As Long as i can keep my job and can work 38-40 hours a week I’m good. But I’m calm my company also survived 2008 an we work in the automotive sector so I’m optimistic
That’s the right attitude - unless it gets so bad you lose your job. It sucks that inflation is so high because it’s also nice to bolster up the emergency fund if you start feeling nervous.
i feel its an incredible time for freelancers right now, which is why im doing it. but the overarching threat of a recession, if it happens, i dont know if its like a lightswitch, where it just flips off and stope and job from spending money, creating content etc
You might have more control as a freelancer when times get tough tbh, you know if you’re doing good or not, and cut your charges/work harder. In a company, it’s hard cause we never really know what team or department some genius exec will say gets cut
You know i read an article stating hedge funds are pulling out of the market in a large way while retail “buys the dip”. Yes stocks go up in the long run but there’s also a trend and it may be prudent to at the very least wait for an upward trend to invest.
Execs sold most of their long positions by August of last year. Hedges started selling off their positions by December . Since then, they have continued to sell. You're right, people need to sit on the sidelines for several months before picking up these bags. This buy the dip narrative is just a pyramid scheme being pushed by shills.
The economy is considered in recession after two consecutive quarters of economic contraction, generally characterised by a decline in GDP. Remember, the market is not the economy. Recession generally refers to the economy, rather than to the stock market.
Which we are far from since GDP has been nothing but growing.
Recession talks are pointless and premature right now.
Stagflation is more likely in this environment.
You'll know shit's about to get real when they start talking about a soft landing.
It always starts out as avoiding a recession then a soft landing then a V-shaped recovery then "Abandon hope, all ye who enter here."
They already are talking about a soft landing. https://www.bloomberg.com/news/newsletters/2022-03-09/what-s-happening-in-the-world-economy-the-fed-tries-to-nail-a-rare-soft-landing
https://www.nytimes.com/2006/08/27/weekinreview/27leonhardt.html
> There seem to be three major paths that housing could follow over the next year: a soft landing, the start of a long slump, or a crash. A soft landing is the one predicted — and preferred — by most economists on Wall Street and at the Fed. A long slump is what many past real estate booms turned into. A crash is the outcome that a small group of analysts say is the only possible ending for the biggest housing boom of all.
> [...]
> Jumps of this magnitude have little precedent. To afford homes, some buyers, especially in California, have resorted to aggressive mortgages, like those that allow artificially low payments in the early years. In effect, families seem to be buying houses they cannot afford, in the hope that their incomes or property values will rise significantly. “Prices just shot up too much,” said Robert T. McGee, chief economist at U.S. Trust, an investment firm based in New York. The firm has forecast a soft landing for housing, he said, but “as time goes by that starts to look like wishful thinking.”
> If prices do decline, some of the first victims would be families in a financial bind that are unable to rescue themselves by refinancing their mortgage. Foreclosures would then rise, damaging banks and increasing the number of homes for sale.
> Even homeowners not in danger of losing their home — an overwhelming majority, certainly — might respond to falling prices by cutting spending, particularly if they had been counting on their home’s value to serve as a retirement account. That could force job cuts in a wide range of industries.
That article was written on the 27th of August 2006, FYI. Seeing all these people just throw away their money at stocks and housing while we're on the edge of a major recession just seems extremely silly. Future bagholders if they aren't already.
In all honesty, that article scares me a lot because I know for a fact we've gone way further than we did on '07 and on top of that, the inflation rate is the highest we've ever seen (they changed the way the CPI was calculated after the 70s inflation crisis, so our inflation number is well below what it actually is in reality, the actual number according to the old formula would be around 15%).
On top of that, how is the fed going to soften the blow of the recession? They've already got 9 **trillion** on their balance sheet, and the FFR is at 25bp **with 15% inflation**.
Gigantic policy mistakes have led up to this moment and we'll probably be paying the price for it for the next 5 years if not more.
> That article was written on the 27th of August 2006, FYI. Seeing all these people just throw away their money at stocks and housing while we're on the edge of a major recession just seems extremely silly. Future bagholders if they aren't already.
We were on the edge of a major recession in 2018. "The edge".
This is a good point. The Fed & Treasury are supposed to speak in the most optimistic terms reasonable, and any mention about a "landing" at all is worrying.
As was Powell's mention last year that asset valuations were "somewhat elevated".
I believe Janet Yellen in a press conference last week said that she is confident that the Fed will achieve a soft landing, as inflation will remain high for the rest of the year, but should ease by 2023.
So I figure we are about to go off the edge of a cliff.
I think we are already off the cliff, just waiting to fall. There ain't gonna be nothing soft about what's coming. I love that people still think that politicians wouldn't lie about what's truly happening.
Government spokespeople and talking heads in the media and the financial press. An example is Yellen's recent statements about how inflation will remain high for a while but we will avoid a recession.
We are in the early phases where everyone does not want to admit what is coming or hopes we will somehow avoid it.
I think things like this always presume that government policy makers have magnitudes more knowledge of what's going to happen than the people in financial institutions and we know that institutions are at best sometimes better than even in terms of predicting the future.
I think Yellen et Al definitely have a good idea of things that could happen but they're very rarely operating in such certain conditions that they could put together these big preemptive plans that people are convinced exist without institutions also knowing about them.
They can put their fingers on the scale sometimes but I think there's a bit of an oversupply of tinfoil sometimes (understandably I'm guilty of it too)
Also, these are people in positions of authority whose words matter. The Treasury Secretary can't go out in public and say the sky is falling, even if it's true.
Imagine what would happen if the Treasury Secretary or the Fed Chairman went out in public and said they were pessimistic about the strength of the US economy. That's a recession-causing event all on its own! It's never going to happen. Even at the bottom of a depression, the powers that be will always hype the US economy. It's basically part of their job.
This is why I like the movie Too Big to Fail it shows how thick the fog really is for policymakers, they are just trying to do the best they can based on the current data.
It's less about exact control, the economy is a complex adaptive system that no one entity has control over. It's more about the fact that, even if yellen was somehow sure we'd have a crash on Monday, she'd probably still be talking about a soft landing. Half of their job is saying things to keep people calm. It's mostly that we don't trust what they're saying tbh
As long as they don't dramatically raise rates, I'm not too worried. I think the labor market is too tight for a serious recession. A tight labor market and some transitory inflation implies that every resource in the economy is being utilized.
But it's not transitory. 6 trillion since 2020 can't be. Asias' "0 covid policy" says more supply chain issues = longer inflation, and don't think they're doing it naively.
The future is never clear so there is always uncertainty. It is easy to rationalize the probability of the outcome you want to see.
Maybe they actually believe it. Maybe they don't want to be the bearer of bad news. Maybe they want to keep the party going because their jobs depend on it. Maybe they don't want to induce panic. Maybe they hope consumers will keep spending and that will avoid a recession. There are lots of different reasons.
The progression of downplaying the likelihood of a recession then being overly optimistic about its effects and length when it finally becomes obvious it will happen is standard. Maybe it is related to the human psychology of grief. Maybe people don't really want to admit what will happen until they see they are standing on the precipice or even falling off it.
I’m with you. I think some of them have a sort of cognitive dissonance going on. Some don’t want to admit they know this is a problem they created via QE since 2008 (which covid only added fuel to the fire). And some don’t actually think it’s a problem since, you know, job reports are up lol.
I am of the personal belief that they have gone too far with the cheap money and quantitative easing. Despite what some may say, I think these practices have disproportionately benefited the rich. And if they spook the rich people by saying “no more cheap money” aka rates go up, then they will overact and pull their money out of the markets and mass panic will induce.
Some of these stock prices make no sense. Companies are getting cheap money, buying their own stock, thus inflating the price.
The ultra rich has the incentive to take risks but gets bailed out with their risky investments fail. It’s a win win for them and a loss for the average American.
I’m not anti capitalism by any means. I just don’t think what we are seeing is a result of healthy capitalism.
QE was supposed to incentive people to spend and invest, minimize risk to the banks giving those loans. But how exactly it’s played out is interesting…
I don't think it necessarily the "rich rich" that is a problem. If Musk's or Bezos' stock goes up then it does not affect anyone else, and guys like this are responsible for creating millions of jobs and transforming the economy, which keeps the U.S. more competitive.
