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:marseyhappening: Yes, a recession looks inevitable. But it may not be that bad. Here’s why :marseypoor:

latimes.com

Why are journos like this lmao :marseyxd:


Whether it’s President Biden insisting a recession is avoidable or his critics arguing that the wolf is at the door, both sides are acting as if the nation faces an unprecedented catastrophe.

Partly it’s political theater — Biden fighting on behalf of an already beleaguered presidency and many of the doomsayers hoping a downturn could be the coup de grace for Democrats.

Behind the rhetoric, the reality is that recessions are a normal part of American economic life. The U.S. has had one, on average, every 6½ years since 1945.

And in the present case, most professional economists think any downturn now is likely to be relatively mild, with a fairly quick recovery.

“We’re calling for a small ‘r’ recession,” said Jack Ablin, chief investment officer at Cresset Capital. “It means it’s not going to be protracted and things aren’t going to fall apart,” as they did during the Great Recession and again in 2020 when the pandemic struck.

Many households are flush with cash, and jobs are plentiful with demand for new workers strong. Banks are well capitalized, which gives them a solid buffer against a business contraction.

What may be different this time is the public’s state of mind, coupled with a handful of unusual factors — first among them the grinding war in Ukraine.

For most Americans, the pandemic and its accompanying economic upheaval came after an extraordinarily long period of relative economic stability.

The economy was not growing much and real incomes were stagnating, but unemployment was low among most population groups, prices were stable, interest rates were at rock bottom and stores were flooded with low-cost goods made overseas.

Most people had adjusted to the status quo.

So the COVID-19 downturn hit like a thunderbolt, and the outbreak of inflation — driven largely by consumers suddenly beginning to spend their pandemic-induced savings — was another jolt to popular expectations.

Now, economic indicators look primed for a recession. The broad-based Standard & Poor’s 500 stock index is down more than 20% since its high Jan. 3. U.S. consumer confidence has sunk to record lows, thanks largely to high inflation. Retail spending, home-building and manufacturing output all declined last month.

And consumers, who drive the U.S. economy, are starting to cut back on discretionary purchases, things such as appliances and services.

Tom Straus, owner of Straus Carpets in Oakland, has seen a sudden drop-off in orders for new flooring jobs at homes in the San Francisco Bay Area. Typically his commercial business includes about $1 million in projects for schools during the summer; such orders so far this year total just $30,000.

“Our future work is diminishing,” he said.

Many other leaders of businesses, small and large, as well as workers, are bracing for harder times, with fears stoked by the Federal Reserve’s plans for more fat interest rate increases to combat high inflation.

“We’re skating on the edge of recession, especially with the Fed bringing out these big guns,” said Christopher Rupkey, chief economist at the financial market research firm Fwdbonds.

Larry Summers, Harvard economist and former Treasury secretary, notes that whenever inflation tops 4% (it was more than double that in May) and unemployment drops below 4% (it was 3.6% last month), that’s an indication of an overheating economy that in the past has always brought recession within a year or two.

Whether inflation is avoidable, the real question may be: How bad and how long will the next downturn be?

And on this score, there is greater consensus among experts that it’ll probably be nothing like the most recent episodes.

One common definition of a recession is two consecutive quarters of negative economic growth, that is, shrinking gross domestic product. But an official designation is made by a nonprofit research organization, which looks at a broad set of data and declares a recession, usually months after it’s begun.

The Great Recession that began in late 2007 lasted 18 months — the longest in 90 years — and was also one of the deepest. Millions of Americans lost their jobs and homes after the real estate bubble burst and large banking companies cratered. The unemployment rate shot up to 10%.

The pandemic-inflicted recession in 2020 was the shortest on record, just two months from peak to trough, according to the National Bureau of Economic Research. But the sudden collapse in the economy was unparalleled as businesses across the country closed and consumers sheltered in place for weeks. Some 22 million jobs evaporated between February and April that year.

The rebound since then has been fast and strong, largely because of unprecedented government aid to households and businesses. Several rounds of stimulus checks helped boost consumer spending and demand, contributing to higher inflation. Much of that money hasn’t been spent yet, which will provide a cushion for many households.

Americans overall had excess savings of $2.7 trillion in the first quarter, according to Moody’s Analytics’ calculations based on Fed and other government data. Although more than half of that was held by households in the top 10% of income, those in the bottom 20% had on average about $5,700 more cash in hand than they otherwise would have without the federal aid and the effects of the pandemic.

Those extra savings, along with historically low household debt and loan-servicing burden — many homeowners locked in low mortgage rates before the recent increases — suggest that most people are better positioned financially and could help make the next recession milder.

At Bank of America Institute, economist David Tinsley saw a noticeable uptick in BofA customers using their credit cards last month, as was the case at many banks. High gas prices, he says, are hitting lower-income families hard and also cutting into spending for goods.

