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I agree that we are in a recession. >How did we get to a point where actual data can be outright denied or absorbed based on your political viewpoint? Because

I agree that we are in a recession. >How did we get to a point where actual data can be outright denied or absorbed based on your political viewpoint? Because the actual data is sending mixed signals. People equate recessions with job losses, but job growth is still high and unemployment remains incredibly low. Businesses equate recessions with reduced demand for goods and and services, yet demand remains strong enough to push prices and profits to record levels. GDP has long been criticized for being a poor metric for the economy. But it's always been correlated enough with overall economic sentiment that it was Good Enough. It looks like we've finally gotten ourselves into a situation where the edge case issues with GDP surface. Lastly, not everyone feels recessions the same. I was one of those people who benefited from the financial crisis, because I kept my job and lived in an apartment, so my income was going up while my costs went down. That doesn't take away from the devastation it caused to other people.

njcgbc 4y ago
> Businesses equate recessions with reduced demand for goods and and services, yet demand remains strong This isn't true, major retailers have been reporting falling demand. I'd cite the WSJ but for some reason I can't paste the link in this box, just Google "falling demand Wal-Mart" > enough to push prices and profits to record levels. Adjust both for inflation
- bushbaba 4y ago
  Falling demand of non-necessities. People aren't buying "TVs". Which as you call out, is a stupidly strong recessionary signal.
  - InefficientRed 4y ago
    Or, damn near every household bought a new TV during the pandemic lockdowns using their stimulus checks and now no one needs a new TV. I think Walmart's story in particular is one of stupidly bad demand forecasting.
    - njcgbc 4y ago
      Fast food is reporting the same thing, McDonald's put out a report a few days ago, Yum! Brands is yet to report results for the quarter but similar results are expected. Target had a similar report to Walmart. It is mostly discretionary spending that is down; Wal-Mart reported the largest fall in apparel iirc, but demand is demand. One would expect discretionary spending to fall first, and hopefully it stops there. Again I apologize for not providing a direct citation due to my dumb mobile browser but these are days-old news stories and it should be easy to confirm
      - rustybelt 4y ago
        I know I've cut back on fast food because both product and service quality have declined dramatically, likely due to staffing shortages. Long wait times, cold food, and incorrect orders have pushed me to the point of staying away. It's a weird time, and it's hard to untangle all these additional factors. That said, I'm sure higher prices are having an impact as well.
        InefficientRed 4y ago
        Fast food is pricing itself out of the market. I think it's a great example of a sector that failed to innovate and is now incapable of providing a product worth buying at prices that are profitable. McDonalds et al. probably should've been investing a lot more in automating their kitchens. The fact that a huge percent of locations -- and all drive-thrus -- still use humans for the ordering process is, similarly, inexcusable. Unless the US massively increases its low-skilled immigration quotes, robotics firms will be the FAANG equivalents of the 2020s-2030s.
        whatshisface 4y ago
        If McDonalds can't afford to pay a living wage at the local cost of living, nobody will immigrate to work for them.
        4y ago
  - cma 4y ago
    But people bought more TVs than normal during the pandemic, so it may also be part 'satiation' signal.
  - kube-system 4y ago
    Not across the board. Demand for consumer discretionary spending outside of the home is up. People are tired of sitting at home. They don’t want to buy a TV and binge Netflix. They did that for 2 years. They’re going out to eat, going on vacation. Trying to get on a flight.
  - babypuncher 4y ago
    But demand for services and "experiences" is way up. I think it's unrealistic to expect retail goods to maintain the same highs they had during the pandemic. For a big chunk of the last two years, people couldn't go to concerts, bars and restaurants operated at limited capacity, vacation destinations had travel restrictions in place, etc. This lead people to take the discretionary income they would normally spend on those things and put it into retail goods that improve their lives stuck at home. TVs, game consoles, what have you. Now that restrictions are essentially nonexistent in the US, people are returning to those pre-COVID activities.
