Recession coming?

[SouthOfTheBorder]

24 minutes ago, EZEtoGRU said:

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. 

this is part of the problem.

 Americans go into debt for an otherwise unaffordable lifestyle -  buying homes & things can go far beyond a basic function.  The much larger American homes of today perfectly illustrates that point.  The need for bigger homes & corresponding “stuff” is not a thing in most other places, where the basic sizes really haven’t changed at all. 

and then when there’s too much stuff - Americans put it in paid storage for months/years without thinking twice.  It makes no sense. 

[BuffaloKyle]

1 hour ago, EZEtoGRU said:

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

But eventually he'll be right. Just like I predict my Buffalo Bills to win the super bowl every year. I can't wait to say see I told you so!

[marylander1940]

It's cyclical.... sooner or later a recession will come and end but I doubt it will be even closer to the Great Recession or the self-inflicted wound of shutting down everything in March 2020 because of Covid-19.

[Bokomaru]

On 12/8/2023 at 12:58 PM, EZEtoGRU said:

Dimon has been predicting a recession for over 3 years now

Looking back on this thread there are a number of smart people who predicted doom and gloom, which has yet to materialize.  Point is, no one knows.
 

Slow and steady wins the race in investing. I’ve stopped trying to predict anything. Dollar cost averaging is my strategy. 

Edited December 10, 2023 by Bokomaru
Autocorrect error

[EZEtoGRU]

A thoughtful article by Fortune on the US economic outlook for 2024 and their take on the economic pessimists that keep predicting the recession that never comes. 
 

Economic pessimists’ bet on a 2023 recession failed. Why are they doubling down in 2024?

STOCKS.APPLE.COM

---

Despite the economy’s strength, there remains a reluctance to recognize a soft landing.

 

[samhexum]

The Fed held rates steady again and the market is SOARING at the moment.  

Edited December 13, 2023 by Kevin Slater

[BSR]

On 12/8/2023 at 9:58 AM, EZEtoGRU said:

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

Michael Burry, founder of Scion Capital, started sounding the alarms about subprime lending way back in 2003, five long years before the September 2008 Lehman Brothers bankruptcy.  He bet big on an impending collapse, risking plenty of his own money and much more of his investors'.  After (I'm guessing) many sleepless nights and an investor near-revolt, he did end up being right, making himself a $100 million profit and $700 million for his investors.

Yes, the economy will always go through booms & busts, but the signs of an impending recession are very much real, not just a bunch of tea leaves.  Hindsight being 20/20, it's pretty damn obvious now that you couldn't lend $trillions to unqualified buyers without some dire consequences.

Some troubling signs loom today.  The one that worries me most is the total amount of debt:  personal (credit cards, school loans, home mortgages, etc.), commercial, and of course government (just checked the National Debt Clock, $33.9 Trillion!).  If you add up all the debt and set it relative to GDP, the multiple is at a record-shattering high and is accelerating like it's racing for pinks.

But hey, I could be wrong.  If a recession doesn't hit between now and this time next year, feel free to serve up a towering plate of crow for my consumption.

[SouthOfTheBorder]

On 12/11/2023 at 5:25 PM, EZEtoGRU said:

A thoughtful article by Fortune on the US economic outlook for 2024 and their take on the economic pessimists that keep predicting the recession that never comes. 

these people have a vested interest in making everything negative.  it suits their political agenda and preferred narratives.  fear is the easiest tool in the political playbook to manipulate people - a constant stream of negative spin creates fear & uncertainty.  lots of people buy the propaganda, even when statistical analysis shows otherwise.

and this fits neatly into a broader effort to delegitimize education, science & experts in favor of those who “feel” something.
 It’s that perception thing - meaning the feeling is something different than proven factually.  Perception really isn’t a thing when actual critical thinking skills are zero to none.  
And these days - people believe what they want to believe and select news sources that will confirm exactly that.  They no longer consume news to be educated or have an open-mind to change opinion based on new information.  
It’s not a good trajectory and it’s not sustainable - nobody cares about that though. As usual, they have not considered the long term effects of a society that celebrates ignorance. 

 

Edited December 18, 2023 by SouthOfTheBorder

[+ augustus]

Of course, a recession is coming and a serious one too!   All the “good” economic growth is due to government spending.  Look at the National Debt.  Every household in the country owes $250,000.  Look at California's $68 billion deficit ALL OF A SUDDEN!