But looking at BofA customers’ savings deposits and checking account balances, Tinsley said, “households continue to have high buffers relative to before the pandemic.”

For John Barone, 58, the difference between where he was on the eve of the Great Recession and today is like night and day.

In 2007, he was running his own home renovation business in Baltimore, making payments on a $1-million loan. When the housing market crashed, he laid off 20 workers and eventually lost his business, his home and his wife.

Today Barone and a business partner operate out of Washington, D.C., giving tours with their seven golf carts. His business debts are modest — $32,000 in bank loans for two electric vehicles. Barone has seven seasonal workers and lives modestly in an apartment on Capitol Hill. “I don’t have a car, don’t have to buy gas,” he said. “I go to the day-old bread shelf and buy my bread for half price.”

Barone is more sanguine than most. Nationally, small-business owners were asked last month by the National Federation of Independent Business how they see conditions over the next six months. The result was the lowest reading in 48 years.

At larger companies, a May survey of 750 top executives by the Conference Board found that more than 60% of them see a recession coming or already here. Both surveys, however, suggest employers aren’t sure what that may mean as far as employment and potential for layoffs.

Many employers are still struggling to fill job vacancies and could be reluctant to let go of workers right away. The jobless rate stood at 3.6% in May, a notch above the half-century pre-pandemic low, and there are still nearly two job openings for every person officially unemployed.

New unemployment claims, a proxy for layoffs, have been edging higher in recent weeks but remain low by historical standards. Job growth in May was the slowest in 12 months, but still a robust 390,000.

“Of course we’re slowing down, but let’s remember how fast we had been growing,” said Carl Tannenbaum, chief economist at Northern Trust in Chicago.

One thing that worries Tannenbaum is the risk of knock-on effects from the Fed’s move to jack up interest rates. The pivot has already taken a big bite out of the U.S. housing market, but the tightening by the Fed and other central banks could also slam developing countries and the global economy as investors reshuffle funds. That could circle back to drag down the U.S.

Economists say the Fed misread the threat of inflation and was slow to abandon its easy-money policies, but it’s now racing to catch up and raise its benchmark interest rate aggressively to cool demand and slow growth, including in the job market.

“I think they’re seeing it like the worst of two worlds — either stagflation or recession,” said Beth Ann Bovino, chief U.S. economist at Standard & Poor’s Ratings Services. Stagflation — a condition of high inflation and stagnant activity — plagued the economy in the 1970s and ended only after the Fed raised interest rates high and drove the economy into a deep doubled-dip recession in the early 1980s.

“My belief is that in order to avoid stagflation, I think they would risk the economy and go for the recession rather than suffer stagflation for however many years,” Bovino said.

Jeffrey Korzenik, chief investment strategist at Fifth Third Bank in Tampa, Fla., said the country will avoid a recession, barely, largely because of the strength of the labor market.

He figures the Fed’s tightening will create more layoffs but said, “We have so many openings, it’ll be easier to get workers recycled into the job market. It’s not bulletproof, but it means the economy is less likely to fall off a cliff.”


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:#marseybiden2:


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It’s not real and if it is then it’s not that bad and also your fault


I don’t use my signature. This could be YOUR ad space :marseyexcited:

The way they keep blaming inflation on people spending their stimulus checks and not on the government for issuing them is truly baffling. They do it multiple times.

I have not seen one article blaming stimmys for inflation, it's completely Russia at this point

Shutting down the entire world fpr 2 years has no effect on the economy. This all putins fault

It's funny cause it's the US's choice to sanction Russia and back the futile resistance to Russia's invasion of Ukraine. We have to back up our reputation of backing the wrong groups and being a 60+ year lolcow for foreign policy.

Are you fucking r slurred r*ssia literally gave up on because slav BIPOCs dont havet the IQ to win anything.

Most coherent russophobe

:#marseystroke:

or sanctioning Russia harder than Hitler ever was

Many households are flush with cash

stopped reading after that lie :marseywagie:


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These journoswine have no kids of their own and only have to feed their heckin-cute rescue doggos so of course their worthless dollar goes further than ours.

Imagine being poor lmao

Lucky for me my mum gives me a weekly allowance so I can afford new switch games.

Isn’t like the first principle of journoing that doomed posting brings in so many more people the happy posting

Yup sensationalised headlines are essential and work because everyone's a secret dramatard. Journoscum's still journoscum though

:#marseyjourno::#marseymini:


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That's the second principle. First principle is to be a partisan r-slur and cape for your team no matter how bad they fuck shit up.

The media has been so much tougher on Biden than Trump :marseyclueless:

If you have a steady career and have spending money, a recession isn’t that bad tbh. Clothing is cheaper, car deals are good, and housing becomes affordable to buy. Now if you’re jobless when the recession hits then that really sucks because jobs dry up during a recession.


