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The current go-to arguments for not being in a recession are low unemployment and high inflation, however those have historically been lagging indicators that s

The current go-to arguments for not being in a recession are low unemployment and high inflation, however those have historically been lagging indicators that start moving somewhere in the middle of a recession. So I'd say if we're not in a recession right now, we're on the edge of one. There have been so many economic shocks all at once I don't see how we pull out into positive growth without some serious retooling, and it'll take a recession to provide the necessary motivation/political cover to kickstart said retooling.

dereg 4y ago
For me, the argument about the technicalities of what makes a recession bothers me much, much less than the smugness of a general group of the intelligentsia who once conveniently anointed themselves "fact-checkers" that are trying to handwave away the idea of a recession in spite of historical definitions that we've never strayed away from. We really ought to resist bulls*t like this. One can simultaneously believe that people should get vaccinated, that Trump is an embarrassment of a person and leader, that news has stopped being news for at least 15 years, and that the "but actually it's not a recession because.." elite of this country don't care about truth but, instead, power.
mywittyname 4y ago
GDP is also a lagging indicator. Recessions happen fast. There's never been any "I think" in all the recessions I've experienced. Everyone knew.
- hammock 4y ago
  If you are young and thinking only of 2001, 2008 and 2020, those were crashes and significantly bigger than previous recessions. See another commenter’s chart here: https://fred.stlouisfed.org/series/GDPC1 https://fred.stlouisfed.org/series/GDPC1
  - dragonwriter 4y ago
    2001 was a short and mild recession (and was widely debated up until shortly after 9/11, and then often blamed on 9/11 even though it started six months earlier.) It felt worse and later because lots of people suffered from the poor distributional features of the following expansion more than the recession itself.
    - hammock 4y ago
      What is worse, 2001 or the current recession?
      - rrrrrrrrrrrryan 4y ago
        We probably won't know until this one is over.
      - dragonwriter 4y ago
        Kind of begs the question of the current state being a recession. If it turns out to be, probably this will be worse, but I don't think it will turn out to be. (That is, I think not a recession is the most likely current state, but I think recession that turns out to be more severe than 2001 is still more likely than recession that turns out to be less severe than 2001.) But the whole economic context is fairly unusual, and I wouldn't make any predictions with high confidence.
- AlwaysRock 4y ago
  Well surely at the start it was I think before developing into I know. Right? Plus plenty of folks are already at I know right now while some are at I think or I know were not.
- s1artibartfast 4y ago
  I think that certainty depends on where you are in the the economy. If you are a low earner and your cost of food goes up 10% you know it. If you are a high earner, you can play semantics.
  - dragonwriter 4y ago
    Most of the things that cause pain for low-earners are not recessions, some of them (e.g., inflation) are even anti-correlated with recession.
    - s1artibartfast 4y ago
      I see the exact opposite when I read the charts. Inflation is almost always high before and during a recession. Inflation usually * decreases* over the course of the recession. A recession almost never occurs during times of low inflation. https://static.seekingalpha.com/uploads/2008/8/28/saupload_gdppricecpi.jpg https://static.seekingalpha.com/uploads/2008/8/28/saupload_g...
- dragonwriter 4y ago
  > There's never been any "I think" in all the recessions I've experienced. Everyone knew. The Great Recession even being a recession was debated from before it was later declared to have started until it was officially declared a year after the point it was declared to have begun (which was actually before the revisions to GDP figures which would qualify the starting point as a recession under the 2-down-quarter rule that some people are now pretending is Holy Writ.) So, either your memory is flawed or your experience is quite limited.
lamontcg 4y ago
The Fed was basically announcing that they're going to cause a recession that everyone will agree on in order to get inflation down. They've largely shut up talking in the press which has allowed the markets to rebound a bit (which will allow the rich to unwind some positions). But the problem with inflation that we're seeing right now is that it goes beyond just an increase in oil prices, the leveling off of oil prices will not be enough to get it under control, and the Fed's stated goal of 2% inflation targets will require rising unemployment. And the Fed basically told everyone that this is what needed to happen when they were talking about focusing on core CPI instead of just oil, and talking about holding interest rates above the natural rate for some time, along with their statements that the labor market remains historically strong. I can't quite predict when that will happen, but we're certainly not there yet. We should also see the entire rest of the real economy get stress tested, and you can easily bet that since the last time it was tested was 2008 we'll see detonations in something else. My bet is commercial real estate goes off first due to the combined effects of the pandemic, remote work, and the recession. There's still a lot of "work" left to be done to get into a recession. The yield curve needs to invert for a sustained amount of time, unemployment should spike and I expect it hits around 8%[*], the Fed will realize they've gone too far and start slashing rates again. We'll be talking about bailing out rich people again. Whatever you think about how bad this is, the actual recession is going to be 10 times worse, and most of the arguments about how horrible the current economic conditions are I think can be summed up as "tell me you were too young to really remember how bad 2008 was without telling me". And this time could very well be worse than 2008. We've had even longer to build up problems in the economy (and we did basically fuck-all about regulating the banks last time) along with the fact that if the Republicans take the House they'll likely be happy to ruin the economy to hang it on Biden (probably up until the Billionaire class starts to actually hurt and yells at enough of them to knock it off). Right now it looks like we're heading for a second half recovery in sentiment though and I don't really expect any of this to unfold until next year after higher interest rates have had time to take effect. Although towards the end of this year Wall St may start to realize that core CPI isn't coming down even though oil levels off and that interest rates will still go up, and they'll start to more accurately predict how much pain we're in for. Right now it seems like the prevailing sentiment is that the Fed has largely done their job, rates won't go up much longer and that inflation is tamed because oil leveled off, so we just had the weakest recession possible which tamed all our inflation and its back to boom times--I am extraordinarily skeptical of that take. [*] at a minimum

dereg 4y ago

For me, the argument about the technicalities of what makes a recession bothers me much, much less than the smugness of a general group of the intelligentsia who once conveniently anointed themselves "fact-checkers" that are trying to handwave away the idea of a recession in spite of historical definitions that we've never strayed away from. We really ought to resist bulls*t like this. One can simultaneously believe that people should get vaccinated, that Trump is an embarrassment of a person and leader, that news has stopped being news for at least 15 years, and that the "but actually it's not a recession because.." elite of this country don't care about truth but, instead, power.