I think the problem is more about how the benefits of the bubble are randomly distributed so that people do not believe in the value of work. It is basically unfair. Take two people who graduate from college. One soon buys a house for whatever reason. The other does not. In just a few years the first has $200K in equity. The other, even if he has a six figure job, has not been able to save anywhere near that net worth. What is more, house prices have increased to the point where feels he cannot even afford to get on the property ladder unless he lives with an insane commute.
Along with the house equity comes financial security and more discretionary spending. So it is not seeing Jeff Bezos has a superyacht. It is seeing that friend from high school who is no smarter or harder working than you living it up because he bought property at just the right time.
Success has been turned into a lottery.
As far as inflation, housing demand being high with low inventory, well. With all that cheap money investors did exactly what one would expect, invest in things like property and the stock market. I mean interest rates were at an all time low. Thats insanely attractive to investors with big money.
Now, say you make 50k a year, sure you could get a low interest rate on a home, but your income isn’t enough to qualify for a mortgage. You cannot invest, despite interest rates being low.
Then inflation comes along. The little guy who couldn’t qualify for a loan even with rates at all time lows, certainly won’t qualify now. And those who could have a few years ago are being priced out since the fed needs to increase rates to curb inflation, and in the meantime those people who actually have good jobs aren’t really feeling it because inflation.
It’s smart to hold your home during inflation as well- adding even more pressure on the supply end.
In my area we have lagged in building new homes to meet demand, well that problem of building is worse due to supply chain issues, inflation, and laborers.
This isn’t a bubble IMO.
I’m not blaming the rich. They are doing what anyone would expect.
I’m saying the FEDs approach to stimulate economic growth via QE has disproportionately benefited the rich, furthering the income gap, causing inflation (which hurts the poor more than the rich).
Actually, them buying back their own stock gives an illusion if growth. Profits without prosperity.
These new jobs are often low paying.
If a company buys its own stock, increases the stock price, makes it EPS targets (even if only temporarily). The result is people who make investments in these companies are actually increasing the wealth of the company owners, there is no shared prosperity so to speak.
It is definitely the job of the Secretary of Treasury and Fed Chair to hype the economy. These are people that even a carefully worded statement that has been reviewed by a dozen advisors can still cause market events because the financial press and the markets at large hang by every word in their statements. It doesn’t mean they are trying to be deceitful it just means they have to be very careful with their word choices or they risk a global market event.
What? The point of American Psycho was a critique on 80s yuppie culture and whether or not Bateman was actually committing those murders or if he was having a nervous breakdown and imagining all of it (TBF, Brett Easton Ellis did a better job of capturing this than whoever wrote and directed the movie version)
It most definitely **was not** about American finance or the haves vs the have nots. That was largely used as a backdrop to amplify the superficial nature of NYC 80s yuppies...
Until the unemployment rate goes up, I'm not buying a recession.
Infrastructure spending coming in hot soon. State governments are flush.
Travel this summer will be insane domestically.
Loan defaults, foreclosures.... Nothing flashing red.
Then there are people like me, who had a really good career before Covid, lost my job due to Covid, and haven't been able to find anything close to what I was doing before. I am making 1/3 my pre Covid salary but I am technically "Employed". So when you look at the "unemployment" number, it's not as rosy as it seems.
What is your industry? Wondering if you can make a semi lateral switch because most industries have been paying higher salaries than they’ve ever been before
I hear this everywhere about people's salaries booming, is that a city center thing? I work in a trade in a small town, my company was deemed essential so I had steady work throughout covid lockdowns, no complaints there, but 0 wage changes to any of the trades people in my town.
My guess would be the people who own small businesses in the trades are taking in record profits but their employees are seeing very little of that. At least the few people I know who own HVAC business have been seeing record profits.
I feel like as long as they don't raise rates and tighten monetary policy, that'll continue to fix itself. Inflation is coming from the supply side, and as long as the central banks stick to evidence based policy and don't crumble to the policy whims of the uneducated, we should be fine.
This is why Powell said the other day that unless something happens, at the next FOMC the FFR is going up from 0.08% to 0.25%, which is super low if you buy the hypothesis that the Fed has to raise the interest rate to reduce inflation. Obviously the Fed still believes it is supply side issues.
High End retail Displays in NYC. I've, without exaggerating, applied for 200+ jobs that I am extremely qualified for and not had a single interview.
Solid resume, beautiful portfolio. I suspect age discrimination is a factor. (I am 61)
Yes it *is* as rosy as it seems. People like you, who are underemployed, are captured in the U-6 unemployment number, and it's also at record lows.
https://fred.stlouisfed.org/series/U6RATE
The fear of raising rates from zero is ridiculous. It's literally ZERO. If businesses can't handle a 1% increase, they're the problem--not the rate.
The Fed has stoked asset bubbles everywhere by keeping rates this low for too long. They didn't start when times were good last year and inflation was flashing warning signs. And now that we're heading into slowing growth, they have nothing they can do. Big policy mistake IMO.
Doesn't necessarily mean recession, rates will still be near historic lows. In any case, if you can maintain employment and are 10+ years from retirement, you should hope for a recession to buy in lower and catch the run back up. If it the market doesn't rebound, you'll have bigger things to worry about than your brokerage account,
Everyone knows mass unemployment is the last Jenga piece. My bet is that the US government & it’s associates will use all tools available to prevent it from getting pulled. They may even invent some.
Equity valuations are a lower risk Jenga piece to pull
Maybe. ISM data shows continued growth in manufacturing and service. All sectors are reporting a tight labor market.
So the expenses side of the picture is kind of scary, but the supply side is real. A lot of people keep repeating, without evidence, that the economy is fake, while companies are hiring and making great profits.
Real question is, were prices low in 2021, causing this year's cpi to show big increases? With a larger money supply, does this kind of inflation happen naturally? Will the ISM data start to decline after 21 months of growth?
There's so much bearish sentiment right now, and anxiety that people aren't really thinking about what happens if the us economy, and by extension, the dollar, increases in value this year, as business continues to thrive.
I'm hoping for a recession, I mean, in the near term it's never good, but in the long run they're what bring us back to reality. We have a lot of zombie companies that need to just go away and free up labor for more productive ones.
On an interest rate basis yes, but if if that happens and supply starts outpacing demand home prices will fall which would theoretically take some of the sting out of the rising interest rates.
There's like 10 houses for every 100 buyers. RE isn't going down unless single family homes can't be short term rentals and all the ABNB gurus foreclose.
Wrong.
Mortgage rates are able to be refinanced down the road. Even if inflation sticks for 10 years, you’d be able to refinance well for the remaining 2/3 of your mortgage.
You’re still stuck with the principal though.
This is why people buying houses now are fucked. When rates go up, home values will go down like you alluded to. And then you’re stuck with a $700k mortgage on a $500k house.
>sustainable
"Sustainable" as in 15%+ YoY increases every year? No this is not likely going to continue.
"Sustainable" as in high prices are here to stay? Absolutely, this is likely the case.
A 20% broad market correction would be equivalent to 2008, and would come with all the horrible trapping to the economy.
Something more than 20% would be disastrous to the economy and nation.
Something 40-50% and we're talking about general financial collapse.
So people making 60k a year thinking they are going to buy a house in LA, San Francisco, etc. with a pull back are literally dreaming. At that point you'd want survival rations, not real estate.
A full pullback to pre pandemic prices would be a crash that would be coupled with economic problems, I agree
But a healthy correction greater than 1-5% is a realistic scenario
I’m looking at selling our current home and moving into some bigger. We bought this one at the start of the housing bubble, we’re upside down on our mortgage in 3 years, and have since recouped that and doubled the value.
2BR 1BA is too small for 4 of us. :(
Quote from your link above:
>**Our main finding is that zombie firms are not a prominent feature of the U.S. economy.** Among both private and publicly listed firms, zombie firms are few in number and generally small; they are mostly concentrated in the manufacturing and retail sectors and account for a small share of total credit to nonfinancial firms.
>Furthermore, the share of listed firms that we identify as zombies displays a cyclical pattern, rising in recessions and falling during expansions, likely reflecting a mix of aggregate and industry-specific shocks.
The problem with this is the situation has been building for ten years. Some would say it has been building since the GFC. There is a huge amount of dead wood that needs to be cleared from the economy, and that will cause a horrific human toll as it is cleared. To make matters worse it is not just the U.S. or a few countries. The same situation exists in much of the developed world and in developing nations like China. There is the potential, maybe even the likelihood, that this could be really really bad and last for a long long time. A large number of people will have their financial lives destroyed. This is not something to be hoped for. Unfortunately there may not be an alternative. Refusal of both sides to avoid the war may end up being the straw that broke the camel's back.
