10 ms·

> Real gross domestic product (GDP) decreased at an annual rate of 0.9 percent in the second quarter of 2022 (table 1), according to the "advance" estimate rele

by yuan43 4y ago

> Real gross domestic product (GDP) decreased at an annual rate of 0.9 percent in the second quarter of 2022 (table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP decreased 1.6 percent. That makes two back-to-back quarters of real GDP contraction. To some, this is a recession, but it's the NBER that puts the stamp on it. AFAIK, NBER has never failed to put the recession stamp on back-to-back drops in GDP. It's worth noting that yield curve inversion predicted recession four months ago: > The 2-year and 10-year Treasury yields inverted for the first time since 2019 on Thursday, sending a possible warning signal that a recession could be on the horizon. https://www.cnbc.com/2022/03/31/2-year-treasury-yield-tops-10-year-rate-a-yield-curve-inversion-that-could-signal-a-recession.html https://www.cnbc.com/2022/03/31/2-year-treasury-yield-tops-1... It's also worth noting that 2y-10y yields have been deeply inverted (~20 basis points) for most of July and are in that state today. Still one more thing to note: the earliest warning signal of them all appears to be an inversion of the eurodollar futures curve: https://www.reuters.com/business/finance/eurodollar-futures-market-betting-hawkish-fed-could-ease-rates-slightly-2024-2022-02-18/ https://www.reuters.com/business/finance/eurodollar-futures-... It started inverting last year. The inversion steepened. It is now in a very deep inversion in the long end that is marching steadily to lower maturities.