For the last quarter, the jobs are ALL in government and healthcare (much of which is funded by government.  The government is running a $2T deficit).  This isn't healthy at all!  

 

 

 

Edited December 18, 2023 by augustus

[+ augustus]

2 hours ago, BSR said:

Some troubling signs loom today.  The one that worries me most is the total amount of debt:  personal (credit cards, school loans, home mortgages, etc.), commercial, and of course government (just checked the National Debt Clock, $33.9 Trillion!).  If you add up all the debt and set it relative to GDP, the multiple is at a record-shattering high and is accelerating like it's racing for pinks.

 

Its prosperity built on debt and people don't or can't see the real picture.

[+ augustus]

Consumers are running on fumes. They are running out of credit.  Inflation has been devastating to our standard of living. My Big Mac meal is now $13 from $8 three short years ago.   Inflation is driving older workers out of retirement into permanent retail and leisure workers until life ends.  Millions of Americans are still struggling: Just look at wage growth, housing ownership rates among young people, white collar job creation, skyrocketing homelessness and the like.

[BSR]

1 hour ago, SouthOfTheBorder said:

these people have a vested interest in making everything negative.  it suits their political agenda and preferred narratives.  fear is the easiest tool in the political playbook to manipulate people - a constant stream of negative spin creates fear & uncertainty.  lots of people buy the propaganda, even when statistical analysis shows otherwise.

US Debt Clock

What does statistical analysis say about $33.9 Trillion of federal government debt?  What is the propaganda trying to mislead us into thinking about that staggering amount of debt?

At the end of September 2019, the federal government debt was "only" $22.7 trillion.  The federal debt has increased by more than $11.2 trillion in just over 4 years.  The federal debt to GDP ratio was 33.73% in 1980.  Now the debt is actually greater than the annual GDP,  with a ratio of 122.16%. 

Anyone who thinks that much debt is healthy or OK is whistling past the graveyard.

[pubic_assistance]

44 minutes ago, augustus said:

My Big Mac meal is now $13 from $8 three short years ago. 

Seriously?

MickyD has always been the poor man's burger.

How are they affording $13 ?

Do they take food stamps ? 🤔

[+ stevenkesslar]

5 hours ago, augustus said:

Consumers are running on fumes. They are running out of credit.  Inflation has been devastating to our standard of living. My Big Mac meal is now $13 from $8 three short years ago.   Inflation is driving older workers out of retirement into permanent retail and leisure workers until life ends.  Millions of Americans are still struggling: Just look at wage growth, housing ownership rates among young people, white collar job creation, skyrocketing homelessness and the like.

fact-check

verb

 

1. investigate (an issue) in order to verify the facts.

   "I didn't fact-check the assertions in the editorial"

Actually, Auggie, consumers are running on record net worth.  

The Average American’s Net Worth Jumped 37% in 3 Years

You've done an awesome job of persuading me you are emotionally committed to the idea that the end is near, the sky is falling, and of course there is, was, and will be a recession - always and forever, until the management changes.

That's the part that sucks.  The not so sucky part is that homeownership is at a record high - two in three Americans own their homes - and home values are up.  Most Americans have very stable and low fixed rate mortgages.  Or just own their home free and clear. Most data I read suggest young Americans have it the worst, and are pissed.  Like especially young families who want to buy homes at sky high interest rates.  That said, the net worth of Americans under 35 doubled in three years, from $16,000 to $39,000.  It can't suck that bad, can it?

This is one of the main reasons median net worth increased from $141,100 in 2019 to $192,900 in 2022.  Sucks, huh?  I know from past posts that you'll now pivot from "The sky is falling!" to "It's a bubble!"  Which one is it?  While you are figuring that out, I calculated that the additional $51,800 in net worth for a typical American would buy 3,985 Big Mac meals at $13 a pop.  Hungry, anyone?  That should keep the economy going for a while.

Consumer debt is lower than it has been for most of the last half century.  It was even lower during the pandemic, thanks to lots of enforced savings because people couldn't go to Italy.  So they just remodeled their home instead.  And of course add in all that government money. 

