Recession


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The recession appears to have begun.

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Look at those patterns.  The recession has been talked about for the past few months.  It is now here.  We're at the threshold.

All the ups and downs before were for a myriad of reasons.  Now, they are culminating.  We'll see a pattern very similar to the 70s.

Edited by Carborendum
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Posted (edited)

So, a recession is when your neighbor loses his job.
A depression is when you lose yours.
Recovery is when Biden loses his job.

(Thank you, Mr. President).

All kidding aside...

It looks like we're going to be in for about a 3 year recession.  Depending on when that two consecutive quarters start (I believe we just finished the first quarter) it could mean that (just like the 80s) it will be about a year after another president takes office again that we'll see a real recovery.

Notice that this has nothing to do with politics or what policies are to be implemented.  This is solely based on the patterns shown above.  We've done a compressed version (by a factor of 0.32 to 0.36) of the period from the great depression to 70s stagflation.  So, one would assume that, afterwards, we're going to see a compressed version of the prosperity from Reagan to Clinton.

That said, I don't think that we're "locked in" to this repeat pattern by coincidence.  I think that it is simply a reflection of how we feel the economy affecting the general population, and we have a change of guard accordingly, which then pushes a change to the economic conditions.

The fact that is is compressed says something.  Not only an "end times" signal (the BoM shows a faster and faster pride-prosperity cycle until there was no repentance portion of the cycle).  It is a sign that perhaps technology is allowing us to be more aware of things affecting us, or that as a society we're simply more willing to complain about it.  So, our response time is shortened.

Edited by Carborendum
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On 4/29/2022 at 6:21 AM, Carborendum said:

Look at those patterns. 

Um, okay... 

I don't see anything that stands out in those patterns...

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Posted (edited)
10 hours ago, NeuroTypical said:

Um, okay... 

I don't see anything that stands out in those patterns...

I apologize.  I guess I'm more used to reading graphs than the average person.

 I've created a scaled graph for comparison.

2099587010_CompareCurves.thumb.jpg.21f57ef8db44b37503714116b006e73c.jpg

Black is the long game from Depression to Reagan.

At the beginning is the high and low of the depression.  The previous post will show where the post war prosperity kicked in.  The big mountain went up due to Eisenhower and Kennedy.  The peak was when Lyndon Johnson took office and went downhill from there.  Each President (Johnson, Nixon, Ford, Carter) all made REALLY BAD economic decisions.  That lasted from (Dec '65 / Jan '66) to Jul '82. 16.5 years.

Red is the more recent stock market activity.

We start from the Bush 42 era and the crash of '08.  The peak was at the Trump peak prior to the Pandemic.  If we can assume similar trends will continue (which is debatable) the only question we have is scale.

While minor items don't perfectly line up, the overall pattern shows some interesting comparisons. If we use "The Great Depression" and "The Great Recession" as comparative starting points (which is what the graph above is based on) we see the following comparisons.

Long-term:

  • Stock Market crash of '29 officially started in Sep '29.  But the downward spiral continued until Jun '32 (2.75 years).
  • We experienced recovery until Mar '37. (almost 5 yrs) 
    • Japan and China were at war.
    • Spanish Civil War
    • Hitler was in power and preparing for war.
  • Economic Stagnation until Pearl Harbor.  We saw a drop for several months until the US got geared up for war.  But the macrotrend was pretty stagnant until the end of the Korean War.
  • Eisenhower and Kennedy governed an era of prosperity.
  • We see a slow decline for about 9 years.
  • Then Stagflation of the 70s for 7 years.
  • Then Reagan pulls us out.

Recent:

  • The crash of '08 consisted of a downward trend of about 1 yr.
  • We experienced recovery.  But this period does not resemble the previous pattern.  We did not have WWII AFTER the crash.  We seem to have gone through that before the crash.  So, yes, big events can disrupt the overall pattern.
  • The Korean war can be considered analogous to our continued presence in the Middle East from a global economic perspective.  And this had an effect on the pattern.
  • We've seen prosperity like Eisenhower and Kennedy.
  • Now we're about to see a long-term recession.