_marlowe_ 4y ago
2-10 spread went through the pre-GFC record of -28 bps a day or two ago.
- djbusby 4y ago
  GFC = Global Financial Crisis (2007-08)
- NovemberWhiskey 4y ago
  I'm a little sanguine about the inverted yield curve as a real signal this time around, to be honest. We're in an environment of very rapidly rising short-term interest rates, specifically as the Fed attempts to try to manage inflation; with back-to-back 75 bps increases. That tends to have a curve flattening effect as the yield curve is nominal; short term yields rise more than longer tenors if the market believes that inflation will decrease as real yields will be higher.
melling 4y ago
Doesn’t a Fed typically lower rates during a recession? At least at some point, in order to bring a country out of the recession.
- bandyaboot 4y ago
  Though not unprecedented, they're typically not fighting inflation and a recession at the same time.
- jacobmarble 4y ago
  In this case, the Fed is stimulating a (hopefully mild) recession, by raising interest rates, in order to bring inflation down.
  - njarboe 4y ago
    Until rates are above inflation (now around 8%) I would say the Fed is still pumping up the economy, but it's hard to see the Fed push up rates to that level like Volker did the last time the US had high inflation. The Fed set the federal funds rate at 20% in June of 1981 when inflation was about 15%. If the US has to finance much of its debt at 15% something will seriously break.
    - VictorPath 4y ago
      In 1974, President Ford had Whip Inflation Now buttons printed up, and 1981 was seven years later. So Volcker's dramatic raise was in that context. Whereas people are more used to a more moribund economy since 2008 with very low interest rates, inflation, and lots of QE, with the subprime bailout followed by the Covid stimulus. Actual non-negligible inflation and an actual interest rate is something people have started seeing more recently.
    - dageshi 4y ago
      From what I recall there was a fairly long period pre Volker where there were very half hearted attempts to get inflation under control without going for the kill so to speak. I think the Fed knowing that history will try to kill it dead first time, because if they don't they know they'll likely have to go even higher with interest rates at the second attempt and the higher they're forced to go the more danger there will be to US financing operations as you say.
foobarian 4y ago
Is there some science to these observations or are we just reading tea-leaves post-facto?
NeverFade 4y ago
> To some, this is a recession Not "to some", two back-to-back negative GDP stats has been the definition of a recession for my entire life. Now suddenly it's questionable, because the current administration would like to shrug away its failures, and too many in the media are helping them do it. This ad-hoc re-definition of language to suit political purposes is scary and Orwellian.
- citilife 4y ago
  [flagged]
  - jodrellblank 4y ago
    Nothing says Orwellian Dictatorship like change brought by a "30,000-strong petition", right? Nothing says Ministry of Truth more than "expanding the dictionary", based on "real world examples of use", eh? (Hint: newspeak was not adding more to the language, was not based on real usage, and was not influenced by public petitions). Or is this you redefining "Orwellian" and I've missed the joke?
    - kbutler 4y ago
      Orwellian newspeak definitely expanded the dictionary in doubleplusungood ways, including redefining existing terms to mean the opposite ("WAR IS PEACE, SLAVERY IS FREEDOM" - words are violence, silence is violence, facts are misinformation, racism is only whites oppressing people of color), and by crushing any opposing wrongthink and oldspeak thoughtcrime, the Ministry could easily gather "real world examples of use" and fill petitions with doubleplusgoodspeak doublethink petitioners as desired, whether Orwell described that process or not. But are we trending toward a Brave New World rather than Oceania?
- deleted 4y ago
  [deleted]
- ModernMech 4y ago
  Has that been the definition, or has that just been your understanding, which may have been wrong? Has there really been a redefinition? I mean, if we just take Wikipedia as a gauge, they have defined it according to the NBER, dating back to 2008 [1]. A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. There does appear to be a recent, ad-hoc redefinition edit battle going on [2][3], but it's to redefine it as you are saying here rather than accepting what has been there for over a decade... apparently for the purpose of using it as a political cudgel [4]. Maybe not so Orwellian, just a misconception. [1] https://www.nber.org/news/business-cycle-dating-committee-announcement-january-7-2008 https://www.nber.org/news/business-cycle-dating-committee-an... [2] https://en.wikipedia.org/w/index.php?title=Recession&diff=prev&oldid=1100952421 https://en.wikipedia.org/w/index.php?title=Recession&diff=pr... [3] https://en.wikipedia.org/wiki/Talk:Recession https://en.wikipedia.org/wiki/Talk:Recession [4] https://twitter.com/RepublicanStudy/status/1551627975640190976 https://twitter.com/RepublicanStudy/status/15516279756401909...
_8j50 4y ago
How can one profit from this? Any good short positions?
- s1artibartfast 4y ago
  The exact opposite, Buy long positions at a discount
  - digdugdirk 4y ago
    But you need to time the dip with this strategy, otherwise you're underwater in the meantime. I think the question was, "How can I profit as things get worse?" Or, "What are good ways to protect myself as things go downhill?" My recommendation? Reduce expenses. And think about investing in ways to reduce those expenses - Toilet paper is expensive, buying a bidet can save money after X uses. Meat can be expensive, see if a farmer in your area is willing to sell you the meat of a full cow at a discount for you to freeze and use over the course of X months.
    - outworlder 4y ago
      > But you need to time the dip with this strategy, otherwise you're underwater in the meantime. Being temporarily underwater is fine, unless you think that economic growth will stop, or you are a day trader. Dollar cost average if you can.
    - s1artibartfast 4y ago
      >My recommendation? Reduce expenses. And think about investing in ways to reduce those expenses That's funny, I would recommend the exact opposite given the inflationary situation. I would accelerate buying durable objects that you would like to have eventually, instead of waiting. Saving money beyond a safety buffer is a bad idea when cash is losing 10% of its value per year and stocks are going down.
- xeromal 4y ago
  Buy SPY, wait 10 years, $$$, Profit.
Nimitz14 4y ago
1947 saw two Qs neg growth amd no recession. This is something that everyone who is actually interested in the topic will have heard of because it's been mentioned repeatedly by the experts. And yet this thread is filled with confident statements by people who clearly have put zero effort into forming their opinion. Sad.
- remflight 4y ago
  1947 was 75 years ago. Taking 1 example per lifetime doesn’t constitute any sort of evidence to the contrary.
  - beebmam 4y ago
    The OP comment said: "AFAIK, NBER has never failed to put the recession stamp on back-to-back drops in GDP." The comment you replied to gave evidence that directly contradicts the OP comment.
  - InefficientRed 4y ago
    On the other hand, we just went through a once per lifetime pandemic and a once per lifetime consumer stimulus package. Supply chains are wrecked and we're in a period during which international trading patterns could massively change. Meanwhile, * China is still purusing zero COVID. * There's a land war in Europe with Russia effectively cut off from the Western world. * German manufacturing, once a workhorse, is being crushed by energy costs * much of the developing world is swimming hard against the current just to stay alive. I don't think we are in a situation analogous to 1947, of course, and I do think we are in or at least heading into a more-than-technical recession. But "irrelevant because that only happens after once in a lifetime extremely disruptive events" is a pretty... odd... take in 2022.
    - ChuckNorris89 4y ago
      > German manufacturing, once a workhorse, is being crushed by energy costs Hmm, maybe Germany can solve this the same way they "solved" ballooning Berliner rents: just pass a law saying how much energy should cost. Simple. They do love regulations over there. Or just ask Gerhard Schröder and the rest of their former chancellors who were in bed with Russia, to blow their hot air through the pipes this winter. They have enough of it.
markus_zhang 4y ago
Let's see who breaks first.
- tenpies 4y ago
  The real scary moment will be when you see the White House and Democrats re-define what stagflation is. After all, this is a recession. Inflation is comically high - despite the incredibly massaged CPI number. The third and last criteria for stagflation is high unemployment, which it seems like we're heading into as soon as this last post-lockdown boom in consumer spending falls off a cliff. Stagflation is very scary and it's going to be either the end of the USD, or further raising rates into a recession. Either way will produce untold suffering and cost hundreds of thousands of lives. And we're going full ESG and trying to make energy (and food) as expensive as possible. This is definitely a first and credit has to go to Western leaders because it really takes talent to self-destroy to this extent.
  - markus_zhang 4y ago
    Yeah stagflation is a lot more scary and some think it's already here.
  - selimthegrim 4y ago
    Well if MMT goes too I’m all for it
everybodyknows 4y ago
> inversion of the eurodollar futures curve Can anyone enlighten us non-specialists as to how that particular contract works?