If the question is, "what might keep us out of a recession?", the ability of consumers to spend more would be one good answer.  To put it in relative terms, right now at 10 % of income consumer debt is LOWER than it was in the early 90's, at the start of the biggest bull market in our lifetimes.  By the end of that bull market consumer debt rose to 13 % of income.  Which of course partly helped fuel the boom.  If the future is anything like the past half century, consumer debt is below average and is more likely to go up than down now - fueling economic growth, corporate profits, and higher stock prices.

Now I'll put on my prognosticator hat.  What might drive growth and keep us out of a recession?  I have two answers, citing three people who are smarter than me.

When Stanley Druckenmiller was actually predicting the sky was falling after the 1987 crash, some voodoo stock chart guy named Glenn Neely predicted the biggest bull market ever.  Druckenmiller now admits he was wrong, but is also a lot richer.  Neely admits he was right, and is also a lot richer.  Sucks to be them, huh?  Neely called a one year bull market last June, predicting the S & P would hit something like 5500 in 2024.  So far he looks to be right.  He is also predicting the bull market will keep going for years, with corrections along the way.  His thesis is that capitalism and free markets are going to win.  Frankly, right now, I'm a bit pessimistic.  Vlad had a much better year than everyone thought he would.  That said, China and the US both seem to want to keep the global economy chugging.  So it's a scary and uncertain time.  But Neely could be right.

Druckenmiller could be, too.  I think his call on the big federal debt bomb is correct.  He said at a conference earlier this year that government can and probably will kick the can down the road until the 2030's, when the trust funds for things like Social Security run dry.  Meanwhile, he is big on NVDA and AI.  He said that booms like that can last for years.  It's too soon to tell.  But so far he is right.

I'm personally skeptical about AI.  I'm more worried about how it will shred jobs than how it will increase corporate profits.  That said, this video is worth watching.  It's the CEO of Nvidia.

The thing that worries me is his seemingly guileless tone when asked repeatedly about all the havoc AI could wreak.  He's more worried about his own company's survival than the impact of the technology on the world, or jobs. 

That said, if you watch nothing else watch the last four minutes or so.  To quote him, he says "It's a big deal, because it's a complete reinvention of the computer industry."  New networks, new switching, new computer design, new software, new data centers.  All driven by us stupid passive investors, who are piling money into NVDA and SOXL and their ilk.  It's capitalism, and it sucks, right?  But I could see this driving a boom and a bull market, just like in the 90's.

If we survive AI, things might be okay.  It could actually drive prosperity.  If that happens, like Druckenmiller, I hope the government spends some of the windfall capital gains taxes on reducing the deficit.  It happened in the 1990's.  It could happen again, if we could just agree.  Think about that while you're munching on your 3,985 Big Macs, Auggie.  😉

Edited December 18, 2023 by stevenkesslar

[+ augustus]

4 hours ago, stevenkesslar said:

This is one of the main reasons median net worth increased from $141,100 in 2019 to $192,900 in 2022.  Sucks, huh?  I know from past posts that you'll now pivot from "The sky is falling!" to "It's a bubble!"  Which one is it? 

That has barely kept pace with inflation.  

[SouthOfTheBorder]

From yesterdays  New York Times -

of course the keyboard warriors here are much better informed. This is exactly what has been discussed here: perception vs statistical reality 

perhaps the naysayers here aren’t experiencing the same robust economy - personal choices have consequences 
 Economist Who Won’t Admit They Were Wrong

-ios

 

 

Edited December 19, 2023 by SouthOfTheBorder

[BSR]

11 hours ago, augustus said:

That has barely kept pace with inflation.  

Median net worth also rose significantly prior to the 2008 crash because real estate values were skyrocketing.  Look how that turned out.

What has far outpaced inflation is debt levels.  Not just federal govt debt, every form of debt has hit record highs:  credit cards, home equity loans, school loans, commercial loans, you name it.  Eventually and inevitably when our economy hits a point where we just can't borrow any more, a gigaton of sh*t will hit the fan.

Edited December 19, 2023 by BSR
Added a sentence

[BSR]

19 minutes ago, SouthOfTheBorder said:

From yesterdays  New York Times
 Economist Who Won’t Admit They Were Wrong

-ios

The editorial written by the former Enron advisor is cut off.  It looks like the last page is missing.  I'd love to read more from the man who predicted that the economic impact of the Internet would be minimal, comparable to that of the fax machine.