    - pclmulqdq 4y ago
      The evidence does not suggest that demand for services and experiences is up. Demand for durable goods spiked when COVID checks went out, then returned to parity with demand for services and non-durable goods. According to the fed, both of those have dropped over the last two years.
- InefficientRed 4y ago
  > This isn't true, major retailers have been reporting falling demand. As OP said, >> and services. > Wal-Mart WalMart's issue is that they have a massive inventory/demand mismatch. They already have the headwind of a shift from goods to services, and then on top of that they also massively mismanaged a shift in consumer preference within goods. I have a feeling that they are also feeling the squeeze from Amazon. Many households treat Prime as a fixed cost but the 20 minute drive out to Walmart is a real expense that can be substituted with Amazon purchases. Tonight's earnings will be interesting. Compare to eg Visa [1]. I expect that the "last hoorah" spending of this summer will grind to a halt in the winter and by Q2 2023 we'll be able to see a massive decline in consumer spending during Q4 in particular. But we aren't there yet, at least in aggregate, because consumers are spending like mad on services. [1] https://www.reuters.com/business/finance/visa-quarterly-profit-jumps-unrestrained-consumer-spending-2022-07-26/ https://www.reuters.com/business/finance/visa-quarterly-prof...
- p_j_w 4y ago
  >I'd cite the WSJ but for some reason I can't paste the link in this box, just Google "falling demand Wal-Mart" I'd rather not base my picture of the entire economy around a single retailer. What's going on with other retailers? Amazon, Best Buy, Target, etc? Have they more than picked up the slack that Wal Mart is seeing?
  - InefficientRed 4y ago
    > I'd rather not base my picture of the entire economy around a single retailer Or retailers in general. Retail spending is down because services spending is up -- people are going to the beach and buying plane tickets instead of buying TVs and patio furniture. Regardless of whether we're in a recession, retailer numbers aren't a good indicator for the duration/depth/type. We spent all of 2020 hearing that demand was pulled forward. Well, it was pulled forward from somewhere, and now we are there. > What's going on with other retailers? Best Buy missed by a lot; sales down by over 10%; forecast was a 1% contraction. Amazon tonight. Always complicated because of AWS, digital content, and now a substantial advertising business. If you want the retail details you have to go past the headline numbers. Target in mid-August but expectations are similar. My guess is that none of those companies will be hit has bad as Walmart because (1) Walmart was just particularly badly mismanaged, and (2) these other companies are just different in kind (particularly Amazon -- they could eg suffer retail losses while beating estimates on Advertising/Cloud)
    - p_j_w 4y ago
      >Or retailers in general. Retail spending is down because services spending is up -- people are going to the beach and buying plane tickets instead of buying TVs and patio furniture. >Regardless of whether we're in a recession, retailer numbers aren't a good indicator for the duration/depth/type. We spent all of 2020 hearing that demand was pulled forward. Well, it was pulled forward from somewhere, and now we are there. All fair points. >Best Buy missed by a lot; sales down by over 10%; forecast was a 1% contraction. Ouch.
phpisthebest 4y ago
They are not mixed signals, the data we use for signaling is flawed for the modern area Take for example the U-3 unemployment number that you cite, what is missing from that is Workforce Participation, we have a pretty large drop-off in Work force participation which is leading to the false belief that employment is "fine", and the quote "mix signal" of being in a recession while still having lower unemployment. Completely absent from most of these older metrics is the "gig-economy" which is really screwing with the data IMO. Then you have U-6 Unemployment increasing while U-3 is dropping, I think U-3 is just a few months away from reversal and will start increasing soon >>GDP has long been criticized for being a poor metric for the economy. yes by MMT supporters that want to ignore the classic model of economics in favor of monetary manipulation for political purposes
- kube-system 4y ago