by yuan43 4y ago

_marlowe_ 4y ago

2-10 spread went through the pre-GFC record of -28 bps a day or two ago.

djbusby 4y ago
GFC = Global Financial Crisis (2007-08)
NovemberWhiskey 4y ago
I'm a little sanguine about the inverted yield curve as a real signal this time around, to be honest. We're in an environment of very rapidly rising short-term interest rates, specifically as the Fed attempts to try to manage inflation; with back-to-back 75 bps increases. That tends to have a curve flattening effect as the yield curve is nominal; short term yields rise more than longer tenors if the market believes that inflation will decrease as real yields will be higher.

melling 4y ago

Doesn’t a Fed typically lower rates during a recession? At least at some point, in order to bring a country out of the recession.

bandyaboot 4y ago
Though not unprecedented, they're typically not fighting inflation and a recession at the same time.
jacobmarble 4y ago
In this case, the Fed is stimulating a (hopefully mild) recession, by raising interest rates, in order to bring inflation down.
- njarboe 4y ago
  Until rates are above inflation (now around 8%) I would say the Fed is still pumping up the economy, but it's hard to see the Fed push up rates to that level like Volker did the last time the US had high inflation. The Fed set the federal funds rate at 20% in June of 1981 when inflation was about 15%. If the US has to finance much of its debt at 15% something will seriously break.
  - VictorPath 4y ago
    In 1974, President Ford had Whip Inflation Now buttons printed up, and 1981 was seven years later. So Volcker's dramatic raise was in that context. Whereas people are more used to a more moribund economy since 2008 with very low interest rates, inflation, and lots of QE, with the subprime bailout followed by the Covid stimulus. Actual non-negligible inflation and an actual interest rate is something people have started seeing more recently.
  - dageshi 4y ago
    From what I recall there was a fairly long period pre Volker where there were very half hearted attempts to get inflation under control without going for the kill so to speak. I think the Fed knowing that history will try to kill it dead first time, because if they don't they know they'll likely have to go even higher with interest rates at the second attempt and the higher they're forced to go the more danger there will be to US financing operations as you say.

foobarian 4y ago

Is there some science to these observations or are we just reading tea-leaves post-facto?

NeverFade 4y ago

> To some, this is a recession Not "to some", two back-to-back negative GDP stats has been the definition of a recession for my entire life. Now suddenly it's questionable, because the current administration would like to shrug away its failures, and too many in the media are helping them do it. This ad-hoc re-definition of language to suit political purposes is scary and Orwellian.

citilife 4y ago
[flagged]
- jodrellblank 4y ago
  Nothing says Orwellian Dictatorship like change brought by a "30,000-strong petition", right? Nothing says Ministry of Truth more than "expanding the dictionary", based on "real world examples of use", eh? (Hint: newspeak was not adding more to the language, was not based on real usage, and was not influenced by public petitions). Or is this you redefining "Orwellian" and I've missed the joke?
  - kbutler 4y ago
    Orwellian newspeak definitely expanded the dictionary in doubleplusungood ways, including redefining existing terms to mean the opposite ("WAR IS PEACE, SLAVERY IS FREEDOM" - words are violence, silence is violence, facts are misinformation, racism is only whites oppressing people of color), and by crushing any opposing wrongthink and oldspeak thoughtcrime, the Ministry could easily gather "real world examples of use" and fill petitions with doubleplusgoodspeak doublethink petitioners as desired, whether Orwell described that process or not. But are we trending toward a Brave New World rather than Oceania?
deleted 4y ago
[deleted]
ModernMech 4y ago
Has that been the definition, or has that just been your understanding, which may have been wrong? Has there really been a redefinition? I mean, if we just take Wikipedia as a gauge, they have defined it according to the NBER, dating back to 2008 [1]. A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. There does appear to be a recent, ad-hoc redefinition edit battle going on [2][3], but it's to redefine it as you are saying here rather than accepting what has been there for over a decade... apparently for the purpose of using it as a political cudgel [4]. Maybe not so Orwellian, just a misconception. [1] https://www.nber.org/news/business-cycle-dating-committee-announcement-january-7-2008 https://www.nber.org/news/business-cycle-dating-committee-an... [2] https://en.wikipedia.org/w/index.php?title=Recession&diff=prev&oldid=1100952421 https://en.wikipedia.org/w/index.php?title=Recession&diff=pr... [3] https://en.wikipedia.org/wiki/Talk:Recession https://en.wikipedia.org/wiki/Talk:Recession [4] https://twitter.com/RepublicanStudy/status/1551627975640190976 https://twitter.com/RepublicanStudy/status/15516279756401909...