Edited December 19, 2023 by BSR
Wording

[+ augustus]

2 hours ago, SouthOfTheBorder said:

of course the keyboard warriors here are much better informed. This is exactly what has been discussed here: perception vs statistical reality 

perhaps the naysayers here aren’t experiencing the same robust economy - personal choices have consequences

Are you serious??   70% of the population think the economy sucks.  There are reasons for that.   

Besides that, many of your previous posts describe an America in decline, according to you. 🤔 

Edited December 19, 2023 by augustus

[+ augustus]

2 hours ago, BSR said:

What has far outpaced inflation is debt levels.  Not just federal govt debt, every form of debt has hit record highs:  credit cards, home equity loans, school loans, commercial loans, you name it.  Eventually and inevitably when our economy hits a point where we just can't borrow any more, a gigaton of sh*t will hit the fan.

Exactly.  What these people don't seem to understand is that economic growth built on debt is unsustainable and very dangerous.  The results are always disastrous. That is what Jaime Dimon was talking about!

Edited December 19, 2023 by augustus

[EZEtoGRU]

So funny to see how some posters want to transition this thread discussion from a potential recession (that still hasn't happened) to being a discussion about personal and national debt.  I guess if you can't win the one argument then...presto chango...switch to a different topic.   

The national debt has been many decades in the making...under many administrations.  Neither the current nor the prior administration have been nor were concerned with the ever-burgeoning national debt. Shame on both of them.  I think the last time we had a balanced budget in the US was during the Clinton years.

In any case, let's stay on topic.  This thread is a discussion about if a recession is coming.

Edited December 19, 2023 by EZEtoGRU

[SouthOfTheBorder]

1 hour ago, augustus said:

Besides that, many of your previous posts describe an America in decline, according to you. 

correct - American society, institutions, infrastructure, etc are in decline.

the broader economy as measured by traditional metrics is doing just fine.

there is no recession, there hasn't been a recession and recession is not in the foreseeable future 

the biggest threat to the American economy is political instability.  If something happens where the US is no longer regarded as the safe-haven for global investment & deposits, then all bets are off.  Be careful what you wish for.

Edited December 19, 2023 by SouthOfTheBorder

[BSR]

1 hour ago, EZEtoGRU said:

So funny to see how some posters want to transition this thread discussion from a potential recession (that still hasn't happened) to being a discussion about personal and national debt.  I guess if you can't win the one argument then...presto chango...switch to a different topic.   

The national debt has been many decades in the making...under many administrations.  Neither the current nor the prior administration have been nor were concerned with the ever-burgeoning national debt. Shame on both of them.  I think the last time we had a balanced budget in the US was during the Clinton years.

In any case, let's stay on topic.  This thread is a discussion about if a recession is coming.

I am on topic.  If/when a recession hits, something will have caused it.  I think that cause will be unprecedented and unsustainable levels of debt.

Before the Lehman Brothers bankruptcy, similar conversations were taking place between those predicting bad times ahead and those insisting the economy would keep chugging along.  Hard to believe now, but plenty of people in the aughts insisted that the good times would keep rolling.  In fact, those people then sounded a lot like some of the posts in this thread.

Edited December 19, 2023 by BSR
Wording

[+ augustus]

2 hours ago, EZEtoGRU said:

So funny to see how some posters want to transition this thread discussion from a potential recession (that still hasn't happened) to being a discussion about personal and national debt.  I guess if you can't win the one argument then...presto chango...switch to a different topic.   

The national debt has been many decades in the making...under many administrations.  Neither the current nor the prior administration have been nor were concerned with the ever-burgeoning national debt. Shame on both of them.  I think the last time we had a balanced budget in the US was during the Clinton years.

In any case, let's stay on topic.  This thread is a discussion about if a recession is coming.

OMG!   Most recessions are caused by asset bubbles fueled by debt creation.  ECO 101.  The only thing "off topic" to you here are the posts you don't like.  YOU bring up Jaime Dimon and then decide you don't want to hear about anything he said.

[+ augustus]

1 hour ago, BSR said:

I am on topic.  If/when a recession hits, something will have caused it.  I think that cause will be unprecedented and unsustainable levels of debt.

Exactly. That is the cause of most recessions.  Even the IMF said recently when the recession hits in the US it will have been caused by the excessive debt levels here, particularly the Federal Government.  It really has already started.  The last Federal Fiscal Budget that ended this past October saw tax revenue DROP by 10% compared to the previous fiscal year.  And this is happening when things are supposedly going swimmingly.