Predictive:???  Using an approximate scale of 3:1

  • Slow decline for 3 years.
  • Stagflation for 2+ years.

Here there is a lot of interpretation on timelines.  We can consider 2020 as the beginning of the slow decline.  That would put the recovery date as 2025/2026.  That sucks.

One major thing that is worrisome:  The decline began because of many factors.  But it was exacerbated primarily by severing the last tie to the gold standard.  Carter took some REALLY bad steps with the Oil Embargo which made things worse.

Today, the only thing I can think of that would equate to taking us off the gold standard is to take us off the Petrodollar.  Biden actually made an effort to avoid this.  But I see political wheels turning because of reports surrounding the Russia/Ukraine war.  If that happens, it will be a doozy.

Edited by Carborendum
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I guess I’m torn.  On one hand, I firmly believe history repeats itself.  On the other, put a thousand people into a room who think looking at historical charts can predict the future, and you’ll have 995 wrong people, and 5 lucky ones.

I mean, folks who can predict future economic trends, can always make money off of those trends.  And folks with a track record of doing so, get watched and copied, to the extent that their behavior impacts the future trends.

 So I’m ambivalent.  Are you, like, putting your resources behind your predictions? Short sales, or moves into commodities, or something?

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1 hour ago, NeuroTypical said:

 

are you, like, putting your resources behind your predictions? Short sales, or moves into commodities, or something?

I've sold all my mutual funds.  I'm now watching the crypto market to determine a good point to jump in.  But it seems too volatile.  I can't really see any patterns that are repeating.

I may just ride it out.  But I'm considering just jumping in when the market goes down more than 15% from when I sold it.  That way, if it continues to go down, I at least saved that much im my portfolio.  And when it turns around again (in six four more years) I will be another year ahead.

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5 hours ago, NeuroTypical said:

I guess I’m torn.  On one hand, I firmly believe history repeats itself.  On the other, put a thousand people into a room who think looking at historical charts can predict the future, and you’ll have 995 wrong people, and 5 lucky ones.

 

 

I am ambivalent as well. 

If you wake up every day saying “A recession is coming” you’ll be right eventually, and you’ll be able to brag that you saw it coming. However that doesn't make you a prophet. 
 

That said, I think a recession is likely, especially if the real estate bubble bursts. 

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20 hours ago, LDSGator said:

I am ambivalent as well. 

If you wake up every day saying “A recession is coming” you’ll be right eventually, and you’ll be able to brag that you saw it coming. However that doesn't make you a prophet. 
 

That said, I think a recession is likely, especially if the real estate bubble bursts. 

Different industries are getting affected by different forces right now, and the Covid lockdowns didn't help.

Take, for example, the US comic book industry. Mainstream publishers were already bleeding sales because a large swath of writers, artists, and editors were out of touch with what audiences wanted, causing people to turn elsewhere for entertainment. This led to comic book fans taking their money elsewhere... that is, foreign titles, non-traditional titles (like collections of newspaper comic strips), and indie titles. That many of these options are more bang for the buck price-wise is further leading to people leaving the mainstream publishers behind. 

Most comic companies in the US relied on Diamond Comic Distribution for actual retail-level distribution pre-Covid, giving them a de facto oligopoly position. But when one of their three main warehouses was shut down as "non-essential", Diamond halted all national operations. This forced the mainstream publishers, and even some indies, to order "pencils down" as they were on margins so thin that they couldn't pay for completed work until sales and distribution re-started. I think indie house Alterna was the only real publisher to get any product out during the lockdown, as they had inadvertently developed a manufacturing and distribution system that was Covid-resistant. 

So now the industry is in crisis, but far too many mainstream publishers are refusing to recognize that there's even a problem in the first place and so aren't working to adjust their offerings and marketing mix accordingly. For them, the "recession" is already here, and likely going to last for a while. 