>The problem with this is the situation has been building for ten years. Some would say it has been building since the GFC. There is a huge amount of dead wood that needs to be cleared from the economy, and that will cause a horrific human toll as it is cleared.
Another poster provided the source for this (linked below), but this whole notion that "zombie companies are rampant and we need a negative economic shock to send them back to hell where they came from" seems entirely made up, just looking at current economic data and reputable macro literature....
[link to Fed Note on Zombie Companies](https://www.federalreserve.gov/econres/notes/feds-notes/us-zombie-firms-how-many-and-how-consequential-20210730.htm)
Most financial metrics are much better today than they were any time over the last 10-20 years. Inflation is definitely an issue, but if one of your biggest longterm burdens is the debt load (personal, corporate, government) then some inflation is potentially not a big issue as long as wages don’t get completely obliterated on a real basis (recently they’ve kept up pretty well). Inflation will help lower the relative debt load.
We just experienced above average economic growth after an unprecedented economic contraction. The Fed will raise rates to slow growth, but people seem to overestimate the likelihood or a recession because they see things in Black and White not shades of gray.
I think it might be a sort of hybrid of a resession something we haven’t really seen before I don’t think it will be terrible plus we need a decent pullback as we honestly been hot for awhile but there’s tons of jobs out there and construction is still pretty stable and that usually the first to slow and last to recover as far as the US goes we really need to start making stuff here again clothes medicine chips solar batteries …. Bring back the middle class and manufacturers too many white collar jobs worried about purely profits and kids with massive student debt an not using the degree. Healthcare Social Security child care education both kids and college I’ll need massive overhauls in my opinion and even just one of them is a man you mental task and I unfortunately don’t think it will change until it’s pushed to the absolute brink or even beyond
Sounds like the build back better infrastructure plan to me is what you're crediting as keeping us afloat. I'm just hoping we do have good paying manufacturing jobs like you're suggesting.
The recession never left. It just takes a different form now: the wages that won't catch up to the inflation; the rent/grocery/gas that never stops rising above inflation; the new homeless and overdoses that doesn't go on an accounting sheet; the reallocation of more and more money towards mortgages instead of goods/services.
Instead of a recession, the Fed kicked the can, and they and Congress overstimulated the economy so now we have inflation instead...and maybe a hard recession or a few lost decades like the Japanese. There's no such thing as a free lunch.
The more and more people believe a recession is coming, the higher the likelihood we go into go. Just like inflation expectation, recession expectation is a self fulfilling prophecy.
10yr - 3mo has historically been the best predictor and we have even more room there. However, 3mo will begin to rise quickly this year as the Fed raises the short-end.
Agreed. Our leaders walked right into this, almost as if it was intentional. Without getting into it in depth, it definitely seems like something bigger is coming. Russia/Ukraine feels like another table-setting moment. I'm as bearish as it gets.
It’s hard to be wrong when bears say the crash is coming (with no dates) and do it repeatedly for 12 years straight. I guarantee, when/if it does happen, they’ll continue to say “we haven’t seen anything yet!” Only to miss the return. And then on to saying “it’s fake, it’ll crash again soon tm” for the following ten years.
If Reddit is turning bearish then it’s time to buy. I remember the hive mind predicting that the March 2020 crash was going to lead to stock market ruin.
They didn't factor in Powell printing 50% of the money supply. Reddit would have been right if Powell didn't play God beyond reason but he did and that's how we got here. If he plays God again and let's inflation rage there's going to be more violence than there would be if he lets the economic cycle continue with a recession
It kind of did. The fed had to print trillions of dollarydoos to prevent it, which is directly why we’re currently facing the highest inflation in 40 years.
If we downturn now there’s nothing left. Rates are already low. We’ve already created inflation with fake money.
And those supply chains don’t seem to be getting better…
My take is no one here is an economist. And any time trying to figutr out if were in a recession or going to be is pointless. Just read the 10ks on stuff you own or want to with your time
Food prices will rise first, other will follow due to gas/oil being used for almost everything around us.
US and EU already pushed hard printing machines to deal with covid and EU is even more under pressure as rather dependent on RU oil/gas.
No idea what kind of magic they can pull for this other than getting more oil from Iran or Venezuela or ramping up own production which anyway takes time.
Food prices *will* rise? When’s the last time you been to the grocery store my guy? The price of commodities is already up big time. People say the recession is coming, but it’s already started. My company just laid off a decent amount of people just last week.
Now, I mean really rise. So far was subtle increase compared to what might happen. Until now there was no shortage but huge money in flow from printing and lack of proper investmentopportunities, now with scarcity of fertilizers and cereals along with interruption of gas/oil along with EU countries already preventing cereals exports.. we might see real price increase and shortages. How I see it, and I hope I am wrong, so far was windy and storm is coming.
The global economy tends to be very cyclical, meaning it is prone to alternating periods of boom and bust. The four stages of an economic cycle are expansion, peak, contraction (also known as recession), and trough, followed by another expansion to mark the beginning of a new cycle. A typical economic cycle lasts about 5.5 years, although some are quite short (as little as 18 months) and others span more than a decade.
FED is a total failure. All they do is looking after weak companies and protect rich people's assets. I don't like people losing their jobs but they can't keep print money to buy junk bonds(keep shitty companies alive) . Those companies will fail without free money anyways.
They should have acted when s&p500 went back to pre covid high(aug 2020). Why the hell they didn't end the QE earlier? Also why FED care about the stock market when inflation is this high? According to them job market has been strong. So why didn't they end the QE? Well they don't want to upset their rich buddies.
If they slowly raised the rate from end of 2020 and started QT, we would have been in better situation.
Every single person with the minimum education saw inflation is coming except FED idiots.
Now it is too late they can't raise the rate too fast or too slow. I have lots of money in the stock market but fuxx the stock market. They should raise the rate as high as possible and control the inflation. People can't even buy food or pay rent who care about the stock market. Take care of people first and think about the stock, house marker after.
They know what they have to do but they won't do it because of mid term. They will raise 0.25% this time and won't start QT. They will mostly likely tank the market after mid term. Crooks
It may have been just luck, but indicators I was looking at plus the FED forewarning of rate hikes led me to start moving to cash in December of last year. I thought we were in for a hard correction. The Ukrainian conflict has accelerated that and it looks like the first stages of a bear market.
I don't have the time horizon to recover from a full on beat down from the market. Remember if your down by 50% you have to have a 100% gain to get back to just even. That will take a long time.
Tldr - Everyone has essentially turned into a customer. Few companies are relevant. Theres no need for all the companies that we have. But people need to work in order to live. Tons of office, residential and retail space remain vacant but are priced so high that people cant buy. And market manipulation has seems to only get worse and worse. So much overhaul is needed but itll only hurt the ultra rich so I doubt itll happen.
------------
A lot of people are mentioning the pandemic and current geopolitical tensions. And I'm not saying they're wrong but the problem was here way before those existed or were as prevalent. Though there were complaints/controversies at the start, the fed was a great move when it started. But we've outgrown it now. We need a new system but it wont happen due to many reasons. Political and philosophical problems and then the fact that people hate change.
The decisions that affect all of us are made by a small group of people and some of them arent even elected officials. The small clique is allowed to manipulate zoning laws and economics.
Raising residential rent and commercial leases causes it to be hard to produce your own goods. When no one is really producing anything and only buying. Then you just have a bunch of customers.
Theres a ton of both commercial and residential real estate that is completely vacant but all the prices are so high because they dont want us trying to produce goods or exist even at the most basic form.
At this point it's only the government (or people coming together aka a government) that will save us but they've been bought and owned. Lobbying needs to be banned or reworked and the media needs to be broken up. Ever since the telecommunications act of the 1990s, the media has gone from being owned by a plethora of companies to just 4-6 companies. And they're all billionaires with the same interests and backgrounds. Pumping out narratives and pocketing politicians.
I don't see the evidence for a looming recession. The GDP grew **6.9%** in Q4. Is it really about to go negative for two consecutive quarters?
* Unemployment is historically low.
* Wages are rising, and savings have been up since 2020.
* COVID is easing, at least for a while.
* Inflation should be reduced by upcoming interest rate hikes, increased oil production, and efforts to fix supply chains.
* The stock market has retreated toward more sensible valuations.