  Of course we have a large drop off of workforce participation. Baby Boomers are retiring en masse; they’re reaching retirement age, and many of those who are close were offered buyouts to leave early. It’s not the result of decreased hiring due to economic slowdown. It’s the opposite entirely; this is a contributing factor to the labor shortage.
- hedora 4y ago
  A reasonable definition of recession is "you can't find a job", but, not only are we in the middle of a labor shortage, traditional good-economic-times like unionization are ramping up, and people are successfully demanding raises (and some households are voluntarily moving to single incomes). On the other hand, the stock market is down this year, so if that's your definition, things are dire. Honestly, this seems like stagflation to me, which has been historically known for breaking the definition of "recession". Neither side wants to say that out loud, because it implies a decade-plus economic funk.
  - pclmulqdq 4y ago
    That is actually a really poor definition of a recession. It overlooks many macroeconomic factors that can cause severe problems. "I can't improve my economic position" seems a lot closer, while still being a bad definition, and by that definition, we are deep in a recession.
b0mbadilh0le 4y ago
Macro Econ 101: Unemployment is a lagging indicator. Always has been. Always will be. It's why it was silly for them to keep touting it as a measure of the economy's health. We could even enter a prolonged, severe recession with low unemployment. How? Labor force participation. If it is low enough, there aren't jobs to cut. Your last point is very valid, and much is a matter of perspective. As far as mixed data... the only data throwing a contrary signal is unemployment, previously discussed. Inflation, rising interest rates, low consumer confidence, home prices turning over (speculative market areas currently), supply chain issues, and loss of wealth effect (markets have lost approximately $30 trillion this year), are all VERY recessionary.
- mistrial9 4y ago
  to support your statement that unemployment is a lagging indicator -- very random observation of rural Carolinas annual horse roundup and sale. They keep and publish records of a traditional county horse auction there, and the 2006-2010 years are listed. You can see a big change in the prices among these relatively unconnected people and their auction, but it is lagging by two years versus the massive credit crunch that put so many high-leverage city companies out of business.
bshoemaker 4y ago
- DIARRHEA_xd 4y ago
  Hey please consider changing this comment to substantively add to the discussion. Empty snark, no matter how good it feels, really isn't HNs style and doesn't promote healthy discourse. Yours truly, DIARRHEA_xd
s1artibartfast 4y ago
>Because the actual data is sending mixed signals. People equate recessions with job losses, but job growth is still high and unemployment remains incredibly low. The data isn't mixed, people are just making an incorrect association. Working more or longer isn't a good thing in its own right. In fact, it is bad it you are working more for less purchasing power. employment growth has historically been associated with increased purchasing power, but the current situation is a deviation from this norm. Talking about employment growth ignoring this fact is a bit of a bait and switch playing on this incorrect association.
anamax 4y ago
> Because the actual data is sending mixed signals. People equate recessions with job losses, but job growth is still high and unemployment remains incredibly low. The definition of "recession" doesn't depend on what other things people think happen during a recession. No one would be making this argument if it had happened while Trump was in office.
- dragonwriter 4y ago
  > The definition of "recession" doesn't depend on what other things people think happen during a recession. It absolutely does depend on the factors that NBER has always looked at to judge recessions, like employment. > No one would be making this argument if it had happened while Trump was in office. That's a nonfalsifiable statement that does nothing but show your own political bias.
  - knewter 4y ago
    It's nonfalsifiable but not for the reason you think :)
  - anamax 4y ago
    > That's a nonfalsifiable statement that does nothing but show your own political bias. It's political bias to notice that people behave politically? Is it political bias to notice Republicans complain about the deficit when Democrats are in power or is it only political bias to notice that that Democrats complain about the deficit when Republicans are in power ?

