Why a global recession is inevitable in 2023 • Hacker News Board

Re: Why a global recession is inevitable in 2023

#91

Post by nuc1e0n » Sun, Jan 01, 2023, 5:39 PM UTC

cj wrote: post #4

hunglee2 wrote: post #2

'inevitable' yet precedes to list examples in geopolitics, economy and energy which are all the result of choices made by human beings. Let us not use language which describes economic recessions as force majeure - they are the result of human acts, human decisions, perhaps more strategic and pre-planned than comprised publishers like the Economist would have us believe

> comprised publishers like the Economist I was under the impression that the economist was one of the last remaining high quality print magazines in existence. Curious what makes you think they’re compromised? (And if you’re aware of any similar publications that aren’t compromised?) Edit: just noticed the quote says “comprised” rather than compromised. Disregard this comment if that wasn’t a typo

The Economist remains uncompromised in my view. Maybe out of touch though. Another reason for more vigourous debate. I still think all these troubles are just engineering problems to be solved. I relish the task.

Re: Why a global recession is inevitable in 2023

#92

Post by samwillis » Sun, Jan 01, 2023, 5:39 PM UTC

throwthroyaboat wrote: post #78

diogenescynic wrote: post #65

Earlier quoted context omitted.

>If we have a period of inflation, with increased wages (obviously with a painful lag), but house prices remain stagnant with no increase, would that bring them down in real terms without a "housing crash"? Could this be a "good thing" and does that even make sense? It's still only part of the equation since interest rates are much higher now so mortgage payments are double what they were a year ago. So even if the h…

This is a good point. This is also somewhat dependent on how a particular country does mortgages. The USA does 30-year fixed rate, but that is not the norm in most countries. The main benefit of lower house prices (even if the monthly finance costs are the same) is that the amount you have to save for a deposit is reduced, which is often a significant barrier for young people.

That's more or less where my thinking comes from, I'm in the UK and most people fix for 2-5 years at a time.

Interest rates will come down again so the effect of them being a barrier will reduce. But the fundamental problem for most people here in the UK is getting a 10-20% deposit together when the average house price is £296k, average salary is about £27k, and average household income is £31k.

Re: Why a global recession is inevitable in 2023

#93

Post by Zaskoda » Sun, Jan 01, 2023, 5:39 PM UTC

samwillis wrote: post #47

Disclaimer, I have no idea if this is even slightly logical, I'm not an economist. House prices have increased significantly above inflation for decades to the point of absurdity, many multiples of a households income. People in their 20s (and 30s) increasingly don't believe they will ever own a home. If we have a period of inflation, with increased wages (obviously with a painful lag), but house prices remain stagna…

> If we have a period of inflation, with increased wages (obviously with a painful lag), but house prices remain stagnant with no increase

This would require heavy regulation of the housing market. For example, we could add a hefty tax on any home that isn't owner-occupied. Otherwise, housing will remain one of the better places to invest earnings and the cost of housing will continue to rise with earnings. However, such a tax would likely increase the cost of renting.

Re: Why a global recession is inevitable in 2023

#94

Post by midasuni » Sun, Jan 01, 2023, 5:40 PM UTC

samwillis wrote: post #47

Disclaimer, I have no idea if this is even slightly logical, I'm not an economist. House prices have increased significantly above inflation for decades to the point of absurdity, many multiples of a households income. People in their 20s (and 30s) increasingly don't believe they will ever own a home. If we have a period of inflation, with increased wages (obviously with a painful lag), but house prices remain stagna…

As household wages have increased (especially with increasingly two full time professional incomes now, which was very rare 30 years ago) and internet rates have been low, the monthly cost of housing hasn’t changed as a percentage of take home py, it’s just you need two full time incomes to do it.

This is the fundamental problem though, because there is a shortage of housing, as wages increases, housing costs (either rent or mortgage) increase to suck up every available penny that’s earned.

What is needed is for housing supply to be able to meet housing demand.

Re: Why a global recession is inevitable in 2023

#95

Post by ianai » Sun, Jan 01, 2023, 5:40 PM UTC

jjeaff wrote: post #76

ianai wrote: post #7

Remains to be seen how Powell and the current Fed perceive their joint mandate of low inflation/low unemployment. By indicators, the labor market is still resembling hermit crabs leaving shells empty anytime a shell gets filled with a crab. But I thought the market was overweighted in 2017/2018 and the Fed wouldn't raise rates until 2022. As the economist stated here or elsewhere in this group of articles, the effect…

I'm not aware of them buying any individual stocks recently. They did, however buy several (like GM) during the 2008 recession.

Right, they bailed out corporations and threw people out of their homes. Never forgive, never forget.

I’d still largely say this Fed is departing from history. The economy last saw a pandemic like covid in 1918. And that was during a world war.

