U.S. Economy Shrinks at 4.8% Pace, Signaling Start of Recession • Hacker News Board

Re: U.S. Economy Shrinks at 4.8% Pace, Signaling Start of Recession

#91

Post by xienze » Wed, Apr 29, 2020, 2:21 PM UTC

JKCalhoun wrote: post #63

hn_throwaway_99 wrote: post #17

Earlier quoted context omitted.

3 things: 1. People keep saying about the market being up recently, but skip the part about it still being down about 10% since the start of the year. 2. S&P is heavily weighted towards the strongest companies. Amazon, Apple, Facebook, Microsoft and Google account for 20% of S&P market cap. Most of those companies have been helped by the pandemic, or at least not hurt nearly as bad as smaller companies. 3. The market…

> 1. People keep saying about the market being up recently So, down 10% from the previous bubble. > 2. S&P is heavily weighted towards the strongest companies Good point. Dow is also up almost as much though. > 3. The market is always very forward looking. I may be cynical, but I see perhaps 2 to 3 years to regain the jobs we are losing, to see the employment rate return to earlier levels. That's years of depressed s…

> So the market is looking to, what, 2025 or something?

Well, another point not mentioned is, where else are you going to park your money? Interest rates globally are basically <= 0, real estate may be a dicey proposition for many years to come, bond yields are garbage, so... stock market. And considering so many companies are selling at a discount (regardless of whether or not you think that’s the case), dumping money in the stock market is a pretty good bet right now.

Re: U.S. Economy Shrinks at 4.8% Pace, Signaling Start of Recession

#92

Post by notahacker » Wed, Apr 29, 2020, 2:21 PM UTC

bachmeier wrote: post #85

hn_throwaway_99 wrote: post #17

Earlier quoted context omitted.

3 things: 1. People keep saying about the market being up recently, but skip the part about it still being down about 10% since the start of the year. 2. S&P is heavily weighted towards the strongest companies. Amazon, Apple, Facebook, Microsoft and Google account for 20% of S&P market cap. Most of those companies have been helped by the pandemic, or at least not hurt nearly as bad as smaller companies. 3. The market…

4. Government policy, both current and expected future. I want to add emphasis on (2). The effects are not spread out uniformly across all businesses. The hard hit businesses including restaurants, bars, and hair and nail salons have seen almost all of their business evaporate. You're not going to find the corner nail salon in the S&P 500.

yep. The assumption is they'll be able to borrow more cheaply and easily than ever before and will be able to buy up [assets of] more cashflow-constrained businesses in related markets relatively cheaply.

A related assumption is also that government bonds will be a less attractive alternative place for investors to park their money.

Re: U.S. Economy Shrinks at 4.8% Pace, Signaling Start of Recession

#93

Post by officemonkey » Wed, Apr 29, 2020, 2:21 PM UTC

godzillabrennus wrote: post #75

steveeq1 wrote: post #57

Earlier quoted context omitted.

Better explanation: the fed is buying securities.

Paying a premium for junk...

It's called Lemon Socialism. Businesses keep their winnings. Governments pay their losses.

Re: U.S. Economy Shrinks at 4.8% Pace, Signaling Start of Recession

#94

Post by lettergram » Wed, Apr 29, 2020, 2:21 PM UTC

bachmeier wrote: post #85

hn_throwaway_99 wrote: post #17

Earlier quoted context omitted.

3 things: 1. People keep saying about the market being up recently, but skip the part about it still being down about 10% since the start of the year. 2. S&P is heavily weighted towards the strongest companies. Amazon, Apple, Facebook, Microsoft and Google account for 20% of S&P market cap. Most of those companies have been helped by the pandemic, or at least not hurt nearly as bad as smaller companies. 3. The market…

4. Government policy, both current and expected future. I want to add emphasis on (2). The effects are not spread out uniformly across all businesses. The hard hit businesses including restaurants, bars, and hair and nail salons have seen almost all of their business evaporate. You're not going to find the corner nail salon in the S&P 500.

No but you do find banks, chemical manufacturers, car dealerships, etc. the people employed by the corner nail salon buy goods, indirectly driving the economy.

Re: U.S. Economy Shrinks at 4.8% Pace, Signaling Start of Recession

#95

Post by Ididntdothis » Wed, Apr 29, 2020, 2:21 PM UTC

SpicyLemonZest wrote: post #64

Ididntdothis wrote: post #38

Earlier quoted context omitted.

It seems to me that the stock market or GDP are very bad measures for the economy. Maybe we should look more at average purchasing power or something like that which actually has real meaning for the regular citizen. The stock market seems to have turned into its own system that’s detached from the experience of most citizens.

Metrics like that would be a lot more directly meaningful, but the problem is they're impossible to measure. How would you find out what the average purchasing power is on a day-to-day basis?

On a day to day basis it would be hard but I think a lot of long term policies could be modified for this goal.

Re: U.S. Economy Shrinks at 4.8% Pace, Signaling Start of Recession

#96

Post by lmilcin » Wed, Apr 29, 2020, 2:22 PM UTC

gnulinux wrote: post #55

lmilcin wrote: post #34

Nah, it signals exactly nothing. If there was no Coronavirus, then maybe. With Coronavirus it is just as likely that the economy is going to rebound once the worst of the virus passes. People stopped buying stuff but rest assured, they will make up for it when they finally can.