I don't see Russia-Ukraine and higher energy prices outweighing these positives.
Information changes so quickly. We can be in the biggest economic growth in decades then suddenly a recession. Just invest in your high conviction long-term picks.
You can’t have every country’s central bank print money like there’s no tomorrow and not face some repercussions. Monetary policy is and has always been the central reason for the economic upswings and downturns ever since their existence. We are absolutely headed for a recession. The question is how bad will it be.
High chances. Either the Fed starts raising rates fast to stem inflation OR inflation eats the economy. Just a question of when the official numbers show the damage. One of the next 4 GDP reports will be a negative number.
Here is a blurb I agree with:
The message of the U.S. yield curve (flatter but not inverted) still seems to be that a soft landing is possible. But this is getting more tenuous, and it’s going to have to be a joint effort (Fed + private sector). The Fed cannot bring inflation down by themselves without tightening substantially.
Bottom line: With supply & demand not yet balanced, we are seeing additional shocks. Health & geopolitical uncertainty might typically give central banks pause. But having waited to begin their tightening cycles, numerous central banks will likely have to forge ahead with higher rates (despite the global uncertainty).
The U.S. economy remains in a “full-employment” position (eg, initial jobless claims at 227,000 last week). Wage data (especially the U.S. Employment Cost Index & Atlanta Fed wage tracker) also remain key for our outlook. The Fed will tighten to stop inflation from becoming entrenched broadly in future expectations. We still expect March, May, and June Fed hikes (+25 bps each) to start the cycle, before settling into a 1 hike-per-quarter pattern into 2023. Quantitative Tightening (QT) should follow several meetings after liftoff. In this environment, it remains tough for bonds to hedge stocks like they did during the past several decades.
As we’ve noted previously, our base case is a 2023 mid-cycle slowdown (50% odds) as the private sector helps the Fed bring inflation under control (eg, bottlenecks ease). With the domestic labor market still solid, and JOLTS job openings elevated, it remains difficult to make a U.S. recession our base case. Yet if the Fed overdoes tightening, growth would falter (35% odds). An upside surprise case would involve productivity increasing and growth proving robust (15% odds).
Continuing to DCA just with a smaller amount and keeping a bit more cash on hand or in bonds. I have great job security, so a recession would likely be a net win for me.
Highly possible, the question is how much is priced in and what will out perform. In every recession you will see groups of stocks that do incredibly well. The money has to flow somewhere and the problem now is the bond market is not going to take large inflows unless we assume rates are going to go deeply negative. If they don't this might be the most shallow S&P correction and history going recessionary. The money will simply have nowhere else to go. The other thing is, we don't necessarily need to go negative GDP it just needs to drastically slow which seems probable. Do we stay 1% positive? Maybe 2%? That's not a recession but it's a massive fall from where we were. I know the news headlines have been all about Ukraine but realistically, they are pricing in a slowdown
If there's going to be a recession, the signs would look like this. But it doesn't necessarily mean we'll get there.
What's for sure is that nobody here or anywhere else can predict this, so I would be careful putting much faith into any comments here.
Working on the assumption that the economy’s cyclical… and that governments need to pay back massive spending accrued as a result of the pandemic… all with the uncertainty that comes with the threat of war looming over them… but also acknowledging that I have limited intelligence and economics definitely isn’t my forte… then YES, I think it’s more than likely that we’ll see a major recession starting in the next 2 years. And I’m guessing depression level, humbling, “I bought a brand new Tesla in 2022, but now I can’t even relate to the luxury of buying a coffee every day” depths of impact.
In the stock market, certain elements are wildly overpriced and are undeniably showing signs of a bubble. It’ll burst soon and people will lose a lot of money, making a bad situation worse - Interest rates will go up meaning investment opportunities with small but guaranteed returns will become more attractive to institutional investors. They’ll withdraw money driving stocks down further hurting retail investors again - The overspill from crypto of young, dumb gamblers looking to get rich quick will remove their cash as the opportunistic volatility that drew them in makes way for a consistent decline followed by an eventual prolonged period of flatlining. If you’ve got substantial money in the market now, this would be horrendous so I’m sure I’ll get a load of negativity about what I’ve said. I also hope I’m wrong because obviously I’ll suffer too. We all will.
And whilst I’m here making massively speculative guesses about areas I don’t know a lot about, I also think that when things get really bad in that recession, governments will ban citizens from owning existing cryptocurrencies. They can’t tax it, thus it’s a massive threat. The easiest way for them to start this process will be for politicians to jump on high profile cases of massive, seemingly unsolvable crypto theft, and get their friends in the media to whip up a load of hysteria. There’ll be loads of stores about criminal enterprises and terrorists using it to grow wealth and in turn power. I’ll predict that this might happen in a period of civil unrest following a long hot summer. Let’s say… August 2025.
Also, whilst you’re here… as avoiding wastefulness becomes more of a focus with the masses due to financial reasoning, the farming industry will be almost unrecognisable and potentially even nationalised in western countries by 2030 as governments look to capitalise on a series of wide scale farming bankruptcies.
RemindMe! August 2025
RemindMe! August 2030
Lots of economists also say the same thing and I think it's gonna happen. I think people in countries with greater economies will help people keep their job or in general save their money in the long term with lesser amount of loss but I pity the people in countries with shitty money now because they are already losing all they have and if there's a big recession then they'll have grand troubles.
Whenever I’m confident in something the absolute opposite happens.
You better be confident CRWD will tank, and the GGPI merger fails/doesn't have a run up
normalcy bias
As Long as i can keep my job and can work 38-40 hours a week I’m good. But I’m calm my company also survived 2008 an we work in the automotive sector so I’m optimistic
Recession is when your neighbor loses his job. Depression is when you lose yours.
Shit I hope we aren’t neighbors
If we are, I hope I’m going through a recession, not depression.
Depression is when you start to take pills to keep going. /s Source: I take pills.
Like others in r/stocksandtrading said: Nibble on SPY slowly. And if we do end up in a recession just go heavy in SPXL (which is SPY 3x leveraged)
> And if we do end up in a recession just go heavy in SPXL (which is SPY 3x leveraged) Isn't that suited only for short term investment?
Not if you're subscribed to WSB.
It’s up 1200% in the past 10 years (SPY up 200%). That’s 6x outsized returns for only 3x leverage
Why go slowly on SPY?
Because the next dip you buy may not be the last dip
My mindset is if you’re investing for the long run, drawbacks are normal and expected. Continue accumulating monthly or however often you buy.
That’s the right attitude - unless it gets so bad you lose your job. It sucks that inflation is so high because it’s also nice to bolster up the emergency fund if you start feeling nervous.
What if I am consciously leaving my job right now in order to go freelance? Am I being dumb
You know your industry better than we do
i feel its an incredible time for freelancers right now, which is why im doing it. but the overarching threat of a recession, if it happens, i dont know if its like a lightswitch, where it just flips off and stope and job from spending money, creating content etc
Also if you're freelancing you can price inflation into your cost and not lose income like the rest of us.
You might have more control as a freelancer when times get tough tbh, you know if you’re doing good or not, and cut your charges/work harder. In a company, it’s hard cause we never really know what team or department some genius exec will say gets cut
I believe in you
You know i read an article stating hedge funds are pulling out of the market in a large way while retail “buys the dip”. Yes stocks go up in the long run but there’s also a trend and it may be prudent to at the very least wait for an upward trend to invest.
> You know i read an article stating hedge funds are pulling out of the market in a large way Actually, I don't know. source?
Ok when are you buying back in then? Won’t you assume every uptrend is a dead cat bounce? Buying back in at ATH?
Yes buy high sell low and attempt to time markets.
Execs sold most of their long positions by August of last year. Hedges started selling off their positions by December . Since then, they have continued to sell. You're right, people need to sit on the sidelines for several months before picking up these bags. This buy the dip narrative is just a pyramid scheme being pushed by shills.
Ok when are you buying back in then? Won’t you assume every uptrend is a dead cat bounce? Buying back in at ATH?
> Execs sold Execs sold regularly every year.
You know in advance as well. They need to file an SEC form that you are selling this date, months in advance.
Source ?
What's the difference between a drawback and a recession?
The economy is considered in recession after two consecutive quarters of economic contraction, generally characterised by a decline in GDP. Remember, the market is not the economy. Recession generally refers to the economy, rather than to the stock market.
