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Thu Jul 28, 2022, 12:28 PM

Are we in a recession?

I think we are, but the indications are that it is a very light recession. We are now in negative growth for two successive quarters, which is the measure most economists use.

However, in the last quarter, the GDP grew at a negative rate of 1.7%. Not terrible but not great. The most recent numbers for this quarter show a negative rate of .9%, almost half of the last quarter. With gas prices declining, it is very possible we will be back in positive growth by the next quarter.

Naturally, the Republicans are already looking to make hay out of these numbers. They are calling it the "Biden recession".

So far, it is a very light recession but it is what it is.

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Arrow 23 replies Author Time Post
Reply Are we in a recession? (Original post)
kentuck Jul 2022 OP
Pantagruel Jul 2022 #1
kentuck Jul 2022 #2
Pantagruel Jul 2022 #7
House of Roberts Jul 2022 #3
Baggies Jul 2022 #4
unblock Jul 2022 #11
Baggies Jul 2022 #14
unblock Jul 2022 #17
Baggies Jul 2022 #19
unblock Jul 2022 #21
Moostache Jul 2022 #5
Calculating Jul 2022 #6
unblock Jul 2022 #8
FBaggins Jul 2022 #23
Moostache Jul 2022 #9
unblock Jul 2022 #10
H2O Man Jul 2022 #12
mathematic Jul 2022 #13
Groundhawg Jul 2022 #15
gab13by13 Jul 2022 #16
Sympthsical Jul 2022 #18
groundloop Jul 2022 #20
roamer65 Jul 2022 #22

Response to kentuck (Original post)

Thu Jul 28, 2022, 12:33 PM

1. Economic disruption

not a real recession.That's what happens with pandemics and unexpected war.

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Response to Pantagruel (Reply #1)

Thu Jul 28, 2022, 12:36 PM

2. Also...

..unemployment usually increases during a "recession".

We have a strong jobs market at this time.

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Response to kentuck (Reply #2)

Thu Jul 28, 2022, 12:58 PM

7. Strong jobs market

precludes a "recession" label, regardless of the media's attempt to
add drama to the economic story.

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Response to kentuck (Original post)

Thu Jul 28, 2022, 12:41 PM

3. If we are not yet, we will be.

Give the Fed interest rate increases time to wreak their havoc, and we'll revisit stagflation.

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Response to kentuck (Original post)

Thu Jul 28, 2022, 12:48 PM

4. Will a 3rd negative quarter convince you?

Yes, we are, by definition.

Oh, watch the housing market and see whereís itís headed. That alone effects a lot of other industries.

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Response to Baggies (Reply #4)

Thu Jul 28, 2022, 01:10 PM

11. the "definition" of two consecutive quarters of negative gdp growth is very simplistic

in this case, rising employment rather complicates the determination and timing of a recession.

if and when employment declines, we'll certainly be in a recession, but it's not at all clear we're in one just yet.

personally, i don't think we're there yet.

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Response to unblock (Reply #11)

Thu Jul 28, 2022, 01:26 PM

14. We're in one

I worked for the Federal Reserve for 30 years. The silliest thing Iíve read so far is you canít have a recession with low unemployment. It happened around 1969-70, if I recall correctly. Thatís not the only time. In fact, low unemployment can be a sign that a recession is on the horizon.

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Response to Baggies (Reply #14)

Thu Jul 28, 2022, 01:37 PM

17. I'm not saying it's impossible. Only that rising employment makes it more muddled.

Nber may yet determine a recession has already begun.

Personally, I don't think the economic data quite meets their criteria yet, but they of course at eventually find otherwise.

I agree that recession is possible even with rising employment, but I don't think the contraction is currently deep, wide, and long enough to qualify

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Response to unblock (Reply #17)

Thu Jul 28, 2022, 01:41 PM

19. A word on NBER

Itís a bunch of eggheads in Cambridge who wish they had a clue as to whatís going to happen, when, and why. You wonít read anything from the Fed about them thatís anything other than polite and nice, but privately we used to laugh at them.

But thatís a side issue and Iíve said enough already.

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Response to Baggies (Reply #19)

Thu Jul 28, 2022, 01:49 PM

21. Wow. Ok. They're quite respected outside of you and your buddies.

I find it quite revealing when anyone dismisses experts, academics, and people who spend a great deal of time studying something to become very knowledgeable about a topic as "eggheads" and say they laugh at them.

Nice touch to mention Cambridge as well. I'm sure you would consider them more credible if they changed location.

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Response to kentuck (Original post)

Thu Jul 28, 2022, 12:48 PM

5. When gas touches $5 a gallon national ave

We get a recession in responses.

This happened in 2007 ahead of the housing collapse too. I have believed that the gas prices back in 07 were part of the shock that triggered the collapse of the bad loans and brought everything down.