_8j50 4y ago

How can one profit from this? Any good short positions?

s1artibartfast 4y ago
The exact opposite, Buy long positions at a discount
- digdugdirk 4y ago
  But you need to time the dip with this strategy, otherwise you're underwater in the meantime. I think the question was, "How can I profit as things get worse?" Or, "What are good ways to protect myself as things go downhill?" My recommendation? Reduce expenses. And think about investing in ways to reduce those expenses - Toilet paper is expensive, buying a bidet can save money after X uses. Meat can be expensive, see if a farmer in your area is willing to sell you the meat of a full cow at a discount for you to freeze and use over the course of X months.
  - outworlder 4y ago
    > But you need to time the dip with this strategy, otherwise you're underwater in the meantime. Being temporarily underwater is fine, unless you think that economic growth will stop, or you are a day trader. Dollar cost average if you can.
  - s1artibartfast 4y ago
    >My recommendation? Reduce expenses. And think about investing in ways to reduce those expenses That's funny, I would recommend the exact opposite given the inflationary situation. I would accelerate buying durable objects that you would like to have eventually, instead of waiting. Saving money beyond a safety buffer is a bad idea when cash is losing 10% of its value per year and stocks are going down.
xeromal 4y ago
Buy SPY, wait 10 years, $$$, Profit.

Nimitz14 4y ago

1947 saw two Qs neg growth amd no recession. This is something that everyone who is actually interested in the topic will have heard of because it's been mentioned repeatedly by the experts. And yet this thread is filled with confident statements by people who clearly have put zero effort into forming their opinion. Sad.

remflight 4y ago
1947 was 75 years ago. Taking 1 example per lifetime doesn’t constitute any sort of evidence to the contrary.
- beebmam 4y ago
  The OP comment said: "AFAIK, NBER has never failed to put the recession stamp on back-to-back drops in GDP." The comment you replied to gave evidence that directly contradicts the OP comment.
- InefficientRed 4y ago
  On the other hand, we just went through a once per lifetime pandemic and a once per lifetime consumer stimulus package. Supply chains are wrecked and we're in a period during which international trading patterns could massively change. Meanwhile, * China is still purusing zero COVID. * There's a land war in Europe with Russia effectively cut off from the Western world. * German manufacturing, once a workhorse, is being crushed by energy costs * much of the developing world is swimming hard against the current just to stay alive. I don't think we are in a situation analogous to 1947, of course, and I do think we are in or at least heading into a more-than-technical recession. But "irrelevant because that only happens after once in a lifetime extremely disruptive events" is a pretty... odd... take in 2022.
  - ChuckNorris89 4y ago
    > German manufacturing, once a workhorse, is being crushed by energy costs Hmm, maybe Germany can solve this the same way they "solved" ballooning Berliner rents: just pass a law saying how much energy should cost. Simple. They do love regulations over there. Or just ask Gerhard Schröder and the rest of their former chancellors who were in bed with Russia, to blow their hot air through the pipes this winter. They have enough of it.

markus_zhang 4y ago

Let's see who breaks first.

tenpies 4y ago
The real scary moment will be when you see the White House and Democrats re-define what stagflation is. After all, this is a recession. Inflation is comically high - despite the incredibly massaged CPI number. The third and last criteria for stagflation is high unemployment, which it seems like we're heading into as soon as this last post-lockdown boom in consumer spending falls off a cliff. Stagflation is very scary and it's going to be either the end of the USD, or further raising rates into a recession. Either way will produce untold suffering and cost hundreds of thousands of lives. And we're going full ESG and trying to make energy (and food) as expensive as possible. This is definitely a first and credit has to go to Western leaders because it really takes talent to self-destroy to this extent.
- markus_zhang 4y ago
  Yeah stagflation is a lot more scary and some think it's already here.
- selimthegrim 4y ago
  Well if MMT goes too I’m all for it

everybodyknows 4y ago

> inversion of the eurodollar futures curve Can anyone enlighten us non-specialists as to how that particular contract works?