So, are we in a Recession or not?

[Averageman]

Well they've got The Big Guy" locked in the basement with COVID-19, it would seem twice in a row.
I'm pretty sure they've locked him away so he doesn't further expose what's going on by putting his foot on his mouth again.
I'm anxious for them to come to terms with some Monkey Pox next. That would let the cat out of the bag.

[The_War_Wagon]

Of course not - that's why Biteme has a plan to defeat what's not there!

[Backfire]

Incredible that some can't turn their head left and right to see and feel what's going on, instead putting a thumb in their butt and one in the mouth waiting for someone to yell switch.

[okie]

About the only metrics by which we're not in a recession are jobs and manufacturing. But both of those are tanking as we speak, so by the time the official GDP numbers come out in September things are likely to be a lot clearer. If I were betting man, I would wager inflation will get revised up and GDP down (possibly by a lot).

There are two metrics currently that are extremely suggestive of a recession. The main one is real wages. The other is labor participation, especially when broken down. What we're seeing is that careers got replaced by service sector jobs during the pandemic and subsequent "recovery," and real wages going down confirms that notion.

That's the very short version of a very long story, but my guess is there will be widespread acknowledgement of a so-called double dip recession by the end of September. Part of that perception will depend on what the markets do, and whether the bear market rally persists. With companies all over the place laying off around 10% of their workforce, though, that's not suggesting high expectations for earnings, which is bring stock prices down further. The S&P has also run into pretty serious resistance, which rejected a move higher this week.

Sentiment is another place to keep an eye on. Consumer sentiment is very bad right now, which is understandable. One thing I see that's alarming is people are hoarding cash in their checking accounts, which is suggestive of very high fear levels in response to CPI inflation. In inflationary environments, the end is generally marked by consumers hoarding cash defensively, and generally precedes price rejections and disinflation/deflation. Interest rates seem to be rolling over, too, which is further suggestive of price rejection and the beginning of disinflation.

Another alarming sentiment trend is builder sentiment. Despite low inventory and ostensibly high demand for homes, builders have come to a screeching halt. The HGX is tanking, meaning building is slowing dramatically. Lumber is also nearing break even levels, meaning the mills will soon go into curtailment. So much of the wealth of the middle class right now, and even their very solvency, is predicated on extraordinarily high home values. If home values return to baseline, that lost equity will take out most of the wealth held by the middle class, and many will be underwater. While HELOCs were low, forbearance was high, and represents the same end by different means as the HELOC of 2008 fame.

In summary, off the top of my head, I'm thinking there's maybe a 75% probability against the fed's soft landing being successful.

ETA: There's also this:



This kind of illustrates the absurdity of talking about technical recessions in the first place. Until we climb out of the hole we dug in 2008, we could be talking about 10% GDP growth and STILL be behind the curve. Failure to keep up with trend IS contraction, and while any growth is a step in the right direction, it's irrelevant if the train you're trying to catch is accelerating faster than you are. Just to get back to where we were prior to 2008, we would need to see per capita GDP somewhere around 75-80k.

Furthermore, we need to see about 10% growth just to call ourselves recovered from the pandemic crisis. And that wouldn't even be anything to celebrate, it would just mean that disaster had been averted for maybe another decade.

If you're having trouble wrapping your head around that chart, basically what it's showing, by implication, is the middle class losing wealth.

[rocsteady]

Never fear kids, uncle joe and his wonderful fellow dems have passed a spending bill whose ridiculous size is only outmatched by its ridiculous intentions. 87,000 new IRS agents?? IRS budget from $12 million to $80 million?? That doesn't sound good. Now you see why they were buying $700K worth of ammo and arming up earlier. No problem for citizens there. Billions that will be absolutely wasted, with zero to show for it on "green energy" initiatives. Oh, but don't worry, it'll make the recession worse and more expensive for all of us, so there's that?

[markm]

Never fear kids, uncle joe and his wonderful fellow dems have passed a spending bill whose ridiculous size is only outmatched by its ridiculous intentions.

You can pretty much take the name of any legislation and see that it actually does the opposite.

[okie]

Never fear kids, uncle joe and his wonderful fellow dems have passed a spending bill whose ridiculous size is only outmatched by its ridiculous intentions. 87,000 new IRS agents?? IRS budget from $12 million to $80 million?? That doesn't sound good. Now you see why they were buying $700K worth of ammo and arming up earlier. No problem for citizens there. Billions that will be absolutely wasted, with zero to show for it on "green energy" initiatives. Oh, but don't worry, it'll make the recession worse and more expensive for all of us, so there's that?

I've been telling people to prepare for this for over a year now. I've probably even made half a dozen posts in as many different threads here about it. When the recession does hit, the government is going to need every penny it can get its hands on to fund itself, and all of its entitlements (and likely expand/extend/create new ones). Not only is it going to test existing federal entitlements to their limits, the states will likely not be able to fund their own programs and require federal assistance.

[FromMyColdDeadHand]

Yes, I’d say.

Plastics prices are all down, based on demand.
My supply chain guy just sent out a graph pack of common industrial metals prices, and they are all dropping- 16 for 16. That isn’t random.

If demand for plastics and metals is dropping, there has to be a drop in economic activity. Granted, we are getting back to more of a services than good economy, but that transition won’t be smooth.

[chuckman]

https://www.foxbusiness.com/economy/...ar-record-high

https://www.foxbusiness.com/economy/...-shaky-economy

Jobs 'may' be up, but contraction continues to worsen.

[okie]

Yes, I’d say.

Plastics prices are all down, based on demand.
My supply chain guy just sent out a graph pack of common industrial metals prices, and they are all dropping- 16 for 16. That isn’t random.

Doctor copper says you're right.

If demand for plastics and metals is dropping, there has to be a drop in economic activity. Granted, we are getting back to more of a services than good economy, but that transition won’t be smooth.

So interestingly enough, the countries normally associated with production of goods are basically at a standstill. Very little output from China right now, and even more concerning they're no longer importing the raw materials they need to make the stuff in the first place. So in other words not much coming out, and apparently no immediate plans to increase production. Based on their demand for raw materials, it's looking like their manufacturing will slow down even more than it already has.

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