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

Re: Why a global recession is inevitable in 2023

#121

Post by hammock » Sun, Jan 01, 2023, 6:06 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…

> House prices have increased significantly above inflation for decades to the point of absurdity, many multiples of a households income

True and yet, compared to house price/income multiples in other developed countries, the US metric is remarkably low (yes, Fannie Freddie etc). Perhaps Americans are just catching up

Re: Why a global recession is inevitable in 2023

#122

Post by verisimi » Sun, Jan 01, 2023, 6:10 PM UTC

boh wrote: post #99

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.

We need to get some crossover between virologists and economists. Virologists always seem to know when pandemics are coming.

Re: Why a global recession is inevitable in 2023

#123

Post by verisimi » Sun, Jan 01, 2023, 6:13 PM UTC

verisimi wrote: post #122

boh wrote: post #99

Earlier quoted context omitted.

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.

We need to get some crossover between virologists and economists. Virologists always seem to know when pandemics are coming.

Or climatologists for that matter.

Re: Why a global recession is inevitable in 2023

#124

Post by opportune » Sun, Jan 01, 2023, 6:13 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.

I am pretty into investing and for the past two years have been doing it almost solely on the basis of macro principles.

Inflation in the last 6 months in the US, as measured by the Fed’s CPI, has been about 2%. All the higher inflation headlines are simply comparing the CPI 12 months ago to today, but the fact of the matter is ever since June/July CPI’s annualized inflation is already at roughly 4% or lower. The Fed may not raise interest rates more than 0.5% above where they are today. If they stop there, the recession risk is IMO minimal because employment metrics are still very strong.

Almost all journalists do not know or understand this, which is why a lot are hand wringing that rates may need to raise much more from where they are today (to Volcker levels) to combat inflation, because from their perspective we have raised them so much only for inflation to have gone down by a third. What they don’t realize is we are already past the inflection point, and interest rate swaps aren’t pricing in much more increases. At least in the US, IMO the risk of a recession is minimal

Re: Why a global recession is inevitable in 2023

#125

Post by yucky » Sun, Jan 01, 2023, 6:15 PM UTC

phkahler wrote: post #120

midasuni wrote: post #94

Earlier quoted context omitted.

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…

>> the monthly cost of housing hasn’t changed as a percentage of take home pay, That is by design. Banks figure your monthly payment as a percent of income. Then based on interest rates they figure out how much you can borrow. Then everyone - the sellers, the agents, even the bank - push you to borrow the max allowed and spend it. This is why lower interest rate cause higher house prices. Interest rates are going up.…

   > Then everyone - the sellers, the agents, even the bank - push you to borrow the max allowed and spend it.

You are not forced to spend above your ability to pay. People used to be ok with buying smaller homes, or in less hip neighborhoods. If you can afford a $500k house you can also afford a $350k house. People need to stop making excuses for living above their means.

Re: Why a global recession is inevitable in 2023

#126

Post by gruez » Sun, Jan 01, 2023, 6:16 PM UTC

adam_arthur wrote: post #97

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 analys…

>But in this case the Fed is quite clearly aiming to orchestrate a spike in the unemployment rate

While this might be technically true in the sense that they're trying to fight inflation by tightening monetary policy, and that has the effect of slowing economic activity and driving up unemployment, I dislike the framing because it implies that the fed wants to high unemployment as some sort of end goal, as if they have some sort of diabolical agenda to oppress workers or whatever.

Re: Why a global recession is inevitable in 2023

#127

Post by opportune » Sun, Jan 01, 2023, 6:18 PM UTC

adam_arthur wrote: post #97

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 analys…

The Fed has a dual mandate. They do not actually want to raise the unemployment rate by itself, only insofar as with the very strong unemployment rates now, it gives them leeway to potentially increase it as they address their other mandate of taming inflation. Inflation in the US, contrary to popular belief, is already almost solved. Since July the MoM inflation per the FRED CPI rate is annualized at like 4%. Once the Fed feels like they have it under control they would not want to continue raising it just to increase unemployment.

Re: Why a global recession is inevitable in 2023

#128

Post by KptMarchewa » Sun, Jan 01, 2023, 6:19 PM UTC

diogenescynic wrote: post #65

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, 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…

Newest mortgages. Those that paid off significant amount of principal aren't that high.

Re: Why a global recession is inevitable in 2023

#129

Post by jjeaff » Sun, Jan 01, 2023, 6:20 PM UTC

dingusdew wrote: post #39

senda wrote: post #23

Earlier quoted context omitted.

I have the same thoughts. However I would say, why are there so many endless help wanted signs? Probably because the jobs don't provide enough income to be sustainable. I think the system currently is wabbling as employers are failing to keep rate with inflation in regards to pay. This will cause a bottleneck in regards to growth/performance for many businesses and ultimately be their downfall.

This is absolutely the case. Federal minimum wage is $7.25 an hour. There is literally not anywhere in the country where you can pay for a studio apartment at that pay. Better hope you can scrape together five roommates in a three bedroom. People have figured out that the cost of going to low-wage jobs like that is more than it is worth. The number of parents who realized they actually brought more money home by one…

I think the $600/week unemployment boost was really a catalyst for a lot of this too. It finally gave so many low wage workers just a minute to breathe and reflect and not worry about their next paycheck. And those few weeks of breathing room was enough to sort of break people out of the rat race and give them time to reevaluate what they want to do. Poverty is very mentally taxing and it can make a huge difference if you have a minute to stop and plan out your life a little bit.

Re: Why a global recession is inevitable in 2023

#130

Post by gruez » Sun, Jan 01, 2023, 6:22 PM UTC

Zaskoda wrote: post #93

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,…

>For example, we could add a hefty tax on any home that isn't owner-occupied.

But why are home prices going up? Is it because non occupying buyers are bidding with each other to drive up prices beyond what is rational? If so, banning those buyers might indeed bring prices down to a saner level. However, if prices are high as a result of supply and demand (ie. more people want to live in desirable places and we can't build more homes to accommodate), then banning non occupying buyers won't do much. Given how the overwhelming majority of home purchases are still done by owner occupiers, I'm very skeptical that it's the former, and it's much more likely that it's the latter.