Re: Why a global recession is inevitable in 2023

#96

Post by bratbag » Sun, Jan 01, 2023, 5:41 PM UTC

Xelynega wrote: post #57

cj wrote: post #26

Stupid question: Are recessions a healthy part of a normal economic ebb and flow? (Over the long-term) I suppose an extremely long recession/depression (e.g. 5-10 years) would obviously be bad. But are recessions that last 1-2 years really something to panic over at a macro level? My (less than informed) assumption is high growth followed by a slight contraction/recession isn’t objectively bad if it helps an economy…

The problem with even short recessions is that we should question whether or not we really need actual people to endure actual hardships while worker efficiency continues upwards for the sake of imaginary numbers.

The demand for the work some of those people were doing only existed because of fantasy estimates of the value of a market.

When that fantasy evaporates, people face hardship.

Worker efficiency makes that more likely, not less.

The real question is if 10 years of fantasy chasing growth followed by a year or two of reality, is better or worse than constant hardship where we never allow the fantasy of chasing growth.

Re: Why a global recession is inevitable in 2023

#97

Post by adam_arthur » Sun, Jan 01, 2023, 5:44 PM UTC

jmartrican wrote: post #29

When I see predictions like this I think "awesome, no global recession coming in 2023". I have not done a study on this, but it seems like every prediction I come across is just wrong. Its like when I watch Artosis or Tasteless give a prediction during an SC2 tournament and immediately be wrong. "caster's curse" i think its called.

It’s fair to be skeptical of economic predictions, as yes, most end up being wrong.

But in this case the Fed is quite clearly aiming to orchestrate a spike in the unemployment rate, and pretty much all of history is pointing towards the current macro setup ending with recession.

By and large people tend to be overly optimistic that this time is different re economic cycles and monetary policy.

E.g. Wall Street analysts predicted 10% earnings growth in 2008, and ended up being -70%.

Re: Why a global recession is inevitable in 2023

#98

Post by urfullofsht » Sun, Jan 01, 2023, 5:45 PM UTC

midasuni wrote: post #94

samwillis wrote: post #47

Disclaimer, I have no idea if this is even slightly logical, I'm not an economist. House prices have increased significantly above inflation for decades to the point of absurdity, many multiples of a households income. People in their 20s (and 30s) increasingly don't believe they will ever own a home. If we have a period of inflation, with increased wages (obviously with a painful lag), but house prices remain stagna…

As household wages have increased (especially with increasingly two full time professional incomes now, which was very rare 30 years ago) and internet rates have been low, the monthly cost of housing hasn’t changed as a percentage of take home py, it’s just you need two full time incomes to do it. This is the fundamental problem though, because there is a shortage of housing, as wages increases, housing costs (either…

[dead]

Re: Why a global recession is inevitable in 2023

#99

Post by boh » Sun, Jan 01, 2023, 5:46 PM UTC

jmartrican wrote: post #29

When I see predictions like this I think "awesome, no global recession coming in 2023". I have not done a study on this, but it seems like every prediction I come across is just wrong. Its like when I watch Artosis or Tasteless give a prediction during an SC2 tournament and immediately be wrong. "caster's curse" i think its called.

Most recessions are identified after they've occurred, particularly on a global scale, since the evidence is rarely obvious. Not all countries, industries, states will be affected equally. It's completely possible the recession has already occurred and we're currently in the midst of it.

Re: Why a global recession is inevitable in 2023

#100

Post by adra » Sun, Jan 01, 2023, 5:47 PM UTC

brookst wrote: post #38

cm2187 wrote: post #24

The economist is blaming it all on Ukraine but the reality is that rate increases will likely be the primary driver for the recession, at least in the US. And those rates hikes (and roll off of the Fed B/S) are a response to inflation. And as much as the economist or Biden would like to pin inflation on Putin, the reality is that the inflation started a year earlier than the Ukraine war, and is the result of money pr…

I knows that’s a theory, but I haven’t see any more evidence that inflation is due to monetary policy than I have that it is due to Ukraine. Lots of philosophical arguments that it must be , but no evidence. Correlation, causation, all of that. Have you seen evidence of causality that goes beyond theory? (I’m not necessarily disagreeing, just saying it often seems like a faith-based view)

I'd agree that the Ukraine war is taking the heat for whats probably the result of economic policy. Late 2019 things wete already starting to look a little glum. 2020 everybody put a bunch of money into the system and 2021 was the world living fast and loose from that excess. 2022-2023 feels like a correction from 2020-2021 and one that's plainly predictable which is why this prediction has been well predicted in most markets and news outlets at this point. I have no idea why this seems like news at 11 for the HN crowd, but shrugs. Hope you're locked into diversified portfolios!

PS: though you can blame policy, I'd argue the hit now was a small price to pay for the potential for a much harder hitting system collapse if the COVID shock was ignored.