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There are never widespread indicators we are going into recession, because once they're widespread, we're in recession, by definition. Leading indicators are a

There are never widespread indicators we are going into recession, because once they're widespread, we're in recession, by definition. Leading indicators are always narrow, and they require some economic knowledge (and some risk) in interpreting them. Rises in interest rates. Yield curve inversion. Drops in advertising spending. Companies cancel major new investments. Mortgage applications fall off. Housing starts fall. Nearly all of these are happening now. Things like the Fed Funds rate going up usually lead the recession by ~2 years, yield curve inversions by ~1 year, ad spending and capital investments by 6-12 months. Broad-based layoffs and drops in consumer spending usually don't happen until the recession is well underway. IOW, check back in a year. I'm predicting carnage, and trading on it. You might be right, in which case I've missed out on the growth of a year, but you might also be ruined.

kasey_junk 4y ago
Parts of the yield curve have been inverted since March. The headline inversion has been on since June. We were already in negative gdp at those points and came out of it in the 3rd and 4th quarter. Even Campbell Harvey, who has researched the signal since the mid 80s thinks this one is a false positive. Other indicators that are positive, unemployment, jobs added, new home sales, service growth sentiment (and while manufacturing sentiment is negative it’s trending better than last year). I’ve been waiting for a blood bath in real estate since last year, I’m still betting on one this spring. I can see that contagion spreading to the broader economy, but I don’t know that it will for sure. My broader thesis is that the tech companies don’t know what the broader economy is going to do any better than other market participants and these layoffs are not preemptive, they are reactive to bad forecasting. Does that preclude a recession? No. But the economic indicators do not “all say” a recession is imminent. The picture is extremely muddy, with most recent indicators (sans the yield curve) trending up.

kasey_junk 4y ago

Parts of the yield curve have been inverted since March. The headline inversion has been on since June. We were already in negative gdp at those points and came out of it in the 3rd and 4th quarter. Even Campbell Harvey, who has researched the signal since the mid 80s thinks this one is a false positive. Other indicators that are positive, unemployment, jobs added, new home sales, service growth sentiment (and while manufacturing sentiment is negative it’s trending better than last year). I’ve been waiting for a blood bath in real estate since last year, I’m still betting on one this spring. I can see that contagion spreading to the broader economy, but I don’t know that it will for sure. My broader thesis is that the tech companies don’t know what the broader economy is going to do any better than other market participants and these layoffs are not preemptive, they are reactive to bad forecasting. Does that preclude a recession? No. But the economic indicators do not “all say” a recession is imminent. The picture is extremely muddy, with most recent indicators (sans the yield curve) trending up.