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I don't think it's really started yet.

In theory, gas prices rising suddenly and drastically generally predict a recession within the next 6 months to a year, and we've seen the high gas prices.

In addition, due to the Ukraine War, we see a reduction in oil and we know a great deal of wheat and food supplies (Ukraine feeds the East as does Russia) will probably be reduced in output.  This will create a lot less food which will possibly spike prices and cause financial turmoil.

If Inflation is to get under control, a SHARPER rise in rates needs to come.  Biden's administration probably has been reluctant to push these as they are hoping that they can hold it off till the mid-terms, but inflation isn't waiting that long.  Someone is going to need to spike the rates, or inflation will cause a similar effect anyways.

All of which point to a recession incoming.  No idea how bad it could be.  Some are saying it could spiral to a bigger recession (maybe depression) than the 2008 crisis.  Some say it will be minor. 

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On 5/3/2022 at 2:37 PM, Fether said:

This is the first economic down term I have been in since being married with kids!

how exciting :)

I felt the same way in 07, without kids of course. I remember thinking “This is our generation’s version of the great depression.”

Thankfully it wasn’t that bad. Hope you and your family are riding the storm out my friend. 

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  • 2 weeks later...

So, I just learned that a couple of weeks ago, (shortly after I began this thread) Jerome Powell (Fed Chair) has said that the economy is strong and "there is NOTHING to indicate that it is vulnerable to a recession."

Nothing?  We're already 75% of the way to a recession by the technical definition.  But nothing to indicate we're vulnerable to a recession?  SMH.

I guess I should just tell everyone to ignore me because I'm not a financial advisor or finance expert.  If the Fed Chair is saying there's not going to be a recession...

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1 hour ago, Carborendum said:

So, I just learned that a couple of weeks ago, (shortly after I began this thread) Jerome Powell (Fed Chair) has said that the economy is strong and "there is NOTHING to indicate that it is vulnerable to a recession."

Nothing?  We're already 75% of the way to a recession by the technical definition.  But nothing to indicate we're vulnerable to a recession?  SMH.

I guess I should just tell everyone to ignore me because I'm not a financial advisor or finance expert.  If the Fed Chair is saying there's not going to be a recession...

Everything is NOT Fine - The Governance Coach

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  • 4 weeks later...

OK. I've done it.  I got into crypto.  Just a small amount for now.  I think they will be somewhat stable for the next quarter, but may still go down a bit.

When higher inflation rates kick in, crypto will start to rise again.  But I believe Bitcoin is not the thing to get into.

I'm not offering financial advice.  I'm just raising awareness for others to take a hard look at what is happening in the economy and determine a strategy for themselves.  This is my method.  Everyone needs to find a method that will work for them.

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I've a little bit of mad money float around in crypto.  Looking for one of those fun 5x or 10x stories.  Deal with my wife - once it doubles, I'll take half out and pay ourselves back, then split the 'winnings' with her.  

I showed a $181 loss on my 2021 taxes, so that was nice.

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Posted (edited)

If you've seen what was happening to the market this past week, it's pretty clear that the stock market is in trouble. 

If the pattern holds, the low point for the DOW will be around 24,000 to 25,000.  So, we have quite a ways to go.  But just following the trend, we're looking at an overall downward trend until the fall at least.  I was hoping that it may partially turn around during the later fall.  But I don't think it will be significant.

Edited by Carborendum
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  • 2 weeks later...
Posted (edited)

So, it looks like the forecast for Q2 of 2022 hasn't changed in about 60 days. 

  • The first quarter had a -1.5% GDP* growth rate.
  • Second quarter is still forecast as +1.9%

So, unless something big changes in the next couple of weeks, it looks like I will be wrong.  No recession.  But that sure isn't a growth rate that is making anyone happy.

By the end of the year, they expect a year-over-year rate of 0.2% growth.  (cue Ben Stein) Wow...  I'm so happy we're not in an actual recession.**

 

* The numbers shown are "Real" GDP (i.e. they include the effects of inflation).