njcgbc 4y ago

> Businesses equate recessions with reduced demand for goods and and services, yet demand remains strong This isn't true, major retailers have been reporting falling demand. I'd cite the WSJ but for some reason I can't paste the link in this box, just Google "falling demand Wal-Mart" > enough to push prices and profits to record levels. Adjust both for inflation

bushbaba 4y ago
Falling demand of non-necessities. People aren't buying "TVs". Which as you call out, is a stupidly strong recessionary signal.
- InefficientRed 4y ago
  Or, damn near every household bought a new TV during the pandemic lockdowns using their stimulus checks and now no one needs a new TV. I think Walmart's story in particular is one of stupidly bad demand forecasting.
  - njcgbc 4y ago
    Fast food is reporting the same thing, McDonald's put out a report a few days ago, Yum! Brands is yet to report results for the quarter but similar results are expected. Target had a similar report to Walmart. It is mostly discretionary spending that is down; Wal-Mart reported the largest fall in apparel iirc, but demand is demand. One would expect discretionary spending to fall first, and hopefully it stops there. Again I apologize for not providing a direct citation due to my dumb mobile browser but these are days-old news stories and it should be easy to confirm
    - rustybelt 4y ago
      I know I've cut back on fast food because both product and service quality have declined dramatically, likely due to staffing shortages. Long wait times, cold food, and incorrect orders have pushed me to the point of staying away. It's a weird time, and it's hard to untangle all these additional factors. That said, I'm sure higher prices are having an impact as well.
      - InefficientRed 4y ago
        Fast food is pricing itself out of the market. I think it's a great example of a sector that failed to innovate and is now incapable of providing a product worth buying at prices that are profitable. McDonalds et al. probably should've been investing a lot more in automating their kitchens. The fact that a huge percent of locations -- and all drive-thrus -- still use humans for the ordering process is, similarly, inexcusable. Unless the US massively increases its low-skilled immigration quotes, robotics firms will be the FAANG equivalents of the 2020s-2030s.
        whatshisface 4y ago
        If McDonalds can't afford to pay a living wage at the local cost of living, nobody will immigrate to work for them.
        4y ago
- cma 4y ago
  But people bought more TVs than normal during the pandemic, so it may also be part 'satiation' signal.
- kube-system 4y ago
  Not across the board. Demand for consumer discretionary spending outside of the home is up. People are tired of sitting at home. They don’t want to buy a TV and binge Netflix. They did that for 2 years. They’re going out to eat, going on vacation. Trying to get on a flight.
- babypuncher 4y ago
  But demand for services and "experiences" is way up. I think it's unrealistic to expect retail goods to maintain the same highs they had during the pandemic. For a big chunk of the last two years, people couldn't go to concerts, bars and restaurants operated at limited capacity, vacation destinations had travel restrictions in place, etc. This lead people to take the discretionary income they would normally spend on those things and put it into retail goods that improve their lives stuck at home. TVs, game consoles, what have you. Now that restrictions are essentially nonexistent in the US, people are returning to those pre-COVID activities.
  - pclmulqdq 4y ago
    The evidence does not suggest that demand for services and experiences is up. Demand for durable goods spiked when COVID checks went out, then returned to parity with demand for services and non-durable goods. According to the fed, both of those have dropped over the last two years.
InefficientRed 4y ago
> This isn't true, major retailers have been reporting falling demand. As OP said, >> and services. > Wal-Mart WalMart's issue is that they have a massive inventory/demand mismatch. They already have the headwind of a shift from goods to services, and then on top of that they also massively mismanaged a shift in consumer preference within goods. I have a feeling that they are also feeling the squeeze from Amazon. Many households treat Prime as a fixed cost but the 20 minute drive out to Walmart is a real expense that can be substituted with Amazon purchases. Tonight's earnings will be interesting. Compare to eg Visa [1]. I expect that the "last hoorah" spending of this summer will grind to a halt in the winter and by Q2 2023 we'll be able to see a massive decline in consumer spending during Q4 in particular. But we aren't there yet, at least in aggregate, because consumers are spending like mad on services. [1] https://www.reuters.com/business/finance/visa-quarterly-profit-jumps-unrestrained-consumer-spending-2022-07-26/ https://www.reuters.com/business/finance/visa-quarterly-prof...
p_j_w 4y ago
>I'd cite the WSJ but for some reason I can't paste the link in this box, just Google "falling demand Wal-Mart" I'd rather not base my picture of the entire economy around a single retailer. What's going on with other retailers? Amazon, Best Buy, Target, etc? Have they more than picked up the slack that Wal Mart is seeing?
- InefficientRed 4y ago
  > I'd rather not base my picture of the entire economy around a single retailer Or retailers in general. Retail spending is down because services spending is up -- people are going to the beach and buying plane tickets instead of buying TVs and patio furniture. Regardless of whether we're in a recession, retailer numbers aren't a good indicator for the duration/depth/type. We spent all of 2020 hearing that demand was pulled forward. Well, it was pulled forward from somewhere, and now we are there. > What's going on with other retailers? Best Buy missed by a lot; sales down by over 10%; forecast was a 1% contraction. Amazon tonight. Always complicated because of AWS, digital content, and now a substantial advertising business. If you want the retail details you have to go past the headline numbers. Target in mid-August but expectations are similar. My guess is that none of those companies will be hit has bad as Walmart because (1) Walmart was just particularly badly mismanaged, and (2) these other companies are just different in kind (particularly Amazon -- they could eg suffer retail losses while beating estimates on Advertising/Cloud)
  - p_j_w 4y ago
    >Or retailers in general. Retail spending is down because services spending is up -- people are going to the beach and buying plane tickets instead of buying TVs and patio furniture. >Regardless of whether we're in a recession, retailer numbers aren't a good indicator for the duration/depth/type. We spent all of 2020 hearing that demand was pulled forward. Well, it was pulled forward from somewhere, and now we are there. All fair points. >Best Buy missed by a lot; sales down by over 10%; forecast was a 1% contraction. Ouch.

