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A death rattle can often be mistaken for a rally

eropple 3y ago
It might be! Or it might be the seventh recession predicted out of the last three. Nobody's going to know until later, so is this kind of veiled, content-free foreboding actually like...useful?
- Texasian 3y ago
  Having dealt with this person at a former employer: No.
- AndrewKemendo 3y ago
  Depends on how interested you are in discussion. The best way to get a good answer on the internet is to make a false claim. The second best is to ennervate debate with something. The point I’m making is that these kinds of macro economics statistics almost never actually reflect on the ground understanding of day to day life and even rarer give any meaningful insight. Usually, however, they give a false sense of hope about the actual state of things if you go out into the market, and you look at savings rate that the Fed publishes, if you look at decreasing equity, because people are cashing out with no ability to put back into equity then a clearer picture forms. As I said elsewhere, all the long-term data shows that we are eating our seed corn
derwiki 3y ago
Why do you think it’s a death rattle?
- AndrewKemendo 3y ago
  Savings rate is unchanged so people are shopping on credit even more than they were because they are tapped out. The most common equity holdings like single family homes are being bought out at blisteringly fast rates We’re eating our seed corn
  - dsugarman 3y ago
    The fed pumped interest rates to bankrupt everyone and create a recession to drop demand off a cliff to fight inflation. The recession never came because people have weathered the storm through credit and other means. Fed is starting to drop interest rates because inflation is under control. Inflation was caused by the massive increase in money supply due to the fed buying up assets and to a lesser extent the covid stimmys. Inflation followed the curve of the money supply pretty closely. The interest rates just hurt everyone, we need some brighter minds with more open thought handling the central bank fiscal policy in my humble opinion
    - hiddencost 3y ago
      Meh. Economy would have collapsed without stimulus during COVID. That inflation has come down without a recession is a miracle. Given a potentially catastrophic situation, we're incredibly lucky to have gotten off this easy.
    - KMag 3y ago
      I hope you're being hyperbolic about the Fed's intentions. Bankruptcies and recession are often unwanted side-effects of attempts to tame inflation, not intentional effects.
      - dsugarman 3y ago
        No, that's exactly how they look at it. They see it as they can't really change supply but they can lower demand by removing all purchase power and they look at the recession as a necessary goal to tame inflation.
        KMag 3y ago
        > ... and they look at the recession as a necessary goal to tame inflation. Necessary goal, or necessary evil? I'd really like to see a citation for the Fed explicitly targeting a recession. I used to work with a former senior Fed economist (though, in the capacity I worked with him, he was researching market microstructure, not macroeconomics), and I have another friend who currently works at the Fed. In thhe past 3 rate hike cycles, I've heard lots of talk about the difficulty of a "soft landing" in taming inflation without tanking the economy. Everything I've heard this tightening cycle has praised the near-miracle soft landing they seem to have achieved. Taken as a control theory problem, the economy has very noisy measurements, heavy hysteresis, and a relatively long lag for all of the effects of rate changes to ripple through the economy. My understanding is that under-shooting the landing can result in long-term inflation psychologically taking root, creating more problems in the future, so the Fed tends to err on the side of triggering a recession. I've only read the full minutes of a handful of Fed meetings, so maybe I've missed something. I'm prepared to have my mind changed, but I'm highly skeptical a recession has ever been a goal rather than a regrettable side-effect.
- jimbob45 3y ago
  [flagged]
  - dopeboy 3y ago
    Bit of a strange take. There’s multiple economists expressing puzzlement around the resilience of consumer spending. Don’t think the NYT is expressing an opinion one way or the other here. (FD - I blocked NYT in 2016 and haven’t looked back, but for other reasons).
  - deleted 3y ago
    [deleted]
  - kibwen 3y ago
    > The NYT is a highly leftist paper How can you tell someone spends all their time falling down right-wing rabbit holes? Because they all seem to think that the New York Times, that bastion of waffling milquetoast enlightened centrism, is tantamount to communist propaganda.
    - networkchad 3y ago
      [dead]
fmajid 3y ago
I prefer the expression “dead-cat bounce”.
- dragonwriter 3y ago
  A dead cat bounce is a short rebound that is a brief interruption in a decline, the US economy has been in an expansion for more than three years since the extremely sharp, extremely brief early-2020 COVID recession. Whatever the current condition is, its not a dead cat bounce. (The recent change isn't fron decline to growth, its fron a broad public expectation of future decline to more positive forward expectations.) I suppose you could try to argue its a dead cat bounce in the future expectations component of sentiment rather than in the econony itself.
  - throwaway5959 3y ago
    To people who voted for Donald Trump in the last election, the economy crashed hard in January of 2021. It’s only gotten worse for them. This is of course nonsense, the economy hasn’t registered less than 1% annual growth the whole time, but feelings matter more than facts to people it would seem. https://images.app.goo.gl/NkTBByuiRr1H4ZxX6 https://images.app.goo.gl/NkTBByuiRr1H4ZxX6
andsoitis 3y ago
Fine to be skeptical, but I prefer to look at the data and inference drawn by sources who specialize in economic, investment, and financial matters. For instance: - The Economist, which has had a number of articles over the last few months about how the American economy is doing, e.g. https://www.economist.com/business/2023/10/29/americas-economy-is-booming-why-arent-its-bosses-happier https://www.economist.com/business/2023/10/29/americas-econo... - Vanguard's outlook for the next 10 years, in which they talk about how well the US economy is faring - https://corporate.vanguard.com/content/dam/corp/research/pdf/isg_vemo_2024.pdf https://corporate.vanguard.com/content/dam/corp/research/pdf...