** My theory is that we really are in a recession. But TPTB are fudging the numbers *just a tictch" so we can be so happy to not be in a recession.

Edited by Carborendum
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  • 1 month later...
Posted (edited)

Welp, looks like those projections may be off by a bit.  The reality was just reported.  We're apparently in a recession. But I can't find the numbers to back it up.  Why is no one posting the numbers?

Here is a Forbes article on what a recession actually is.

Finally found an official site with GDP growth.

https://data.oecd.org/gdp/quarterly-gdp.htm#indicator-chart

2nd quarter was +0.24%... Gee, I'm so excited we're not in a recession.

This bank offers its data 

https://data.oecd.org/gdp/quarterly-gdp.htm#indicator-chart

Their number is not a quarterly number.  I believe they're saying that the Year-over-year GDP growth was -1.6%  That would mean that the 2nd quarter (including a couple weeks of July) show an overall shrinking of the economy for over 6 months.  That's a recession.  Thankfully, it isn't a very deep one.  1.6% at least gives us a buffer from a depression.

I'm not predicting a depression, yet.  But if Biden keeps doing some of the things he's proposing, it will become a depression.  And it won't be the normal 2 year lag.  We'll see market reactions within a month.

EDIT: Apparently, these are all unofficial numbers.  We still don't have the "official" number until the 28th.  We'll see.

Edited by Carborendum
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4 hours ago, Carborendum said:

Welp, looks like those projections may be off by a bit.  The reality was just reported.  We're apparently in a recession. But I can't find the numbers to back it up.  Why is no one posting the numbers?

Here is a Forbes article on what a recession actually is.

Finally found an official site with GDP growth.

https://data.oecd.org/gdp/quarterly-gdp.htm#indicator-chart

2nd quarter was +0.24%... Gee, I'm so excited we're not in a recession.

This bank offers its data 

https://data.oecd.org/gdp/quarterly-gdp.htm#indicator-chart

Their number is not a quarterly number.  I believe they're saying that the Year-over-year GDP growth was -1.6%  That would mean that the 2nd quarter (including a couple weeks of July) show an overall shrinking of the economy for over 6 months.  That's a recession.  Thankfully, it isn't a very deep one.  1.6% at least gives us a buffer from a depression.

I'm not predicting a depression, yet.  But if Biden keeps doing some of the things he's proposing, it will become a depression.  And it won't be the normal 2 year lag.  We'll see market reactions within a month.

EDIT: Apparently, these are all unofficial numbers.  We still don't have the "official" number until the 28th.  We'll see.

https://en.wikipedia.org/wiki/Maslow's_hierarchy_of_needs

Abraham Maslow postulated that for the average human being, there's a general order of precedence when it comes to what a person seeks after, and that most people won't move to seeking anything higher until they've sought after the more basic.

The most basic of these needs are what he calls the "survival" needs - oxygen, water, food, sleep, physical safety, shelter, a mate - and are so essential for living that the average person will drop everything if any of these are in danger of not being met.

Right now, between inflation, the supply chain shortages, the spike in fuel prices, and a lot of other issues that are all fusing together into one giant mass, a large swath of the United States has been pushed back down to the "survival" needs level. People are struggling to find and keep jobs (there's a great mismatch between what the market needs and what many people are trained for / willing to do), and those who do have jobs are finding it harder to make ends meet even if the basic supplies they need are available. 

Much to the chagrin of various pundits and politicians, folks are indeed dropping everything to focus on their survival.

"Why do you care so much about gas prices when abortion is in danger?!" many a pundit has shouted, inadvertently indicating that they have the means to where they're insulated from rising prices.

"If you're that upset about gas prices, just buy an electric car!" several politicians have declared, not understanding that the person who is struggling to pay an extra $1.50 / gallon can't afford the $48K for a new vehicle or that public charging facilities are rare outside of select major cities. 