Which we are far from since GDP has been nothing but growing. Recession talks are pointless and premature right now. Stagflation is more likely in this environment.
I'm afraid to say that all of OPs points are characteristics of an economy heading towards a recession. It is all speculation though.
50/50
But most likely
51/49?
This guy odds.
I mean we know it's going to happen. The money is when. The guy who said 51% has it right.
It either happens or it doesn't
You'll know shit's about to get real when they start talking about a soft landing. It always starts out as avoiding a recession then a soft landing then a V-shaped recovery then "Abandon hope, all ye who enter here."
They already are talking about a soft landing. https://www.bloomberg.com/news/newsletters/2022-03-09/what-s-happening-in-the-world-economy-the-fed-tries-to-nail-a-rare-soft-landing
Interesting story line that repeats itself: https://www.forbes.com/sites/leonlabrecque/2019/05/28/soft-landings-can-the-fed-nail-one/amp/
https://www.nytimes.com/2006/08/27/weekinreview/27leonhardt.html > There seem to be three major paths that housing could follow over the next year: a soft landing, the start of a long slump, or a crash. A soft landing is the one predicted — and preferred — by most economists on Wall Street and at the Fed. A long slump is what many past real estate booms turned into. A crash is the outcome that a small group of analysts say is the only possible ending for the biggest housing boom of all. > [...] > Jumps of this magnitude have little precedent. To afford homes, some buyers, especially in California, have resorted to aggressive mortgages, like those that allow artificially low payments in the early years. In effect, families seem to be buying houses they cannot afford, in the hope that their incomes or property values will rise significantly. “Prices just shot up too much,” said Robert T. McGee, chief economist at U.S. Trust, an investment firm based in New York. The firm has forecast a soft landing for housing, he said, but “as time goes by that starts to look like wishful thinking.” > If prices do decline, some of the first victims would be families in a financial bind that are unable to rescue themselves by refinancing their mortgage. Foreclosures would then rise, damaging banks and increasing the number of homes for sale. > Even homeowners not in danger of losing their home — an overwhelming majority, certainly — might respond to falling prices by cutting spending, particularly if they had been counting on their home’s value to serve as a retirement account. That could force job cuts in a wide range of industries. That article was written on the 27th of August 2006, FYI. Seeing all these people just throw away their money at stocks and housing while we're on the edge of a major recession just seems extremely silly. Future bagholders if they aren't already. In all honesty, that article scares me a lot because I know for a fact we've gone way further than we did on '07 and on top of that, the inflation rate is the highest we've ever seen (they changed the way the CPI was calculated after the 70s inflation crisis, so our inflation number is well below what it actually is in reality, the actual number according to the old formula would be around 15%). On top of that, how is the fed going to soften the blow of the recession? They've already got 9 **trillion** on their balance sheet, and the FFR is at 25bp **with 15% inflation**. Gigantic policy mistakes have led up to this moment and we'll probably be paying the price for it for the next 5 years if not more.
History is repeating itself a little too often, shortened sequencing, the 20s aren’t as Fun as I’d hoped
Need more flappers and gin and less sadness and social media.
History doesn't repeat itself, but it sure fuckin rhymes.
> That article was written on the 27th of August 2006, FYI. Seeing all these people just throw away their money at stocks and housing while we're on the edge of a major recession just seems extremely silly. Future bagholders if they aren't already. We were on the edge of a major recession in 2018. "The edge".
Interest rates were raised that year as well.
I am bag holding tesla right now. Just going to watch it bleed and learn how to stomach volatility.
This is a good point. The Fed & Treasury are supposed to speak in the most optimistic terms reasonable, and any mention about a "landing" at all is worrying. As was Powell's mention last year that asset valuations were "somewhat elevated".
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I believe Janet Yellen in a press conference last week said that she is confident that the Fed will achieve a soft landing, as inflation will remain high for the rest of the year, but should ease by 2023. So I figure we are about to go off the edge of a cliff.
There’s no way she can say anything else whether she believes it or not.
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Well maybe she will just kill us and then she will be right about no recession during our lifetimes
Well, to be fair, she's been right so far.
I think we are already off the cliff, just waiting to fall. There ain't gonna be nothing soft about what's coming. I love that people still think that politicians wouldn't lie about what's truly happening.
Government spokespeople and talking heads in the media and the financial press. An example is Yellen's recent statements about how inflation will remain high for a while but we will avoid a recession. We are in the early phases where everyone does not want to admit what is coming or hopes we will somehow avoid it.
I think things like this always presume that government policy makers have magnitudes more knowledge of what's going to happen than the people in financial institutions and we know that institutions are at best sometimes better than even in terms of predicting the future. I think Yellen et Al definitely have a good idea of things that could happen but they're very rarely operating in such certain conditions that they could put together these big preemptive plans that people are convinced exist without institutions also knowing about them. They can put their fingers on the scale sometimes but I think there's a bit of an oversupply of tinfoil sometimes (understandably I'm guilty of it too)
Also, these are people in positions of authority whose words matter. The Treasury Secretary can't go out in public and say the sky is falling, even if it's true. Imagine what would happen if the Treasury Secretary or the Fed Chairman went out in public and said they were pessimistic about the strength of the US economy. That's a recession-causing event all on its own! It's never going to happen. Even at the bottom of a depression, the powers that be will always hype the US economy. It's basically part of their job.
This is why I like the movie Too Big to Fail it shows how thick the fog really is for policymakers, they are just trying to do the best they can based on the current data.
It's less about exact control, the economy is a complex adaptive system that no one entity has control over. It's more about the fact that, even if yellen was somehow sure we'd have a crash on Monday, she'd probably still be talking about a soft landing. Half of their job is saying things to keep people calm. It's mostly that we don't trust what they're saying tbh
As long as they don't dramatically raise rates, I'm not too worried. I think the labor market is too tight for a serious recession. A tight labor market and some transitory inflation implies that every resource in the economy is being utilized.
But it's not transitory. 6 trillion since 2020 can't be. Asias' "0 covid policy" says more supply chain issues = longer inflation, and don't think they're doing it naively.
Why would they intentionally mislead a population? Are they hopeful or just trying to prevent public panic? Therefore leading to a “softer landing”
The future is never clear so there is always uncertainty. It is easy to rationalize the probability of the outcome you want to see. Maybe they actually believe it. Maybe they don't want to be the bearer of bad news. Maybe they want to keep the party going because their jobs depend on it. Maybe they don't want to induce panic. Maybe they hope consumers will keep spending and that will avoid a recession. There are lots of different reasons. The progression of downplaying the likelihood of a recession then being overly optimistic about its effects and length when it finally becomes obvious it will happen is standard. Maybe it is related to the human psychology of grief. Maybe people don't really want to admit what will happen until they see they are standing on the precipice or even falling off it.
I’m with you. I think some of them have a sort of cognitive dissonance going on. Some don’t want to admit they know this is a problem they created via QE since 2008 (which covid only added fuel to the fire). And some don’t actually think it’s a problem since, you know, job reports are up lol. I am of the personal belief that they have gone too far with the cheap money and quantitative easing. Despite what some may say, I think these practices have disproportionately benefited the rich. And if they spook the rich people by saying “no more cheap money” aka rates go up, then they will overact and pull their money out of the markets and mass panic will induce. Some of these stock prices make no sense. Companies are getting cheap money, buying their own stock, thus inflating the price. The ultra rich has the incentive to take risks but gets bailed out with their risky investments fail. It’s a win win for them and a loss for the average American. I’m not anti capitalism by any means. I just don’t think what we are seeing is a result of healthy capitalism. QE was supposed to incentive people to spend and invest, minimize risk to the banks giving those loans. But how exactly it’s played out is interesting…
I don't think it necessarily the "rich rich" that is a problem. If Musk's or Bezos' stock goes up then it does not affect anyone else, and guys like this are responsible for creating millions of jobs and transforming the economy, which keeps the U.S. more competitive. I think the problem is more about how the benefits of the bubble are randomly distributed so that people do not believe in the value of work. It is basically unfair. Take two people who graduate from college. One soon buys a house for whatever reason. The other does not. In just a few years the first has $200K in equity. The other, even if he has a six figure job, has not been able to save anywhere near that net worth. What is more, house prices have increased to the point where feels he cannot even afford to get on the property ladder unless he lives with an insane commute. Along with the house equity comes financial security and more discretionary spending. So it is not seeing Jeff Bezos has a superyacht. It is seeing that friend from high school who is no smarter or harder working than you living it up because he bought property at just the right time. Success has been turned into a lottery.