It might be! Or it might be the seventh recession predicted out of the last three. Nobody's going to know until later, so is this kind of veiled, content-free foreboding actually like...useful?

Texasian 3y ago
Having dealt with this person at a former employer: No.
AndrewKemendo 3y ago
Depends on how interested you are in discussion. The best way to get a good answer on the internet is to make a false claim. The second best is to ennervate debate with something. The point I’m making is that these kinds of macro economics statistics almost never actually reflect on the ground understanding of day to day life and even rarer give any meaningful insight. Usually, however, they give a false sense of hope about the actual state of things if you go out into the market, and you look at savings rate that the Fed publishes, if you look at decreasing equity, because people are cashing out with no ability to put back into equity then a clearer picture forms. As I said elsewhere, all the long-term data shows that we are eating our seed corn

derwiki 3y ago

Why do you think it’s a death rattle?

AndrewKemendo 3y ago
Savings rate is unchanged so people are shopping on credit even more than they were because they are tapped out. The most common equity holdings like single family homes are being bought out at blisteringly fast rates We’re eating our seed corn
- dsugarman 3y ago
  The fed pumped interest rates to bankrupt everyone and create a recession to drop demand off a cliff to fight inflation. The recession never came because people have weathered the storm through credit and other means. Fed is starting to drop interest rates because inflation is under control. Inflation was caused by the massive increase in money supply due to the fed buying up assets and to a lesser extent the covid stimmys. Inflation followed the curve of the money supply pretty closely. The interest rates just hurt everyone, we need some brighter minds with more open thought handling the central bank fiscal policy in my humble opinion
  - hiddencost 3y ago
    Meh. Economy would have collapsed without stimulus during COVID. That inflation has come down without a recession is a miracle. Given a potentially catastrophic situation, we're incredibly lucky to have gotten off this easy.
  - KMag 3y ago
    I hope you're being hyperbolic about the Fed's intentions. Bankruptcies and recession are often unwanted side-effects of attempts to tame inflation, not intentional effects.
    - dsugarman 3y ago
      No, that's exactly how they look at it. They see it as they can't really change supply but they can lower demand by removing all purchase power and they look at the recession as a necessary goal to tame inflation.
      - KMag 3y ago
        > ... and they look at the recession as a necessary goal to tame inflation. Necessary goal, or necessary evil? I'd really like to see a citation for the Fed explicitly targeting a recession. I used to work with a former senior Fed economist (though, in the capacity I worked with him, he was researching market microstructure, not macroeconomics), and I have another friend who currently works at the Fed. In thhe past 3 rate hike cycles, I've heard lots of talk about the difficulty of a "soft landing" in taming inflation without tanking the economy. Everything I've heard this tightening cycle has praised the near-miracle soft landing they seem to have achieved. Taken as a control theory problem, the economy has very noisy measurements, heavy hysteresis, and a relatively long lag for all of the effects of rate changes to ripple through the economy. My understanding is that under-shooting the landing can result in long-term inflation psychologically taking root, creating more problems in the future, so the Fed tends to err on the side of triggering a recession. I've only read the full minutes of a handful of Fed meetings, so maybe I've missed something. I'm prepared to have my mind changed, but I'm highly skeptical a recession has ever been a goal rather than a regrettable side-effect.
jimbob45 3y ago
[flagged]
- dopeboy 3y ago
  Bit of a strange take. There’s multiple economists expressing puzzlement around the resilience of consumer spending. Don’t think the NYT is expressing an opinion one way or the other here. (FD - I blocked NYT in 2016 and haven’t looked back, but for other reasons).
- deleted 3y ago
  [deleted]
- kibwen 3y ago
  > The NYT is a highly leftist paper How can you tell someone spends all their time falling down right-wing rabbit holes? Because they all seem to think that the New York Times, that bastion of waffling milquetoast enlightened centrism, is tantamount to communist propaganda.
  - networkchad 3y ago
    [dead]

fmajid 3y ago

I prefer the expression “dead-cat bounce”.

dragonwriter 3y ago
A dead cat bounce is a short rebound that is a brief interruption in a decline, the US economy has been in an expansion for more than three years since the extremely sharp, extremely brief early-2020 COVID recession. Whatever the current condition is, its not a dead cat bounce. (The recent change isn't fron decline to growth, its fron a broad public expectation of future decline to more positive forward expectations.) I suppose you could try to argue its a dead cat bounce in the future expectations component of sentiment rather than in the econony itself.
- throwaway5959 3y ago
  To people who voted for Donald Trump in the last election, the economy crashed hard in January of 2021. It’s only gotten worse for them. This is of course nonsense, the economy hasn’t registered less than 1% annual growth the whole time, but feelings matter more than facts to people it would seem. https://images.app.goo.gl/NkTBByuiRr1H4ZxX6 https://images.app.goo.gl/NkTBByuiRr1H4ZxX6

andsoitis 3y ago

Fine to be skeptical, but I prefer to look at the data and inference drawn by sources who specialize in economic, investment, and financial matters. For instance: - The Economist, which has had a number of articles over the last few months about how the American economy is doing, e.g. https://www.economist.com/business/2023/10/29/americas-economy-is-booming-why-arent-its-bosses-happier https://www.economist.com/business/2023/10/29/americas-econo... - Vanguard's outlook for the next 10 years, in which they talk about how well the US economy is faring - https://corporate.vanguard.com/content/dam/corp/research/pdf/isg_vemo_2024.pdf https://corporate.vanguard.com/content/dam/corp/research/pdf...