phpisthebest 4y ago

They are not mixed signals, the data we use for signaling is flawed for the modern area Take for example the U-3 unemployment number that you cite, what is missing from that is Workforce Participation, we have a pretty large drop-off in Work force participation which is leading to the false belief that employment is "fine", and the quote "mix signal" of being in a recession while still having lower unemployment. Completely absent from most of these older metrics is the "gig-economy" which is really screwing with the data IMO. Then you have U-6 Unemployment increasing while U-3 is dropping, I think U-3 is just a few months away from reversal and will start increasing soon >>GDP has long been criticized for being a poor metric for the economy. yes by MMT supporters that want to ignore the classic model of economics in favor of monetary manipulation for political purposes

kube-system 4y ago
Of course we have a large drop off of workforce participation. Baby Boomers are retiring en masse; they’re reaching retirement age, and many of those who are close were offered buyouts to leave early. It’s not the result of decreased hiring due to economic slowdown. It’s the opposite entirely; this is a contributing factor to the labor shortage.
hedora 4y ago
A reasonable definition of recession is "you can't find a job", but, not only are we in the middle of a labor shortage, traditional good-economic-times like unionization are ramping up, and people are successfully demanding raises (and some households are voluntarily moving to single incomes). On the other hand, the stock market is down this year, so if that's your definition, things are dire. Honestly, this seems like stagflation to me, which has been historically known for breaking the definition of "recession". Neither side wants to say that out loud, because it implies a decade-plus economic funk.
- pclmulqdq 4y ago
  That is actually a really poor definition of a recession. It overlooks many macroeconomic factors that can cause severe problems. "I can't improve my economic position" seems a lot closer, while still being a bad definition, and by that definition, we are deep in a recession.

b0mbadilh0le 4y ago

Macro Econ 101: Unemployment is a lagging indicator. Always has been. Always will be. It's why it was silly for them to keep touting it as a measure of the economy's health. We could even enter a prolonged, severe recession with low unemployment. How? Labor force participation. If it is low enough, there aren't jobs to cut. Your last point is very valid, and much is a matter of perspective. As far as mixed data... the only data throwing a contrary signal is unemployment, previously discussed. Inflation, rising interest rates, low consumer confidence, home prices turning over (speculative market areas currently), supply chain issues, and loss of wealth effect (markets have lost approximately $30 trillion this year), are all VERY recessionary.

mistrial9 4y ago
to support your statement that unemployment is a lagging indicator -- very random observation of rural Carolinas annual horse roundup and sale. They keep and publish records of a traditional county horse auction there, and the 2006-2010 years are listed. You can see a big change in the prices among these relatively unconnected people and their auction, but it is lagging by two years versus the massive credit crunch that put so many high-leverage city companies out of business.

bshoemaker 4y ago

DIARRHEA_xd 4y ago
Hey please consider changing this comment to substantively add to the discussion. Empty snark, no matter how good it feels, really isn't HNs style and doesn't promote healthy discourse. Yours truly, DIARRHEA_xd

s1artibartfast 4y ago

>Because the actual data is sending mixed signals. People equate recessions with job losses, but job growth is still high and unemployment remains incredibly low. The data isn't mixed, people are just making an incorrect association. Working more or longer isn't a good thing in its own right. In fact, it is bad it you are working more for less purchasing power. employment growth has historically been associated with increased purchasing power, but the current situation is a deviation from this norm. Talking about employment growth ignoring this fact is a bit of a bait and switch playing on this incorrect association.

anamax 4y ago

> Because the actual data is sending mixed signals. People equate recessions with job losses, but job growth is still high and unemployment remains incredibly low. The definition of "recession" doesn't depend on what other things people think happen during a recession. No one would be making this argument if it had happened while Trump was in office.

dragonwriter 4y ago
> The definition of "recession" doesn't depend on what other things people think happen during a recession. It absolutely does depend on the factors that NBER has always looked at to judge recessions, like employment. > No one would be making this argument if it had happened while Trump was in office. That's a nonfalsifiable statement that does nothing but show your own political bias.
- knewter 4y ago
  It's nonfalsifiable but not for the reason you think :)
- anamax 4y ago
  > That's a nonfalsifiable statement that does nothing but show your own political bias. It's political bias to notice that people behave politically? Is it political bias to notice Republicans complain about the deficit when Democrats are in power or is it only political bias to notice that that Democrats complain about the deficit when Republicans are in power ?