I bet the housing market, which has been crazy for years now, is about to face another correction too.

Well see soon enough...

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Response to kentuck (Original post)

Thu Jul 28, 2022, 12:52 PM

6. Work has slowed down a lot at the shop I work at

We've laid off most of the crew and are in a pretty precious spot right now. We manufacture luxury home goods.

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Response to kentuck (Original post)

Thu Jul 28, 2022, 01:05 PM

8. i think nber will not see this as the start of a recession based on their more details criteria:

here's a portion of their explanation of how they define recession:

https://www.nber.org/research/business-cycle-dating

--
Because a recession must influence the economy broadly and not be confined to one sector, the committee emphasizes economy-wide measures of economic activity. The determination of the months of peaks and troughs is based on a range of monthly measures of aggregate real economic activity published by the federal statistical agencies. These include real personal income less transfers, nonfarm payroll employment, employment as measured by the household survey, real personal consumption expenditures, wholesale-retail sales adjusted for price changes, and industrial production. There is no fixed rule about what measures contribute information to the process or how they are weighted in our decisions. In recent decades, the two measures we have put the most weight on are real personal income less transfers and nonfarm payroll employment.
--


i think it's clear we're going to have a brief period of negative gdp growth, but i am not at all convinced nber will see this as a recession based on the other metrics they look at and criteria they use.

notably, i do not see nonfarm payroll employment declining in the short term at least, and they weight this heavily. yes, there are talks of layoffs in a few industries, but there remain a lot of open jobs. moreover, i think higher prices will bring people back into the workforce. i think a lot of people retired or spouses left "second jobs" at the start of the pandemic, but inflation may bring them back to work to make ends meet. so i don't see employment declining any time soon.

so i suspect that they'll need more bad news before they deem this a recession, and they may not deem it to have started with the first month of negative gdp.

if employment does dip, then yes, i think they will deem it a recession at that point.






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Response to unblock (Reply #8)


Response to kentuck (Original post)

Thu Jul 28, 2022, 01:05 PM

9. When gas touches $5 a gallon national ave

We get a recession in responses.

This happened in 2007 ahead of the housing collapse too. I have believed that the gas prices back in 07 were part of the shock that triggered the collapse of the bad loans and brought everything down.

I bet the housing market, which has been crazy for years now, is about to face another correction too.

Well see soon enough...

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Response to Moostache (Reply #9)

Thu Jul 28, 2022, 01:07 PM

10. yeah rising interest rates are not good for house prices.

and a lot of consumer spending is driven by borrowing against rising home values.

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Response to kentuck (Original post)

Thu Jul 28, 2022, 01:11 PM

12. Recommended.

Mid- to low-income people are.

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Response to kentuck (Original post)

Thu Jul 28, 2022, 01:26 PM

13. For sure, we haven't been in a recession for 6 months, which is what the 2 q GDP rule of thumb means

May we be in a recession right now or entering one, sure. Have we been in one since the Jan (or Feb, more realistically)? No, not a chance. Unemployment has been historically low this whole time and that never happens 5-6 months into a recession.

I won't believe that we have been in a recession until unemployment hits 4.0%, which would be a significant jump typical of what happens a couple months after a recession starts.

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Response to kentuck (Original post)

Thu Jul 28, 2022, 01:28 PM

15. yes

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Response to kentuck (Original post)

Thu Jul 28, 2022, 01:36 PM

16. Janet Yellen says no, for what that's worth.

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Response to kentuck (Original post)

Thu Jul 28, 2022, 01:37 PM

18. Yes

And playing word games with it is not the effective look people think it is. It looks like reality denial out of political motivation.

Acknowledging it, outlining steps, letting voters know strategies and why they should vote for us in November are all good things. They're honest things.

"It's not happening! It's not real! Disbelieve the obvious! But the meeediaaaaaa!" erodes credibility. Because once the strategy becomes to lie and play word games, voters lose trust. Voters are living in this economy. They're struggling with it. They're trying to cope with it. To stack, "You're not experiencing what you're clearly experiencing" on top of it. What's the point? To win at a Twitter argument?

Voters aren't typically the brightest group anyone will ever meet, but they're not that stupid.

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Response to kentuck (Original post)

Thu Jul 28, 2022, 01:43 PM

20. NOT A RECESSION (yet).....


I just finished reading an analysis by Fidelity Investments. Their take is that many companies are posting good earnings numbers, with just a few segments showing negative earnings growth. Their conclusion - This Is Not What A Recession Looks Like.


https://www.fidelity.com/learning-center/trading-investing/doesnt-look-like-recession

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Response to kentuck (Original post)

Thu Jul 28, 2022, 01:59 PM

22. Mild one at worst.

Certainly not like the Great Recession or the Coronavirus one.

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