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I think plummeting savings (down to $600B from $4T as of October of last year) is probably the best indicator of a major incoming recession. The layoffs haven't

I think plummeting savings (down to $600B from $4T as of October of last year) is probably the best indicator of a major incoming recession. The layoffs haven't really significantly impacted anybody outside of the tech sector and I think that's in part because consumers are still spending. However, they are spending their dwindling savings, not extra cash, and getting into credit card debt. This will eventually come to an end and then it will really hit the fan. I also don't see FED stop raising interest rates any time soon which puts even more pressure on economy. It's hard to see how any of this will result in a "soft landing."

coding123 4y ago
I stayed with the same job since 2017 - too afraid to change jobs after the pandemic hit. No raises at all, and we're at a company that was able to profit from COVID-19. My wife and I have been taking huge credit card losses lately by staying with the company. I'm now interviewing and getting out. The inflation is killing everything. Definitely saw my grocery and gas bills double, easily. It's really hard to live in California right now, since every item at the grocery store got their with Diesel fuel (which is 5.00, peaked at 8 in the summer).
UncleOxidant 4y ago
The layoffs in tech so far are a drop in the bucket. The pace of hiring overall surged unexpectedly in January (517,000 jobs added) - that's going to keep the Fed wanting to raise rates. On the other hand, tech (and finance) layoffs probably impact the economy more because those being laid off are generally making higher salaries than most other industries. You've gotta wonder if tech layoffs are going to start hurting local economies in the Bay Area and perhaps Seattle.
ajross 4y ago
That $4B number was a huge outlier, though. Here's the FRED graph (which should be a required link any time someone wants to talk about economics numbers): https://fred.stlouisfed.org/series/PSAVE https://fred.stlouisfed.org/series/PSAVE The combination of restricted consumer economies and extensive government assistance produced a savings boom the likes of which we have basically never seen in the US in the era of modern economic data. And it's over, and so naturally consumers are spending down their bank accounts to the levels that they felt were appropriate before the pandemic. The point is that the current conditions are a much better approximation to "normal economy" than what was happening in 2020/21. You can explain the inflation burp very well via the savings data. But trying to read a recession into it seems IMHO pretty ridiculous.
juve1996 4y ago
How does the savings numbers compare historically? Honestly I've been hearing since 2008 about the next coming crash and it still hasn't come, despite massive shocks to the economy. Perhaps we're more robust than we think? I get it - fear sells. But look at the recent job numbers? GDP grew last quarter? Inflation has slowed down.
deleted 4y ago
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dcolkitt 4y ago
Savings are not anywhere close to "dwindling". There are still huge excess savings accumulated during the pandemic. Relative to 2019 baseline ($1.4T annual), Americans accumulated about $2.2T in excess savings. The 2022 shortfall relative to baseline is about $800B. Even if this continued it would take another 2 years to burn off excess pandemic savings. And that doesn't even count the sizable gains in home equity and investment portfolios over the period.
idsout 4y ago
What does a "hard" landing look like and will things return to the way they were?
drexlspivey 4y ago
> I also don't see FED stop raising interest rates any time soon The FED will do one or two more rate bumps for 0.25% in the next couple of months and then stop. At least that’s the collective belief of the bond market. Unless you know something that bond traders don’t.

coding123 4y ago

I stayed with the same job since 2017 - too afraid to change jobs after the pandemic hit. No raises at all, and we're at a company that was able to profit from COVID-19. My wife and I have been taking huge credit card losses lately by staying with the company. I'm now interviewing and getting out. The inflation is killing everything. Definitely saw my grocery and gas bills double, easily. It's really hard to live in California right now, since every item at the grocery store got their with Diesel fuel (which is 5.00, peaked at 8 in the summer).

UncleOxidant 4y ago

The layoffs in tech so far are a drop in the bucket. The pace of hiring overall surged unexpectedly in January (517,000 jobs added) - that's going to keep the Fed wanting to raise rates. On the other hand, tech (and finance) layoffs probably impact the economy more because those being laid off are generally making higher salaries than most other industries. You've gotta wonder if tech layoffs are going to start hurting local economies in the Bay Area and perhaps Seattle.

ajross 4y ago

That $4B number was a huge outlier, though. Here's the FRED graph (which should be a required link any time someone wants to talk about economics numbers): https://fred.stlouisfed.org/series/PSAVE https://fred.stlouisfed.org/series/PSAVE The combination of restricted consumer economies and extensive government assistance produced a savings boom the likes of which we have basically never seen in the US in the era of modern economic data. And it's over, and so naturally consumers are spending down their bank accounts to the levels that they felt were appropriate before the pandemic. The point is that the current conditions are a much better approximation to "normal economy" than what was happening in 2020/21. You can explain the inflation burp very well via the savings data. But trying to read a recession into it seems IMHO pretty ridiculous.

juve1996 4y ago

How does the savings numbers compare historically? Honestly I've been hearing since 2008 about the next coming crash and it still hasn't come, despite massive shocks to the economy. Perhaps we're more robust than we think? I get it - fear sells. But look at the recent job numbers? GDP grew last quarter? Inflation has slowed down.

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dcolkitt 4y ago

Savings are not anywhere close to "dwindling". There are still huge excess savings accumulated during the pandemic. Relative to 2019 baseline ($1.4T annual), Americans accumulated about $2.2T in excess savings. The 2022 shortfall relative to baseline is about $800B. Even if this continued it would take another 2 years to burn off excess pandemic savings. And that doesn't even count the sizable gains in home equity and investment portfolios over the period.

idsout 4y ago

What does a "hard" landing look like and will things return to the way they were?

drexlspivey 4y ago

> I also don't see FED stop raising interest rates any time soon The FED will do one or two more rate bumps for 0.25% in the next couple of months and then stop. At least that’s the collective belief of the bond market. Unless you know something that bond traders don’t.