U.S. history is a history of recessions and recoveries.

The U.S. economy, as is the economies of other countries, is influenced by the economic environments of other countries.

The only path now, as it has been in the past, is to just ride it out until better times.

[+ keroscenefire]

It's looking more and more like a global recession is inevitable. Europe definitely is going to have a rough couple years. I think the US economy is actually relatively strong compared to many others. But probably we're in for at least a mild recession to push back against inflation. 

[+ FrankR]

42 minutes ago, keroscenefire said:

It's looking more and more like a global recession is inevitable. Europe definitely is going to have a rough couple years. I think the US economy is actually relatively strong compared to many others. But probably we're in for at least a mild recession to push back against inflation. 

Listening to bank earnings calls today - it sounds like the CEOs feel that banks, at least, are in a good position to weather the coming storm.  Things will be rough for the next year, market wise. A “soft landing” seems more and more unlikely.  So buckle up, cup cake! 🤓

[pubic_assistance]

In my mere 5 decades on this planet I've seen multiple boom and bust sessions in the US economy. Each time it's the same result. Small businesses collapse and big businesses lap up the market share. If you think the ups and downs aren't rigged, you're not paying attention to the benefits for those with the most influence.

[Kevin Slater]

Let's keep this topic to investing and finances.

[+ keroscenefire]

In terms of bringing it back to finances/investing, any advice on weathering bad economic times? I did just put 5K into a 3.5% CD. Considering doing another 5K in I-bonds maybe? Anything else?

[pubic_assistance]

Rental property near Agra businesses in the south. Those migrants gotta live somewhere. The Federal Government is never late with the rent.

[+ FrankR]

2 hours ago, keroscenefire said:

In terms of bringing it back to finances/investing, any advice on weathering bad economic times? I did just put 5K into a 3.5% CD. Considering doing another 5K in I-bonds maybe? Anything else?

Well, if there is an “economic hurricane” coming…make sure you have the basics covered. If you are single, I recommend having 9 months worth of living expenses in cash or cash equivalents (like CDs) where you can get to it quick if needed.  Then you can start thinking about returns. “Insurance” first, “investments” second. 😉

[+ The Big Guy]

Hopefully we can avoid a rail workers strike as the impact could be significant.  

[EZEtoGRU]

19 hours ago, arnemgreeves said:

I'd be surprised if most European/North American economies are not in recession right now. 

Putting money away for a rainy day, as well as watching heating and food costs, are probably in order right now.

I think Europe is well into it's recession right now.  I don't feel North America is as far down that path yet even though, technically, we are probably in a recession.  As I said up-thread in July, it still doesn't feel like a recession to me.  Lot's of places in Michigan are still looking for workers.  Inflation is ebbing by all accounts.  People are still traveling a whole lot.  The high-tech/social media bubble does seem to have burst with those layoffs becoming a reality now.   Let's see how things look/feel after the holidays in January.  Right now it still feels like business as usual...at least where I live.  

[hassanizhar]

It is important to note that predicting the future of the economy is a complex and uncertain task, and it involves various factors, including political and social conditions, market trends, global events, and many others. While some signs may suggest that the market is peaking, it is not possible to predict with certainty if we are on the verge of a recession.

Concerns about rising gas prices, supply chain disruptions, and geopolitical risks can have an impact on the economy, but it is difficult to quantify their exact effects. It is also important to note that the stock market is not always a perfect reflection of the broader economy, and it can be influenced by many factors, including investor sentiment and speculation.

If you are considering adjusting your investment strategy, it is always advisable to consult with a financial advisor who can provide personalized guidance based on your financial goals, risk tolerance, and other factors

[EZEtoGRU]

To answer the thread title, it seems not.  Report after report shows inflation is moderating and near-full employment continues to hold.  People in the US continue to spend money like it's going out of style.  One Wall Street analyst says we're "slipping into an expansion".  It seems all the nay-sayers that have been predicting a recession for the last two years may have been wrong (are you listening Elon Musk and Jamie Dimon?).

Link to article:

https://www.yahoo.com/finance/news/wall-street-biggest-bull-called-213737048.html

[EZEtoGRU]

Further evidence of a robust economy:

U.S. economy was hotter than previously thought, new GDP data shows

STOCKS.APPLE.COM

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Fresh data released Wednesday shows U.S. economic growth in the third quarter was even better than...

No recession in sight

Edited November 29, 2023 by Kevin Slater

[Bucky]

Is a recession on the horizon? More bank CEOs think so | CNN Business

WWW.CNN.COM

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Add Citigroup CEO Jane Fraser to the growing list of bank CEOs who are warning about tough times ahead.

 

[pubic_assistance]

On 12/6/2023 at 5:35 PM, Bucky said:

Add Citigroup CEO Jane Fraser to the growing list of bank CEOs who are warning about tough times ahead.

We'd probably be in a better position if CEO's stopped stripping the middle class of their earnings.

The  float to the top is stagnating the "normal" economy.

Impulse shopping in down with middle class wage earners because necessities are still at grossly inflated prices.

As said before, you can't go by the stock market. Too much hype to run up numbers before the people who really know what's going on, jump ship, and start shorting.

[+ Vegas_Millennial]

On 7/29/2022 at 4:20 PM, Luv2play said:

I would argue that the difference between my parent's generation and today is that the solid middle class then entailed a single earner family that could afford a nice house in a good neighbourhood, one or two cars replaced every three or five years, a vacation home and private clubs for sports or other activities.

Today all these things require both parents working.

Your parent's generation had a smaller labor force before women began entering the workforce in masses.  When the labor supply nearly doubles (due to half the population seeking employment instead of staying home; or masses of immigration; etc.) then wages are suppressed because there are more available workers to apply for the same job.  The labor supply nearly doubled because of the stark increase in participation by women, now it takes nearly twice as many people working in a household to sustain what one person used to be able to.

[SouthOfTheBorder]

14 hours ago, Vegas_Millennial said:

now it takes nearly twice as many people working in a household to sustain what one person used to be able to.

just wait till AI is fully rolled-out & millions of jobs are no longer required.

Im losing track of just how long the “experts” have been predicting a recession.  It’s beyond ridiculous.  Of course they will eventually be right if they keep it up long enough - it’s clickbait at this point.  

[EZEtoGRU]

52 minutes ago, SouthOfTheBorder said:

Im losing track of just how long the “experts” have been predicting a recession.  It’s beyond ridiculous.  Of course they will eventually be right if they keep it up long enough - it’s clickbait at this point.  

This is so true.  Jamie Dimon has been predicting a recession for over 3 years now.  

[EZEtoGRU]

19 hours ago, Vegas_Millennial said:

now it takes nearly twice as many people working in a household to sustain what one person used to be able to.

Yes...but...people want to live much larger today than they did 60 years ago.  The typical household has a much bigger house than before and on a much bigger lot.  Two or three cars instead of one.  People take much more luxurious vacations now than before.  A week at the cottage will no longer do.  It needs to be at least two weeks during the summer in Italy and then a one week winter cruise to the Caribbean... plus a long weekend in Las Vegas somewhere in between. 

I wonder if an average one salary household could sustain a family today if they lived like folks did in the 50's/60's: in a 1500 sq ft bungalow on a 5,000 sq ft lot.  One car and a one-week summer vacation on the lake up north in a small rented cottage.  

Edited December 8, 2023 by EZEtoGRU