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Accurate prediction: Job data trails rate increases by many months. So do recessions. If the fed levels off interest rates within the next year or so, we have

Accurate prediction: Job data trails rate increases by many months. So do recessions. If the fed levels off interest rates within the next year or so, we have a very good chance of avoiding a recession. I am young/old enough to remember the last time interest rates were this high, and we were BOOMING. If the fed pushes the gas on interest rates, it will likely push us into a mild recession. Thanks (covid!) to millions retiring along with remote work, it would take a black swan event to really push things into the red. Note that we have a few possibilities for that setup, but so far, nothing has pushed every button as of yet. I predict a sideways trend for the near future. A really good event unrelated to employment will pull us up, a really bad event will drag us down.

lordfrito 4y ago
> we have a very good chance of avoiding a recession Not sure that's the case, I work in RV, which is a leading indicator for recession and recovery. RV volumes have been getting hammered for the last 8 months. OEM mfg numbers are down over 50% year on year. [1] Sure it's just one small segment of the overall economy, but things are getting strange out there. [1] https://rv-pro.com/wp-content/uploads/2023/01/Shipments2.png https://rv-pro.com/wp-content/uploads/2023/01/Shipments2.png
- tracerbulletx 4y ago
  You really think that it's not just that the RV surge was another COVID phenomenon? The same thing is happening with the bike market.
  - lordfrito 4y ago
    You are correct that COVID was responsible for a huge boom in RV. In fact, 2021 was biggest year ever for RV. The numbers speak for themselves. [1] However volumes this year are projected to be in the low 300k range. [2] Also these projections seem to be getting revised lower every month. These are numbers the industry hasn't seen since 2014. So we're not returning to pre-COVID levels (record shipments in 500k range in 2017 and 2018). The industry is being cut in half (at least) right now. And the drop is predicted to be long (we're already 6 months in, and the articles are saying this will last until at least the end of 2023). There's something deeper going on here. I think that something deeper is a recession. Not saying I have all the answers. But from the angle I'm sitting at this looks a lot like the decline seen after the housing bubble and 2008 crisis. YMMV [1] https://www.rvia.org/historical-rv-data https://www.rvia.org/historical-rv-data [2] https://www.rvia.org/rv-roadsigns-quarterly-forecast https://www.rvia.org/rv-roadsigns-quarterly-forecast
metadat 4y ago
Hogwash. How do you know in advance this prediction will be "accurate"? Please don't spread ChatGPT-level certainty about an inherently uncertain future, it is a disservice and insult to all. Otherwise, please share the magic crystal ball sources.
lamontcg 4y ago
We've had more than a decade for businesses to get used to being able to borrow on short timeframes of ~2 years with extremely low interest rates. Increasing those interest rates will cause zombie business interests to go broke by increasing their borrowing costs. This will probably look something like a meltdown in the office and retail commercial MBS for a start (I have no idea who else is out there ready to join the party once it gets started, but that's a good start). Already sales of CMBS have fallen 85% from where they should be this year: https://www.bloomberg.com/news/articles/2023-02-17/sales-of-cmbs-plunge-85-as-commercial-property-markets-freeze https://www.bloomberg.com/news/articles/2023-02-17/sales-of-... Those interest rates also go into everyone's Discounted Cash Flow models, which affects the prices of assets across the board, once people start to adjust to the fact that higher interest rates are going to stick (until the Fed blows up the economy, which of course means the beta value in those models needs to increase). Once the unemployment rate climbs back to 6-8% or higher then the Fed will probably cut interest rates back down to zero again due to the recession that they will have created. With more slack in the labor force then when they do that inflation will not reemerge. The recovery won't be V-shaped like the pandemic recession because businesses will be allowed to go bust without any kind of government support -- the recession may be particularly bad since the Republicans in the House will want to hang the recession on Biden (a situation which didn't happen in the 2001/2008/2020 recessions since there were Republicans in the WH and cooperative Democrats).

lordfrito 4y ago

> we have a very good chance of avoiding a recession Not sure that's the case, I work in RV, which is a leading indicator for recession and recovery. RV volumes have been getting hammered for the last 8 months. OEM mfg numbers are down over 50% year on year. [1] Sure it's just one small segment of the overall economy, but things are getting strange out there. [1] https://rv-pro.com/wp-content/uploads/2023/01/Shipments2.png https://rv-pro.com/wp-content/uploads/2023/01/Shipments2.png

tracerbulletx 4y ago
You really think that it's not just that the RV surge was another COVID phenomenon? The same thing is happening with the bike market.
- lordfrito 4y ago
  You are correct that COVID was responsible for a huge boom in RV. In fact, 2021 was biggest year ever for RV. The numbers speak for themselves. [1] However volumes this year are projected to be in the low 300k range. [2] Also these projections seem to be getting revised lower every month. These are numbers the industry hasn't seen since 2014. So we're not returning to pre-COVID levels (record shipments in 500k range in 2017 and 2018). The industry is being cut in half (at least) right now. And the drop is predicted to be long (we're already 6 months in, and the articles are saying this will last until at least the end of 2023). There's something deeper going on here. I think that something deeper is a recession. Not saying I have all the answers. But from the angle I'm sitting at this looks a lot like the decline seen after the housing bubble and 2008 crisis. YMMV [1] https://www.rvia.org/historical-rv-data https://www.rvia.org/historical-rv-data [2] https://www.rvia.org/rv-roadsigns-quarterly-forecast https://www.rvia.org/rv-roadsigns-quarterly-forecast

metadat 4y ago

Hogwash. How do you know in advance this prediction will be "accurate"? Please don't spread ChatGPT-level certainty about an inherently uncertain future, it is a disservice and insult to all. Otherwise, please share the magic crystal ball sources.

lamontcg 4y ago

We've had more than a decade for businesses to get used to being able to borrow on short timeframes of ~2 years with extremely low interest rates. Increasing those interest rates will cause zombie business interests to go broke by increasing their borrowing costs. This will probably look something like a meltdown in the office and retail commercial MBS for a start (I have no idea who else is out there ready to join the party once it gets started, but that's a good start). Already sales of CMBS have fallen 85% from where they should be this year: https://www.bloomberg.com/news/articles/2023-02-17/sales-of-cmbs-plunge-85-as-commercial-property-markets-freeze https://www.bloomberg.com/news/articles/2023-02-17/sales-of-... Those interest rates also go into everyone's Discounted Cash Flow models, which affects the prices of assets across the board, once people start to adjust to the fact that higher interest rates are going to stick (until the Fed blows up the economy, which of course means the beta value in those models needs to increase). Once the unemployment rate climbs back to 6-8% or higher then the Fed will probably cut interest rates back down to zero again due to the recession that they will have created. With more slack in the labor force then when they do that inflation will not reemerge. The recovery won't be V-shaped like the pandemic recession because businesses will be allowed to go bust without any kind of government support -- the recession may be particularly bad since the Republicans in the House will want to hang the recession on Biden (a situation which didn't happen in the 2001/2008/2020 recessions since there were Republicans in the WH and cooperative Democrats).