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I'm just hoping the housing market will crash faster than inflation can devalue my savings, I'm sitting on an uncomfortably large pile of cash rn.

Hi @TheGuntForRedCocktober,

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Yep. My job is extra secure during a recession since that's when my company makes higher profits. If there's a deep recession then it's very likely I can buy a very nice house and retire shortly after it ends.

So fuck it. Accelerate this shit.

Repo man?

If so

:gigachad2:

Tempest's job is massaging Soros' ballsack.

Part of why I’m glad to be a pharma bro. This recession hitting means an uptick in QOL, not the other way around

there needs to be a lasting period of higher unemployment

Why contain it?

:marseybobpage:

So if LA Times is running with it I assume it's too late to make any money off of this?

I paid a lot for this knowledge, gretas, so listen up

Economic theory as a field has never been predictive, but rather watches the giant fuck ups and RETROSPECTIVELY tries to explain it.

The modern left has allowed itself to become anti-econ theory. This is exciting, events will test the modern macro theory consensus and the people in charge do not believe in the system. A better test could not be designed.

:#marseychartscatter::#marseypopcorn:

i had a phone it in substitute cause the actual teacher was out for the semester in highschool, learned barely anything, and got a 4 on the AP test. that should tell you all you need to know about the legitimacy of economics

the fundamentals boil down to hurr durr supply vs demand :grugthink: and then you have a bunch of r-slurs doing "TA" on random lines in a graph or trying to find patterns that fit the narrative. sounds alot like astrology foids :ramonajak:

I do agree though there's a giant crash coming, but I'm not r-slurred and have enough money saved to compensate and take advantage :marseywallst:

Thanks for your input, Greta. You're exactly the uneducated 'expert' I'm talking about.

As I say, the test is upon us. Exciting.

(Highschool example, couldn't have been better, thanks)

lol act smug all you want dork, economist have no idea what their talking about

Learn to code and prove literally anything you're saying and then we'll talk

Ooo, hit the mark, didn't I, Greta?

Nah, it's cool, keep playing yer role, copy pasting GitHub is still needed (well, for a short while yet at least)

I'm gonna act in "good faith"

are you saying economists are more valuable than even a code monkey?

![](https://media.giphy.com/media/TD0NYrLpcnsTm/giphy.webp)

also i have no idea what a greta is, speak english motherfucka

Put it this way, do the codecels or the econcels run wall street? Not who does the work to make the money, their bosses who run shit?

It's been an easy ride for Econ theory the last 40 or so years, even the GFC 'fits' RETROSPECTIVELY into the models. So easy everyone assumes it's the way it is.

And now, the test. Fuck yeah

(No shit, don't know who Greta is? That's a kinda impressively large rock to live under, no shit. The teen-ager who yelled at everyone about climate shite, ring a bell?)

its completely backwards at the top, as it is in pretty much everywhere. I concede that point

Pay scales v worth is exactly right, this is kinda like digging holes vs knowing where to dig holes. Skewed af too, but there's a true concept there

More comments

The thing I was able to notice without taking on a 100,000 dollar student loan debt is: if people in or adjacent to the Deep State admit a recession is coming but it won't be bad, then we're already in the middle of it and it's gonna be a crusher for all but them.

*lots of money but not America style

But you have hit the nail right on the head. Central bankers have to talk funny and all 'maybe' because otherwise they make it worse. I agree it's likely worse than they are saying and it's gunna be real fucked too

IF IT SAVES EVEN ONE HOHOL LIFE

you dont even live here, you can just laugh at us from across the great ocean.


"It tis, it tis, a glorious thing to be a Major General"

Nah, it inevitably would affect us down the line but on the bright side cheap stonks :marseyhmm::marseycheerup:


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I think China locking down constantly like insane r-slurs should affect you more, no? Or are you getting boatloads of rich chinxfugees?

Lol I dono if the lockdowns are as bad as it's reported tbh, the waifu's online shopping from China still ships pretty fast and yeah chinxfugees are still aplenty in the casinos :marseyshrug: I don't play the chinx stonk markets or anything because I don't trust them (lol) so I wouldn't know


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Ah no I meant more like Singapore's total economy being more dependent on China than on the West. China and Hong Kong combined account for a quarter of your trade.

journ*lists deserve nothing but suffering; I hope the upcoming second great depression leads to them all being homeless and that they get repeatedly assaulted by their fellow bums.

:#marseydetective:

Snapshots:

:#marseyscared:


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Look here is the deal. As long as your unemployment rate is below 5% you are still living in a world better than USA in 2007.

I mean, the article isn't wrong. And I certainly prefer it to the "recession is because of corporate greed" shit that Reddit loves.

Damn, I thought recessions came along at random every few decades, but now I realise there's factors that trigger them I have to throw my hands in the air and accept it willingly.

Gib cheap stonks crypto and houses pls

!blackjack190

:#marseygambling:


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Have you tried not being unlucky?