How do you make up for the 2 months you decided not to eat out and cooked home instead? I live in Boston, and some of my favorite restaurants are already closed, and the huge liqueur store next to my house closed this week. It's not possible to make up for things like this, they're gonna be replaced by larger food chains once virus passes. But it's not true to say virus didn't hurt our economy permanently, of course,…

I never said businesses will come back from grave. But people will want to get out once this passes. I'm personally sick of staying at home, I am going to try to make better use of my time. Somebody will get that business anyway.

I am also putting off repairing my car until after all this passes. Yes, car repair shops may be at loss now because I decided not to do business with them, but my car is still broken and I will probably have to pay premium to get my favorite mechanic to take a look.

This is "economy" we are talking about. It is an average over a lot of individual cases. It does not care that a lot of companies will die if the ones that survive get more business.

Re: U.S. Economy Shrinks at 4.8% Pace, Signaling Start of Recession

#97

Post by lisper » Wed, Apr 29, 2020, 2:22 PM UTC

ganeshkrishnan wrote: post #88

lisper wrote: post #70

Earlier quoted context omitted.

This. What you're seeing is the beginning of a massive currency inflation.

It's very hard to have currency based inflation especially for USD which is in very high demand.

Have you looked at the Fed's balance sheet lately? It is quite literally off the charts.

https://www.federalreserve.gov/monetarypolicy/bst_recenttren...

It is no harder to inflate the dollar than any other currency. Print enough of them, and the their price will go down. It's no different from any other commodity.

Re: U.S. Economy Shrinks at 4.8% Pace, Signaling Start of Recession

#98

Post by nimbius » Wed, Apr 29, 2020, 2:22 PM UTC

This is anecdotal and it might come across as bitter and tonedeaf as someone who is not in a STEM job and cant see the bigger picture very well. Im a diesel engine tech who repairs those big trucks carrying food and shit tickets to grocery stores. the fact that ANY market is completely detached from whats actually happening to Americans is frustrating.

My job just cut benefits and hours but we're "essential." Remember those $1200 checks? Im still waiting on mine. Lenders and banks were supposed to start going easy on loans but ive had two emails and a phone call about the loan for my Silverado this month and wouldnt you know, the caller was excited to mention my stimulus check.

A guy who used to be my bartender now couch surfs a few days a week at my place while he looks for work. His mother is getting evicted from an assisted living center in a few days and his girlfriend is sick. She 'works at the Amazon' so she cant take any time off, but hes hoping if he gets a job at the Flying J at the edge of town he can switch places with her and she can take a few days off.

Shops are closing and nobody seems to care. Ive counted 2 furniture stores, a consignment shop, a few barber shops, and half the god damn bars in this town including one that was burned to the ground "mysteriously" over the last two weeks. Someone spray painted a swastika on the late night pizza joint.

So yeah this is a recession but it is so much worse than a lot of people think. No school means poor kids roam the street like packs of feral dogs asking for money for food around here. Half the country is out of work and the best Bloomberg can come up with is "its the start of a recession dont you know!"

Re: U.S. Economy Shrinks at 4.8% Pace, Signaling Start of Recession

#99

Post by cwhiz » Wed, Apr 29, 2020, 2:23 PM UTC

lmilcin wrote: post #34

Nah, it signals exactly nothing. If there was no Coronavirus, then maybe. With Coronavirus it is just as likely that the economy is going to rebound once the worst of the virus passes. People stopped buying stuff but rest assured, they will make up for it when they finally can.

That is an optimistic outlook and I hope you are right.

But I bet you are wrong. The destruction of the energy industry will last into 2021 and that alone will drag the economy down. There are also 26 million people who have been out of work and some non-zero percentage of those people won't be able to find work when or if the national economy is full reopened. Then there is the phenomenon of people retracting from spending after big financial events.

...and people are going to be scared for a long time, probably until there is a vaccine. I saw Reuters poll yesterday that indicated 40-60% of people would not go to the movies, a concert, sporting event, conference, or other large gathering until there was a vaccine. To expect that there won't be a trickle down impact from people retreating into their homes is... optimistic.

...but I hope you're right. The pessimists (me) dominate the headlines but the optimists are right more often.

Re: U.S. Economy Shrinks at 4.8% Pace, Signaling Start of Recession

#100

Post by take_a_breath » Wed, Apr 29, 2020, 2:23 PM UTC

matwood wrote: post #77

hn_throwaway_99 wrote: post #17

Earlier quoted context omitted.

3 things: 1. People keep saying about the market being up recently, but skip the part about it still being down about 10% since the start of the year. 2. S&P is heavily weighted towards the strongest companies. Amazon, Apple, Facebook, Microsoft and Google account for 20% of S&P market cap. Most of those companies have been helped by the pandemic, or at least not hurt nearly as bad as smaller companies. 3. The market…

You're spot on. The companies you listed plus others are going to come out of this leaner, with fewer competitors, and a whole set of new people forced to learn how to use them. Great news for those companies. I would also add a #4 to your list that people often miss. There is risk and there is uncertainty (think unknown unknowns). The market hates uncertainty because it is so hard to price. Risk though can be priced…

==Great news for those companies.==

The downside for those companies will be the regulators at DOJ. I have no doubt they will survive this pandemic in even better shape than before. The question then is if the government will work to break them up.

Obvious examples would be splitting YouTube from Google, splitting Instagram and WhatsApp from Facebook and forcing Amazon to pick a side (own the marketplace or be a seller).