Whether the folks in office want to admit it or not, this November is largely going to be based on the question of "Am I, as a citizen, meeting my survival needs, and if not then who is responsible?". When that becomes the dominant question going into an election, the party in power has good odds of being unseated in the belief that they did nothing while the problem got worse. 

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People really don't want to hear the "r" word.  There's always been an emotional reaction to such news.

I remember decades ago, an economist was set to testify in congress about the economy.  Some of the behind-the-scenes dealings leaked out - not sure if the story is true or not.  Apparently TPTB were using all the pressure they had, to keep the economist from saying the word "recession" in his testimony.   So he ended up using the term "banana" to reflect the shape of the curve of whatever was being measured. 

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15 hours ago, NeuroTypical said:

People really don't want to hear the "r" word.  There's always been an emotional reaction to such news.

I remember decades ago, an economist was set to testify in congress about the economy.  Some of the behind-the-scenes dealings leaked out - not sure if the story is true or not.  Apparently TPTB were using all the pressure they had, to keep the economist from saying the word "recession" in his testimony.   So he ended up using the term "banana" to reflect the shape of the curve of whatever was being measured. 

The thing about The "R" word is that what Biden and Janet Yellen are saying is technically true, but it is being put forth in a highly propagandist manner.

The "Standard Definition" is two consecutive quarters of negative GDP growth.  But like many technical things, and especially with very complex things like the economy, there are multiple definitions/measures of a particular condition.

While, technically, you can say that you're using a different measure to determine if it is depression, you can't deny that the standard definition is, in fact, a valid definition.  And that is exactly what they're trying to do.

So, if we're being completely open and honest, the best they can possibly say is,"Well, by one measure, it seems we may be in a recession. But we have other metrics that seem to indicate we're not quite there."

With that in mind, a great public speaker could turn that around and say "hope is not lost..." kinda thing.  And that might rally the people to be more positive.  But

  • Biden is not that guy.
  • Whether we're at -0.1%, or 0%, or +0.1%, does it really matter?  The economy is freaking weak right now.

We'll see in a couple of days.

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2 hours ago, NeuroTypical said:

You know you’re in trouble when CNN even calls you on it.

 

The simple truth of the matter is that more mainstream Democrats are calling out others within their own party. 

The insistence upon using -x as a suffix when speaking to Latino audiences is causing many individuals who identify as Latino to switch party affiliations because that suffice is nothing short of cultural imperialism. 

The whole "You can just buy an electric car!" is rapidly becoming "Let them eat cake!" as the Democrats in more rural areas realize that the people who are having the most trouble paying for gas are the ones least capable of buying an electric car. 

Open borders is being scapegoated as the cause of a whole host of social ills, including drug running and the 50+ people who died in that semi trailer.

People who are struggling to make ends meet are being told that they *should* care more about abortion, because "food is temporary". (Yes, someone used those words with me.)

Et cetra. 

The more mainstream, more moderate part of the party is seeing the writing on the wall: if the more activist, more socially isolated members of the party don't start listening to the general public then the party is doomed to irrelevance come election time.

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As it is...

On Monday I was helping my mom do errands, and as part of it we walked through the local H-E-B Plus grocery store here in town. 

They had a great many items on clearance, and as we were there in the afternoon most of them were gone. 

These included household staple goods, such as unpopular flavors of Hamburger Helper and Tuna Helper. 

Fortunately, the clearance tags were still on the shelves, letting us know that the store was likely *deliberately* allowing its inventory of certain products to run out. Given the large number of metal container units out behind the store and a number of other factors, we suspect that the store is due for renovations, and that the powers-that-be have decided it's easier to clear things out than try to move it back and forth. 

I can only imagine, however, what people likely would have thought had they not seen these things, the panic it would have potentially caused. We have a Wal-Mart Supercenter that has a grocery side, and a few other stores in town also sell groceries. But H-E-B Plus is the main store, and so if they were running low on items it likely would have spooked much of the city. 

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