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

#111

Post by quickthrowman » Wed, Apr 29, 2020, 2:28 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.

Where do you think those small businesses buy their supplies/inventory from?

The employees of these businesses also consume products from large cap companies. Who is going to buy things if they’re out of work?

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

#112

Post by dudul » Wed, Apr 29, 2020, 2:28 PM UTC

nimbius wrote: post #98

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." Remembe…

And this post is why I get so infuriated when I see all the blue-checkmarks on Twitter, calling people who want to go back to work "Selfish, stupid, idiot, etc".

People don't want lockdown to stop because they need to go to their hairdresser, or because they need to go hangout at the pub, or whatever idiotic reason these privilege a-holes put in their tweets. People want to get back to work, because they need money, to have a roof above their head. To feed their kids.

Edit: Just to clarify because I see a lot of misunderstanding in the replies: I am not advocating to end the lockdown. I am criticizing the tone deaf, patronizing, rude, caricatural comments attacking people who want to end it to get their paycheck back.

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

#113

Post by wpietri » Wed, Apr 29, 2020, 2:30 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.

I used to think that too. The buildings and are still there, and the workers can come back easily enough. Unlike, say, a hurricane, we should be able to just start things up.

However, I think two factors make that unlikely now. One is the inadequate, spotty government intervention. They should have strongly pressured banks and landlords to just extend mortgages and defer or suspend rent. They should have encouraged utilities and other large, stable suppliers to stretch bills. And then they should have paid workers to mostly stay the fuck home.

The other is inadequate, spotty government response to the virus. When you look at SF and Seattle vs NYC, it's pretty obvious that strong, early government intervention can make a huge difference. And when you look at S Korea vs the US, it's even clearer. If we'd had good test-and-trace capacity ready, or if we'd locked down while quickly developing it, we'd be done with things by now. But governmental half-assing of this means that we're looking at a much larger impact than is necessary.

I think the first failure means that both businesses and consumer spending will be slow to recover once the crisis is past. And I think the second failure means it's going to be a much larger crisis. So I'm now expecting a much more significant reaction than I was 6 weeks ago.

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

#114

Post by banannaise » Wed, Apr 29, 2020, 2:30 PM UTC

lettergram wrote: post #94

bachmeier wrote: post #85

Earlier quoted context omitted.

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.

The economy's response to "a large segment of the population has no money to buy things" seems to be selling more stuff and more expensive stuff to those who do. The economy is essentially trying to cut many people out of it entirely. (and yes, I know 'the economy' isn't some sentient monolith)

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

#115

Post by hnarn » Wed, Apr 29, 2020, 2:30 PM UTC

nimbius wrote: post #98

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." Remembe…

[flagged]

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

#116

Post by RHSeeger » Wed, Apr 29, 2020, 2:31 PM UTC

nimbius wrote: post #98

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." Remembe…

It might help to remember that a recession is economic decline over a period of time, so a steep decline over a very short period is not considered a recession. As we move into a longer period of time (in the past, the rule was two quarters, but that doesn't seem to be a "rule" of the definition anymore), it starts to officially be considered a recession.

So it's not that it was being dismissed as not significant before this but, rather, it hadn't been going on long enough yet to officially be called a recession.

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

#117

Post by Invictus0 » Wed, Apr 29, 2020, 2:31 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…

Who cares if it takes 3 or 4 years to recover if retirement is 20+ years away? Everyone knows you should buy at the bottom of a recession and people are betting that we've already bottommed out. And even if we haven't, stocks have been so cheap that it doesn't matter that much if we miss the absolute rock bottom. I'm up 60% for this month.

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

#118

Post by mywittyname » Wed, Apr 29, 2020, 2:31 PM UTC

iambateman wrote: post #4

I understand that the economy and the market are different but I'm so confused. The S&P is up ~12% this month, despite massive unemployment, a shrinking economy, and serious long-term questions about the outlook. Is most of the 12% just market speculation that the virus issue will pass without a long-term earnings hit?

Well, that's a 12% increase following a huge drop. So the market is still 15% or so under its February peak.

A significant number of S&P 500 investors (roughly 40%) hold their investments in retirement accounts. These people are not going to sell unless forced to because they lost their jobs. If you're looking for a huge drop in the S&P 500, then keep an eye out on laws that allow for penalty-free withdraws from retirement accounts and reports that Americas are taking money out of their retirement accounts to live.

Also, there are plenty of people betting on the market going down.

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

#119

Post by sigmar » Wed, Apr 29, 2020, 2:31 PM UTC

dudul wrote: post #112

nimbius wrote: post #98

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." Remembe…

And this post is why I get so infuriated when I see all the blue-checkmarks on Twitter, calling people who want to go back to work "Selfish, stupid, idiot, etc". People don't want lockdown to stop because they need to go to their hairdresser, or because they need to go hangout at the pub, or whatever idiotic reason these privilege a-holes put in their tweets. People want to get back to work , because they need money…

The biggest contributor to this economic downturn is the pandemic. Demand and market valuations plummeted in February, long before any stay-at-home orders.

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

#120

Post by res0nat0r » Wed, Apr 29, 2020, 2:32 PM UTC

dudul wrote: post #112

nimbius wrote: post #98

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." Remembe…

And this post is why I get so infuriated when I see all the blue-checkmarks on Twitter, calling people who want to go back to work "Selfish, stupid, idiot, etc". People don't want lockdown to stop because they need to go to their hairdresser, or because they need to go hangout at the pub, or whatever idiotic reason these privilege a-holes put in their tweets. People want to get back to work , because they need money…

I understand their thinking because not working is causing a massive amount of collateral damage, but the virus doesn't care about any of that. If everyone goes back to normal too early, this all just starts over, and folks are forced to be inside even longer, there's just no way around it.