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Predicting something 2-3 years early is not a "prediction", it's a failure to predict. I'll suggest better predictors of the health of the economy would be 1)

Predicting something 2-3 years early is not a "prediction", it's a failure to predict. I'll suggest better predictors of the health of the economy would be 1) Record domestic manufacturing output, 2) Most energy security in history (US is now a net exporter of oil), and 3) lowest unemployment since 1969. The US Economy is firing on all cylinders and I wouldn't be surprised if a strong economy runs for another 2-5 years. This is not all that unusual, since the US is returning to a historical average GDP growth rate of 3-4% after an abysmal decade of 1-2% growth.

dragontamer 8y ago
> 3) lowest unemployment since 1969 What was the US's unemployment in 2007, before the crash? It was 5%. https://www.bls.gov/spotlight/2012/recession/pdf/recession_bls_spotlight.pdf https://www.bls.gov/spotlight/2012/recession/pdf/recession_b... Recessions CAUSE unemployment. You've got cause-and-effect backwards. First comes recession, THEN comes unemployment. Usually, unemployment happens as the recession recovers. In 2009, unemployment was 10%. But guess what? The recession was over, and 2010 was one of the best recoveries of all time. > 1) Record domestic manufacturing output That's practically a tautology. When US GDP shrinks (and a large portion of GDP is manufacturing), you have the DEFINITION of a recession. -------------- You're looking at historical indicators of a Recession. IE: When everyone is unemployed and the factories are closed, we can look back and say "Yeah, a recession happened 6 months ago". But there's literally NO predictive power in those two attributes. ------------ > 2) Most energy security in history (US is now a net exporter of oil) While this is likely good policy, it doesn't seem to be indicative of recessions or not. Case in point: we've grown incredibly in the 1950s when we were importing oil. The 80s and 90s were also built on top of foreign imports, but that didn't stop the economic boom times.
checkyoursudo 8y ago
> Predicting something 2-3 years early is not a "prediction", it's a failure to predict. Why do you say that?
- snowwrestler 8y ago
  Predicting the economy will experience a recession is like predicting a person will die: you'll be right eventually, but without knowing when, you can't do much useful with that information.
  - dragontamer 8y ago
    IMO, this is the time for policy makers to start to debate policy changes. It takes over a year for tax laws to have any effect for example, and maybe 2 or 3 years before tax laws really kick in and affect the economy. (First year, people will be typically surprised at their new refunds instead of really spreading it over the year) Trump's Tax Cuts were written into law in 2017, but only these months (tax season 2019) is when people are fully understanding the scope of the tax law, as it hits our pocketbooks. A surefire predictor within 2-years or so is good for policymakers, but probably bad for traders.
dv_dt 8y ago
I think before you can declare any indicator a success or failure, you need to put into context what decision you are trying to make off the indicator. If you are trying to decide wether to dump all your stocks into treasury bills in the next 90 days, but before an actual recessionary drop, then yes it's a poor indicator (and likely there is no indicator to answer this question). But if you're looking at a long term allocation of your assets, or a corporation trying to plan investments long term then maybe it's relevant. It's hard to look at the long run GDP rate (from the50's on) and think we're going to return to past rates until we fix our inequality problem. They've been inversely related for multiple decades now.
deleted 8y ago
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dragontamer 8y ago

> 3) lowest unemployment since 1969 What was the US's unemployment in 2007, before the crash? It was 5%. https://www.bls.gov/spotlight/2012/recession/pdf/recession_bls_spotlight.pdf https://www.bls.gov/spotlight/2012/recession/pdf/recession_b... Recessions CAUSE unemployment. You've got cause-and-effect backwards. First comes recession, THEN comes unemployment. Usually, unemployment happens as the recession recovers. In 2009, unemployment was 10%. But guess what? The recession was over, and 2010 was one of the best recoveries of all time. > 1) Record domestic manufacturing output That's practically a tautology. When US GDP shrinks (and a large portion of GDP is manufacturing), you have the DEFINITION of a recession. -------------- You're looking at historical indicators of a Recession. IE: When everyone is unemployed and the factories are closed, we can look back and say "Yeah, a recession happened 6 months ago". But there's literally NO predictive power in those two attributes. ------------ > 2) Most energy security in history (US is now a net exporter of oil) While this is likely good policy, it doesn't seem to be indicative of recessions or not. Case in point: we've grown incredibly in the 1950s when we were importing oil. The 80s and 90s were also built on top of foreign imports, but that didn't stop the economic boom times.

checkyoursudo 8y ago

> Predicting something 2-3 years early is not a "prediction", it's a failure to predict. Why do you say that?

snowwrestler 8y ago
Predicting the economy will experience a recession is like predicting a person will die: you'll be right eventually, but without knowing when, you can't do much useful with that information.
- dragontamer 8y ago
  IMO, this is the time for policy makers to start to debate policy changes. It takes over a year for tax laws to have any effect for example, and maybe 2 or 3 years before tax laws really kick in and affect the economy. (First year, people will be typically surprised at their new refunds instead of really spreading it over the year) Trump's Tax Cuts were written into law in 2017, but only these months (tax season 2019) is when people are fully understanding the scope of the tax law, as it hits our pocketbooks. A surefire predictor within 2-years or so is good for policymakers, but probably bad for traders.

dv_dt 8y ago

I think before you can declare any indicator a success or failure, you need to put into context what decision you are trying to make off the indicator. If you are trying to decide wether to dump all your stocks into treasury bills in the next 90 days, but before an actual recessionary drop, then yes it's a poor indicator (and likely there is no indicator to answer this question). But if you're looking at a long term allocation of your assets, or a corporation trying to plan investments long term then maybe it's relevant. It's hard to look at the long run GDP rate (from the50's on) and think we're going to return to past rates until we fix our inequality problem. They've been inversely related for multiple decades now.

deleted 8y ago

[deleted]