Recession?

[Ernie]

Analysts have been predicting a recession now for a few years. It seems like it keeps getting pushed off... Possibly due to injecting trillions of dollars into the economy and the millions more immigrants needing food and shelter. I expect the recession to come eventually.

https://apnews.com/article/us-economy-r ... 990169d387

[RZehr]

Analysts have been predicting a recession now for a few years. It seems like it keeps getting pushed off... Possibly due to injecting trillions of dollars into the economy and the millions more immigrants needing food and shelter. I expect the recession to come eventually.

https://apnews.com/article/us-economy-r ... 990169d387

I thought it happened at one point, but the government moved the goal posts. I thought it happened at one point according to defined metrics, so the government arbitrarily redefined what a “recession” threshold was, and presto, no recession.

[Ken]

Analysts have been predicting a recession now for a few years. It seems like it keeps getting pushed off... Possibly due to injecting trillions of dollars into the economy and the millions more immigrants needing food and shelter. I expect the recession to come eventually.

https://apnews.com/article/us-economy-r ... 990169d387

I thought it happened at one point, but the government moved the goal posts. I thought it happened at one point according to defined metrics, so the government arbitrarily redefined what a “recession” threshold was, and presto, no recession.

The standard definition of a recession is a minimum two subsequent quarters of negative growth (or shrinkage) of the economy.

Did we change that and I wasn't paying attention?

EDIT.

It looks like there was a tiny blip when that happened during the last quarter of 2021 and first quarter of 2022 but I guess it was so small that no one really noticed much and it was over before the data were even collected

[Josh]

We aren’t anywhere close to a recession and if we were, all the have to do is drop rates. For some reason, the American consumer hasn’t decided to stop spending and start saving, and the American worker continues to not care too much about working, which means labour continues to have more demand than supply.

It’s really an economic miracle… at the same time, I’d say a lot of the “easy money” has dried up.

[MaxPC]

Analysts have been predicting a recession now for a few years. It seems like it keeps getting pushed off... Possibly due to injecting trillions of dollars into the economy and the millions more immigrants needing food and shelter. I expect the recession to come eventually.

https://apnews.com/article/us-economy-r ... 990169d387

I thought it happened at one point, but the government moved the goal posts. I thought it happened at one point according to defined metrics, so the government arbitrarily redefined what a “recession” threshold was, and presto, no recession.

Agreed. I think recession should be defined by the ratio between income and the grocery bill. Our groceries cost 72% more than they did last year.

[Josh]

Analysts have been predicting a recession now for a few years. It seems like it keeps getting pushed off... Possibly due to injecting trillions of dollars into the economy and the millions more immigrants needing food and shelter. I expect the recession to come eventually.

https://apnews.com/article/us-economy-r ... 990169d387

I thought it happened at one point, but the government moved the goal posts. I thought it happened at one point according to defined metrics, so the government arbitrarily redefined what a “recession” threshold was, and presto, no recession.

Agreed. I think recession should be defined by the ratio between income and the grocery bill. Our groceries cost 72% more than they did last year.

That is an entirely unreasonable definition of a “recession”. During a recession, it’s possible grocery prices might even go down. Recessions have a lot more to do with unemployment levels than grocery store prices.

[Ken]

Josh is right. food inflation is not the same thing as a recession. Inflation and recession are two separate things. We can have one or the other or both or neither.

And, in any event, food inflation is basically back down to near zero. The current annual rate of food inflation (1.2%) is actually below the Fed's target. Prices for eating out are still rising at about 5% per year due largely to wage increases (which are the opposite of recessionary, they are simulative.) Here is the current rate of food inflation according to the FED.

Now if you want food PRICES to go back DOWN to 2018 or 1995 or 1954 or 1920 then that is deflation. And deflation (falling prices) usually does bring on a recession. A zero inflation rate simply means they aren't going up anymore. Of course it would be nice to buy steak at $0.40/lb. which was the price in 1920. But may not if you are earning the median monthly wage in 1920 of $275/month.

One advantage to inflation is that it erodes debt. If the past 2 years saw inflation of 10% then the national debt was deflated by 10%. And that fixed rate mortgage gets easier and easier to pay.

[Josh]

Doesn’t erode debt when interest rates are high.

[Ken]

Doesn’t erode debt when interest rates are high.

Most debt is in fixed rate bonds like 10 year t-bills so inflation means the bond holders eat it, not the government. Only a few are inflation adjusted rate bonds like i-bonds.

So of the hundreds of billions or trillions of US debt that is held in long term bonds by governments around the world like China? Inflation just erodes their holdings. So 10-year bonds the US government issued in 2020 were issued in 2020 dollars but get paid back in 2030 dollars

As long as the interest rate on the bond is LOWER than the inflation rate, the government gains and the bond-holder loses from inflation.

[Josh]

Doesn’t erode debt when interest rates are high.

Most debt is in fixed rate bonds like 10 year t-bills so inflation means the bond holders eat it, not the government. Only a few are inflation adjusted rate bonds like i-bonds.

So of the hundreds of billions or trillions of US debt that is held in long term bonds by governments around the world like China? Inflation just erodes their holdings. So 10-year bonds the US government issued in 2020 were issued in 2020 dollars but get paid back in 2030 dollars

As long as the interest rate on the bond is LOWER than the inflation rate, the government gains and the bond-holder loses from inflation.

Hard working Americans with credit card bills don’t have fixed rate debt. Neither do working class people who need a car loan or to get a mortgage for a house, or who need to sell their house, move. And get a new mortgage.