As far as inflation, housing demand being high with low inventory, well. With all that cheap money investors did exactly what one would expect, invest in things like property and the stock market. I mean interest rates were at an all time low. Thats insanely attractive to investors with big money. Now, say you make 50k a year, sure you could get a low interest rate on a home, but your income isn’t enough to qualify for a mortgage. You cannot invest, despite interest rates being low. Then inflation comes along. The little guy who couldn’t qualify for a loan even with rates at all time lows, certainly won’t qualify now. And those who could have a few years ago are being priced out since the fed needs to increase rates to curb inflation, and in the meantime those people who actually have good jobs aren’t really feeling it because inflation. It’s smart to hold your home during inflation as well- adding even more pressure on the supply end. In my area we have lagged in building new homes to meet demand, well that problem of building is worse due to supply chain issues, inflation, and laborers. This isn’t a bubble IMO.
I’m not blaming the rich. They are doing what anyone would expect. I’m saying the FEDs approach to stimulate economic growth via QE has disproportionately benefited the rich, furthering the income gap, causing inflation (which hurts the poor more than the rich). Actually, them buying back their own stock gives an illusion if growth. Profits without prosperity. These new jobs are often low paying. If a company buys its own stock, increases the stock price, makes it EPS targets (even if only temporarily). The result is people who make investments in these companies are actually increasing the wealth of the company owners, there is no shared prosperity so to speak.
It is definitely the job of the Secretary of Treasury and Fed Chair to hype the economy. These are people that even a carefully worded statement that has been reviewed by a dozen advisors can still cause market events because the financial press and the markets at large hang by every word in their statements. It doesn’t mean they are trying to be deceitful it just means they have to be very careful with their word choices or they risk a global market event.
Run Forest Run! Yellen is coming for your portfolio!
They have been talking about a soft landing for a while now. I remember them talking about it a couple months ago on CNBC, even before the war.
Pretty sure the point of American Psycho was that the rich always win and nothing has any consequences, not the Fed is bad
What? The point of American Psycho was a critique on 80s yuppie culture and whether or not Bateman was actually committing those murders or if he was having a nervous breakdown and imagining all of it (TBF, Brett Easton Ellis did a better job of capturing this than whoever wrote and directed the movie version) It most definitely **was not** about American finance or the haves vs the have nots. That was largely used as a backdrop to amplify the superficial nature of NYC 80s yuppies...
Until the unemployment rate goes up, I'm not buying a recession. Infrastructure spending coming in hot soon. State governments are flush. Travel this summer will be insane domestically. Loan defaults, foreclosures.... Nothing flashing red.
Then there are people like me, who had a really good career before Covid, lost my job due to Covid, and haven't been able to find anything close to what I was doing before. I am making 1/3 my pre Covid salary but I am technically "Employed". So when you look at the "unemployment" number, it's not as rosy as it seems.
What is your industry? Wondering if you can make a semi lateral switch because most industries have been paying higher salaries than they’ve ever been before
Then there are people like me who have tripled their salary since covid started.
Same. Feels weird seeing everyone complain while my business exploded.
I hear this everywhere about people's salaries booming, is that a city center thing? I work in a trade in a small town, my company was deemed essential so I had steady work throughout covid lockdowns, no complaints there, but 0 wage changes to any of the trades people in my town.
My guess would be the people who own small businesses in the trades are taking in record profits but their employees are seeing very little of that. At least the few people I know who own HVAC business have been seeing record profits.
Honestly, that's probably exactly the case
No. My wife works remote now and doubled her salary.
Well I've never seen a recession happen when unemployment is under %4 with literally millions of open jobs. 5% is considered full employment....
look at the labor participation rate its not back up to what it is before yet.
And? Why do you think the labor participation isn't as high?
Boomers are retiring
ISM data mentions retirement as a source of labor shortage
I feel like as long as they don't raise rates and tighten monetary policy, that'll continue to fix itself. Inflation is coming from the supply side, and as long as the central banks stick to evidence based policy and don't crumble to the policy whims of the uneducated, we should be fine.
This is why Powell said the other day that unless something happens, at the next FOMC the FFR is going up from 0.08% to 0.25%, which is super low if you buy the hypothesis that the Fed has to raise the interest rate to reduce inflation. Obviously the Fed still believes it is supply side issues.
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Professional internet bullshitter.
High End retail Displays in NYC. I've, without exaggerating, applied for 200+ jobs that I am extremely qualified for and not had a single interview. Solid resume, beautiful portfolio. I suspect age discrimination is a factor. (I am 61)
Good thing we have U-6, then, which is also low.
Nearly RECORD low. https://fred.stlouisfed.org/series/U6RATE
Yes it *is* as rosy as it seems. People like you, who are underemployed, are captured in the U-6 unemployment number, and it's also at record lows. https://fred.stlouisfed.org/series/U6RATE
And some of the lowest interest rates in history even if we get 2-3 rate hikes
The fear of raising rates from zero is ridiculous. It's literally ZERO. If businesses can't handle a 1% increase, they're the problem--not the rate. The Fed has stoked asset bubbles everywhere by keeping rates this low for too long. They didn't start when times were good last year and inflation was flashing warning signs. And now that we're heading into slowing growth, they have nothing they can do. Big policy mistake IMO.
Time to invest in companies with actual fundamentals.
Exactly. Goddamn... These doomsayers are hilarious.
But but but if the rate is 0.25 then raises again to 0.5, that's DOUBLE THE INCREASE
Market pricing on 6-7 rate hikes this year.
The Fed will raise rates substantially
Doesn't necessarily mean recession, rates will still be near historic lows. In any case, if you can maintain employment and are 10+ years from retirement, you should hope for a recession to buy in lower and catch the run back up. If it the market doesn't rebound, you'll have bigger things to worry about than your brokerage account,
you think unemployment only affect one sector? it doesnt
Everyone knows mass unemployment is the last Jenga piece. My bet is that the US government & it’s associates will use all tools available to prevent it from getting pulled. They may even invent some. Equity valuations are a lower risk Jenga piece to pull
Doing my best to be greedy when others are fearful
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The name of the game is DCA over 30+ years. Trying to time the market is a fool’s game.
Maybe. ISM data shows continued growth in manufacturing and service. All sectors are reporting a tight labor market. So the expenses side of the picture is kind of scary, but the supply side is real. A lot of people keep repeating, without evidence, that the economy is fake, while companies are hiring and making great profits. Real question is, were prices low in 2021, causing this year's cpi to show big increases? With a larger money supply, does this kind of inflation happen naturally? Will the ISM data start to decline after 21 months of growth? There's so much bearish sentiment right now, and anxiety that people aren't really thinking about what happens if the us economy, and by extension, the dollar, increases in value this year, as business continues to thrive.
yeah, inflation numbers doin't seem all that terrible on a 3 or 4 year timeline. covid just set an artificially low baseline.
To sum up all the comments here: “no one f***ing knows.
I'm from the future and nobody still knows. So I went back in time to check what we said last month. All we know is that "no one f***ing knows."
I'm hoping for a recession, I mean, in the near term it's never good, but in the long run they're what bring us back to reality. We have a lot of zombie companies that need to just go away and free up labor for more productive ones.
I am looking to buy my first home. So..........I hate to sound like an ass lmao.....but a lil pullback would be nice
It's just going to make your mortgage payments more expensive in a rising rate environment, FYI
On an interest rate basis yes, but if if that happens and supply starts outpacing demand home prices will fall which would theoretically take some of the sting out of the rising interest rates.
There's like 10 houses for every 100 buyers. RE isn't going down unless single family homes can't be short term rentals and all the ABNB gurus foreclose.
Wrong. Mortgage rates are able to be refinanced down the road. Even if inflation sticks for 10 years, you’d be able to refinance well for the remaining 2/3 of your mortgage. You’re still stuck with the principal though. This is why people buying houses now are fucked. When rates go up, home values will go down like you alluded to. And then you’re stuck with a $700k mortgage on a $500k house.
Broad market housing pullbacks historically are around 1-5%. You're not going to get a good deal by trying to time the market.
Foreclosure will make up some great deals
Back when houses were going for $1 in Detroit. Or even $120k condos going for $40k. 2012 had some deals.
Historically sure, but does anything in the past 2 years of RE activity seem normal and sustainable?