mywittyname 4y ago

GDP is also a lagging indicator. Recessions happen fast. There's never been any "I think" in all the recessions I've experienced. Everyone knew.

hammock 4y ago
If you are young and thinking only of 2001, 2008 and 2020, those were crashes and significantly bigger than previous recessions. See another commenter’s chart here: https://fred.stlouisfed.org/series/GDPC1 https://fred.stlouisfed.org/series/GDPC1
- dragonwriter 4y ago
  2001 was a short and mild recession (and was widely debated up until shortly after 9/11, and then often blamed on 9/11 even though it started six months earlier.) It felt worse and later because lots of people suffered from the poor distributional features of the following expansion more than the recession itself.
  - hammock 4y ago
    What is worse, 2001 or the current recession?
    - rrrrrrrrrrrryan 4y ago
      We probably won't know until this one is over.
    - dragonwriter 4y ago
      Kind of begs the question of the current state being a recession. If it turns out to be, probably this will be worse, but I don't think it will turn out to be. (That is, I think not a recession is the most likely current state, but I think recession that turns out to be more severe than 2001 is still more likely than recession that turns out to be less severe than 2001.) But the whole economic context is fairly unusual, and I wouldn't make any predictions with high confidence.
AlwaysRock 4y ago
Well surely at the start it was I think before developing into I know. Right? Plus plenty of folks are already at I know right now while some are at I think or I know were not.
s1artibartfast 4y ago
I think that certainty depends on where you are in the the economy. If you are a low earner and your cost of food goes up 10% you know it. If you are a high earner, you can play semantics.
- dragonwriter 4y ago
  Most of the things that cause pain for low-earners are not recessions, some of them (e.g., inflation) are even anti-correlated with recession.
  - s1artibartfast 4y ago
    I see the exact opposite when I read the charts. Inflation is almost always high before and during a recession. Inflation usually * decreases* over the course of the recession. A recession almost never occurs during times of low inflation. https://static.seekingalpha.com/uploads/2008/8/28/saupload_gdppricecpi.jpg https://static.seekingalpha.com/uploads/2008/8/28/saupload_g...
dragonwriter 4y ago
> There's never been any "I think" in all the recessions I've experienced. Everyone knew. The Great Recession even being a recession was debated from before it was later declared to have started until it was officially declared a year after the point it was declared to have begun (which was actually before the revisions to GDP figures which would qualify the starting point as a recession under the 2-down-quarter rule that some people are now pretending is Holy Writ.) So, either your memory is flawed or your experience is quite limited.

lamontcg 4y ago

The Fed was basically announcing that they're going to cause a recession that everyone will agree on in order to get inflation down. They've largely shut up talking in the press which has allowed the markets to rebound a bit (which will allow the rich to unwind some positions). But the problem with inflation that we're seeing right now is that it goes beyond just an increase in oil prices, the leveling off of oil prices will not be enough to get it under control, and the Fed's stated goal of 2% inflation targets will require rising unemployment. And the Fed basically told everyone that this is what needed to happen when they were talking about focusing on core CPI instead of just oil, and talking about holding interest rates above the natural rate for some time, along with their statements that the labor market remains historically strong. I can't quite predict when that will happen, but we're certainly not there yet. We should also see the entire rest of the real economy get stress tested, and you can easily bet that since the last time it was tested was 2008 we'll see detonations in something else. My bet is commercial real estate goes off first due to the combined effects of the pandemic, remote work, and the recession. There's still a lot of "work" left to be done to get into a recession. The yield curve needs to invert for a sustained amount of time, unemployment should spike and I expect it hits around 8%[*], the Fed will realize they've gone too far and start slashing rates again. We'll be talking about bailing out rich people again. Whatever you think about how bad this is, the actual recession is going to be 10 times worse, and most of the arguments about how horrible the current economic conditions are I think can be summed up as "tell me you were too young to really remember how bad 2008 was without telling me". And this time could very well be worse than 2008. We've had even longer to build up problems in the economy (and we did basically fuck-all about regulating the banks last time) along with the fact that if the Republicans take the House they'll likely be happy to ruin the economy to hang it on Biden (probably up until the Billionaire class starts to actually hurt and yells at enough of them to knock it off). Right now it looks like we're heading for a second half recovery in sentiment though and I don't really expect any of this to unfold until next year after higher interest rates have had time to take effect. Although towards the end of this year Wall St may start to realize that core CPI isn't coming down even though oil levels off and that interest rates will still go up, and they'll start to more accurately predict how much pain we're in for. Right now it seems like the prevailing sentiment is that the Fed has largely done their job, rates won't go up much longer and that inflation is tamed because oil leveled off, so we just had the weakest recession possible which tamed all our inflation and its back to boom times--I am extraordinarily skeptical of that take. [*] at a minimum