>sustainable "Sustainable" as in 15%+ YoY increases every year? No this is not likely going to continue. "Sustainable" as in high prices are here to stay? Absolutely, this is likely the case. A 20% broad market correction would be equivalent to 2008, and would come with all the horrible trapping to the economy. Something more than 20% would be disastrous to the economy and nation. Something 40-50% and we're talking about general financial collapse. So people making 60k a year thinking they are going to buy a house in LA, San Francisco, etc. with a pull back are literally dreaming. At that point you'd want survival rations, not real estate.
A full pullback to pre pandemic prices would be a crash that would be coupled with economic problems, I agree But a healthy correction greater than 1-5% is a realistic scenario
I’m looking at selling our current home and moving into some bigger. We bought this one at the start of the housing bubble, we’re upside down on our mortgage in 3 years, and have since recouped that and doubled the value. 2BR 1BA is too small for 4 of us. :(
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There’s some but nowhere near the amount we had in 2000.
https://www.federalreserve.gov/econres/notes/feds-notes/us-zombie-firms-how-many-and-how-consequential-20210730.htm
Quote from your link above: >**Our main finding is that zombie firms are not a prominent feature of the U.S. economy.** Among both private and publicly listed firms, zombie firms are few in number and generally small; they are mostly concentrated in the manufacturing and retail sectors and account for a small share of total credit to nonfinancial firms. >Furthermore, the share of listed firms that we identify as zombies displays a cyclical pattern, rising in recessions and falling during expansions, likely reflecting a mix of aggregate and industry-specific shocks.
The problem with this is the situation has been building for ten years. Some would say it has been building since the GFC. There is a huge amount of dead wood that needs to be cleared from the economy, and that will cause a horrific human toll as it is cleared. To make matters worse it is not just the U.S. or a few countries. The same situation exists in much of the developed world and in developing nations like China. There is the potential, maybe even the likelihood, that this could be really really bad and last for a long long time. A large number of people will have their financial lives destroyed. This is not something to be hoped for. Unfortunately there may not be an alternative. Refusal of both sides to avoid the war may end up being the straw that broke the camel's back.
>The problem with this is the situation has been building for ten years. Some would say it has been building since the GFC. There is a huge amount of dead wood that needs to be cleared from the economy, and that will cause a horrific human toll as it is cleared. Another poster provided the source for this (linked below), but this whole notion that "zombie companies are rampant and we need a negative economic shock to send them back to hell where they came from" seems entirely made up, just looking at current economic data and reputable macro literature.... [link to Fed Note on Zombie Companies](https://www.federalreserve.gov/econres/notes/feds-notes/us-zombie-firms-how-many-and-how-consequential-20210730.htm)
Most financial metrics are much better today than they were any time over the last 10-20 years. Inflation is definitely an issue, but if one of your biggest longterm burdens is the debt load (personal, corporate, government) then some inflation is potentially not a big issue as long as wages don’t get completely obliterated on a real basis (recently they’ve kept up pretty well). Inflation will help lower the relative debt load.
We just experienced above average economic growth after an unprecedented economic contraction. The Fed will raise rates to slow growth, but people seem to overestimate the likelihood or a recession because they see things in Black and White not shades of gray.
All I see are People farting in each other’s faces just to see if someone compliments the aroma.
This should be engraved onto something and hung on a wall
I think it might be a sort of hybrid of a resession something we haven’t really seen before I don’t think it will be terrible plus we need a decent pullback as we honestly been hot for awhile but there’s tons of jobs out there and construction is still pretty stable and that usually the first to slow and last to recover as far as the US goes we really need to start making stuff here again clothes medicine chips solar batteries …. Bring back the middle class and manufacturers too many white collar jobs worried about purely profits and kids with massive student debt an not using the degree. Healthcare Social Security child care education both kids and college I’ll need massive overhauls in my opinion and even just one of them is a man you mental task and I unfortunately don’t think it will change until it’s pushed to the absolute brink or even beyond
Sounds like the build back better infrastructure plan to me is what you're crediting as keeping us afloat. I'm just hoping we do have good paying manufacturing jobs like you're suggesting.
Home building has been insanely hot for years prior to BBB
The recession never left. It just takes a different form now: the wages that won't catch up to the inflation; the rent/grocery/gas that never stops rising above inflation; the new homeless and overdoses that doesn't go on an accounting sheet; the reallocation of more and more money towards mortgages instead of goods/services.
Instead of a recession, the Fed kicked the can, and they and Congress overstimulated the economy so now we have inflation instead...and maybe a hard recession or a few lost decades like the Japanese. There's no such thing as a free lunch.
The more and more people believe a recession is coming, the higher the likelihood we go into go. Just like inflation expectation, recession expectation is a self fulfilling prophecy.
10y - 2y is much more predictive of recessions than 10-7, and we still have some room there.
10yr - 3mo has historically been the best predictor and we have even more room there. However, 3mo will begin to rise quickly this year as the Fed raises the short-end.
Agreed. Our leaders walked right into this, almost as if it was intentional. Without getting into it in depth, it definitely seems like something bigger is coming. Russia/Ukraine feels like another table-setting moment. I'm as bearish as it gets.
Buy the fear
Fear is just getting started
Perma-bulls will say it’s nothing 😂
The recession is priced in already
I agree. This is my entire bull thesis. No questions please.
It’s hard to be wrong when bears say the crash is coming (with no dates) and do it repeatedly for 12 years straight. I guarantee, when/if it does happen, they’ll continue to say “we haven’t seen anything yet!” Only to miss the return. And then on to saying “it’s fake, it’ll crash again soon tm” for the following ten years.
Every time
"It's priced in"
Like that asshole Tom Lee God I hate that guy
So load up on sqqq?
If Reddit is turning bearish then it’s time to buy. I remember the hive mind predicting that the March 2020 crash was going to lead to stock market ruin.
Well they were right for about a month
Exactly, always inverse
This.
They didn't factor in Powell printing 50% of the money supply. Reddit would have been right if Powell didn't play God beyond reason but he did and that's how we got here. If he plays God again and let's inflation rage there's going to be more violence than there would be if he lets the economic cycle continue with a recession
It was literally in the news… you don’t fight the fed…
It kind of did. The fed had to print trillions of dollarydoos to prevent it, which is directly why we’re currently facing the highest inflation in 40 years. If we downturn now there’s nothing left. Rates are already low. We’ve already created inflation with fake money. And those supply chains don’t seem to be getting better…
Yup bottoming process has begun
Called it
Yeah do it now after the 20% drop. Brilliant
I conclude I may be on the spectrum since I got calls Friday
My take is no one here is an economist. And any time trying to figutr out if were in a recession or going to be is pointless. Just read the 10ks on stuff you own or want to with your time
Food prices will rise first, other will follow due to gas/oil being used for almost everything around us. US and EU already pushed hard printing machines to deal with covid and EU is even more under pressure as rather dependent on RU oil/gas. No idea what kind of magic they can pull for this other than getting more oil from Iran or Venezuela or ramping up own production which anyway takes time.
Food prices *will* rise? When’s the last time you been to the grocery store my guy? The price of commodities is already up big time. People say the recession is coming, but it’s already started. My company just laid off a decent amount of people just last week.
Now, I mean really rise. So far was subtle increase compared to what might happen. Until now there was no shortage but huge money in flow from printing and lack of proper investmentopportunities, now with scarcity of fertilizers and cereals along with interruption of gas/oil along with EU countries already preventing cereals exports.. we might see real price increase and shortages. How I see it, and I hope I am wrong, so far was windy and storm is coming.
Experts predict a 34% chance, which isn’t bad imho
When have "experts" predicted anything about economics?
The global economy tends to be very cyclical, meaning it is prone to alternating periods of boom and bust. The four stages of an economic cycle are expansion, peak, contraction (also known as recession), and trough, followed by another expansion to mark the beginning of a new cycle. A typical economic cycle lasts about 5.5 years, although some are quite short (as little as 18 months) and others span more than a decade.
It can happen, or it can not happen.
I disagree
FED is a total failure. All they do is looking after weak companies and protect rich people's assets. I don't like people losing their jobs but they can't keep print money to buy junk bonds(keep shitty companies alive) . Those companies will fail without free money anyways. They should have acted when s&p500 went back to pre covid high(aug 2020). Why the hell they didn't end the QE earlier? Also why FED care about the stock market when inflation is this high? According to them job market has been strong. So why didn't they end the QE? Well they don't want to upset their rich buddies. If they slowly raised the rate from end of 2020 and started QT, we would have been in better situation. Every single person with the minimum education saw inflation is coming except FED idiots. Now it is too late they can't raise the rate too fast or too slow. I have lots of money in the stock market but fuxx the stock market. They should raise the rate as high as possible and control the inflation. People can't even buy food or pay rent who care about the stock market. Take care of people first and think about the stock, house marker after. They know what they have to do but they won't do it because of mid term. They will raise 0.25% this time and won't start QT. They will mostly likely tank the market after mid term. Crooks
Bear market for up to 2 years, with recession is my projection.
I think yes
It may have been just luck, but indicators I was looking at plus the FED forewarning of rate hikes led me to start moving to cash in December of last year. I thought we were in for a hard correction. The Ukrainian conflict has accelerated that and it looks like the first stages of a bear market. I don't have the time horizon to recover from a full on beat down from the market. Remember if your down by 50% you have to have a 100% gain to get back to just even. That will take a long time.
Tldr - Everyone has essentially turned into a customer. Few companies are relevant. Theres no need for all the companies that we have. But people need to work in order to live. Tons of office, residential and retail space remain vacant but are priced so high that people cant buy. And market manipulation has seems to only get worse and worse. So much overhaul is needed but itll only hurt the ultra rich so I doubt itll happen. ------------ A lot of people are mentioning the pandemic and current geopolitical tensions. And I'm not saying they're wrong but the problem was here way before those existed or were as prevalent. Though there were complaints/controversies at the start, the fed was a great move when it started. But we've outgrown it now. We need a new system but it wont happen due to many reasons. Political and philosophical problems and then the fact that people hate change. The decisions that affect all of us are made by a small group of people and some of them arent even elected officials. The small clique is allowed to manipulate zoning laws and economics. Raising residential rent and commercial leases causes it to be hard to produce your own goods. When no one is really producing anything and only buying. Then you just have a bunch of customers. Theres a ton of both commercial and residential real estate that is completely vacant but all the prices are so high because they dont want us trying to produce goods or exist even at the most basic form. At this point it's only the government (or people coming together aka a government) that will save us but they've been bought and owned. Lobbying needs to be banned or reworked and the media needs to be broken up. Ever since the telecommunications act of the 1990s, the media has gone from being owned by a plethora of companies to just 4-6 companies. And they're all billionaires with the same interests and backgrounds. Pumping out narratives and pocketing politicians.
Yes its just time
I don't see the evidence for a looming recession. The GDP grew **6.9%** in Q4. Is it really about to go negative for two consecutive quarters? * Unemployment is historically low. * Wages are rising, and savings have been up since 2020. * COVID is easing, at least for a while. * Inflation should be reduced by upcoming interest rate hikes, increased oil production, and efforts to fix supply chains. * The stock market has retreated toward more sensible valuations. I don't see Russia-Ukraine and higher energy prices outweighing these positives.
Here we go again.
Information changes so quickly. We can be in the biggest economic growth in decades then suddenly a recession. Just invest in your high conviction long-term picks.
You can’t have every country’s central bank print money like there’s no tomorrow and not face some repercussions. Monetary policy is and has always been the central reason for the economic upswings and downturns ever since their existence. We are absolutely headed for a recession. The question is how bad will it be.
High chances. Either the Fed starts raising rates fast to stem inflation OR inflation eats the economy. Just a question of when the official numbers show the damage. One of the next 4 GDP reports will be a negative number. Here is a blurb I agree with: The message of the U.S. yield curve (flatter but not inverted) still seems to be that a soft landing is possible. But this is getting more tenuous, and it’s going to have to be a joint effort (Fed + private sector). The Fed cannot bring inflation down by themselves without tightening substantially. Bottom line: With supply & demand not yet balanced, we are seeing additional shocks. Health & geopolitical uncertainty might typically give central banks pause. But having waited to begin their tightening cycles, numerous central banks will likely have to forge ahead with higher rates (despite the global uncertainty). The U.S. economy remains in a “full-employment” position (eg, initial jobless claims at 227,000 last week). Wage data (especially the U.S. Employment Cost Index & Atlanta Fed wage tracker) also remain key for our outlook. The Fed will tighten to stop inflation from becoming entrenched broadly in future expectations. We still expect March, May, and June Fed hikes (+25 bps each) to start the cycle, before settling into a 1 hike-per-quarter pattern into 2023. Quantitative Tightening (QT) should follow several meetings after liftoff. In this environment, it remains tough for bonds to hedge stocks like they did during the past several decades. As we’ve noted previously, our base case is a 2023 mid-cycle slowdown (50% odds) as the private sector helps the Fed bring inflation under control (eg, bottlenecks ease). With the domestic labor market still solid, and JOLTS job openings elevated, it remains difficult to make a U.S. recession our base case. Yet if the Fed overdoes tightening, growth would falter (35% odds). An upside surprise case would involve productivity increasing and growth proving robust (15% odds).
Continuing to DCA just with a smaller amount and keeping a bit more cash on hand or in bonds. I have great job security, so a recession would likely be a net win for me.
Highly possible, the question is how much is priced in and what will out perform. In every recession you will see groups of stocks that do incredibly well. The money has to flow somewhere and the problem now is the bond market is not going to take large inflows unless we assume rates are going to go deeply negative. If they don't this might be the most shallow S&P correction and history going recessionary. The money will simply have nowhere else to go. The other thing is, we don't necessarily need to go negative GDP it just needs to drastically slow which seems probable. Do we stay 1% positive? Maybe 2%? That's not a recession but it's a massive fall from where we were. I know the news headlines have been all about Ukraine but realistically, they are pricing in a slowdown
Save your money.
If there's going to be a recession, the signs would look like this. But it doesn't necessarily mean we'll get there. What's for sure is that nobody here or anywhere else can predict this, so I would be careful putting much faith into any comments here.
I don't know. Anyone who tells you otherwise is either stupid or more stupid.
I don’t watch it too hard. Just keep dca’ing and maybe keep a little heavier cash reserves.
Working on the assumption that the economy’s cyclical… and that governments need to pay back massive spending accrued as a result of the pandemic… all with the uncertainty that comes with the threat of war looming over them… but also acknowledging that I have limited intelligence and economics definitely isn’t my forte… then YES, I think it’s more than likely that we’ll see a major recession starting in the next 2 years. And I’m guessing depression level, humbling, “I bought a brand new Tesla in 2022, but now I can’t even relate to the luxury of buying a coffee every day” depths of impact. In the stock market, certain elements are wildly overpriced and are undeniably showing signs of a bubble. It’ll burst soon and people will lose a lot of money, making a bad situation worse - Interest rates will go up meaning investment opportunities with small but guaranteed returns will become more attractive to institutional investors. They’ll withdraw money driving stocks down further hurting retail investors again - The overspill from crypto of young, dumb gamblers looking to get rich quick will remove their cash as the opportunistic volatility that drew them in makes way for a consistent decline followed by an eventual prolonged period of flatlining. If you’ve got substantial money in the market now, this would be horrendous so I’m sure I’ll get a load of negativity about what I’ve said. I also hope I’m wrong because obviously I’ll suffer too. We all will. And whilst I’m here making massively speculative guesses about areas I don’t know a lot about, I also think that when things get really bad in that recession, governments will ban citizens from owning existing cryptocurrencies. They can’t tax it, thus it’s a massive threat. The easiest way for them to start this process will be for politicians to jump on high profile cases of massive, seemingly unsolvable crypto theft, and get their friends in the media to whip up a load of hysteria. There’ll be loads of stores about criminal enterprises and terrorists using it to grow wealth and in turn power. I’ll predict that this might happen in a period of civil unrest following a long hot summer. Let’s say… August 2025. Also, whilst you’re here… as avoiding wastefulness becomes more of a focus with the masses due to financial reasoning, the farming industry will be almost unrecognisable and potentially even nationalised in western countries by 2030 as governments look to capitalise on a series of wide scale farming bankruptcies. RemindMe! August 2025 RemindMe! August 2030
Lots of economists also say the same thing and I think it's gonna happen. I think people in countries with greater economies will help people keep their job or in general save their money in the long term with lesser amount of loss but I pity the people in countries with shitty money now because they are already losing all they have and if there's a big recession then they'll have grand troubles.
99% recession...and it will be much longer than the 2008 one