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Why a global recession is inevitable in 2023

economist.com

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Re: Why a global recession is inevitable in 2023

#151

Post by brezelgoring »

snapcaster wrote: post #40
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.

+1 for mentioning the greatest casting duo of all time. Sad they moved on, hard for me to even guess how many hours i've spent with them on in background or foreground

Until his retirement I didn't know he had a wife and 3 kids, good for him - I'm kinda jealous, I won't lie. Life has a way of catching up, I guess, I'm not sad he's not casting GSL anymore, I'm happy that he has done and will likely continue to do well.

Secretly I hope his kids see his achievements and one decides to take the mantle later down the line. It'd be a first in history, a second-generation GSL caster.

Re: Why a global recession is inevitable in 2023

#152

Post by jjeaff »

frankfrankfrank wrote: post #35
netman21 wrote: post #19

Signs I look for of an impending recession: Stagnation. Inflation is a sign of a booming economy. Unemployment. I see help wanted signs everywhere Huge building projects abandoned. Here in SE Michigan I am seeing active construction sites everywhere. The Economist runs headlines like "Are Recessions a Thing of the Past?

I think you should reconsider the position that inflation is a sign of a booming economy. It is an erroneous albeit common perception and perspective. Inflation, the fraud of increasing the number of IOU Currency tokens called {fill in your currency of choice} in circulation simply by copying them is the cause of increasing prices, not inflation itself. It’s a matter of misunderstood definition. An analogy is an arti…

No, inflation is not the same thing as increasing the money supply.

Increasing the money supply is one of the many things that can cause inflation. But to thing it is the only factor is overly simplistic, sort of Laffer-curve-esque. In that it makes a lot of sense in an economics 101 class but the reality is a lot more complex.

For example, if you double the money supply tomorrow but most of that extra money ends up in the bank accounts of the richest people in the world, it will have little effect on the price of avocados, for example. Rich people aren't buying more avocados because now they have $100m instead of $50m. But you can bet you would start to see inflation for yachts, private air

In other words, money supply only affects inflation in as much as it affects supply and demand.

Re: Why a global recession is inevitable in 2023

#153

Post by spacemadness »

speakfreely wrote: post #131
ianai wrote: post #95

Earlier quoted context omitted.

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.

> Right, they bailed out corporations and threw people out of their homes. Never forgive, never forget. So you would've preferred that the whole system came crashing down and believe that average people would've had a better long term outcome from that?

I think there’s a good argument to be made that lots of companies doing bad things and taking bad risks socialize their failure, thus learning nothing except they can get away with it again on the publics dime. Being too big to fail is an added bonus. How is the public better off in that scenario? Regulation can act as a bandaid but there is always another loophole to exploit.

Re: Why a global recession is inevitable in 2023

#154

Post by dragonwriter »

gruez wrote: post #130
Zaskoda wrote: post #93

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 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…

> 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.

Non-occupying owners are a factor in supply and demand; banning them (or even just increasing costs on them, e.g., via taxes on long-term vacant units) reduces the number of prospective non-occupying owners buying and causes existing ones to sell. Similar factors applies to owners with residences used exclusively as short-term rentals rather than residences, which I would expect are usually more of an issue than units held vacant by non-occupying owners.

> Given how the overwhelming majority of home purchases are still done by owner occupiers

The share purchased by investors has gone up much higher than usual to 24% of single family homes nationally last year, with Georgia leading the nation at 33%: https://www.pewtrusts.org/en/research-and-analysis/blogs/sta...

Re: Why a global recession is inevitable in 2023

#155

Post by lamontcg »

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…

Yeah that is exactly what I think needs to happen in a perfect world.

Allow a wage-price spiral of about 6% a year, which would raise long rates, allow short rates to increase eventually without a recession and that would cut off the cheap money supply. Asset prices would fall in real terms because of persistently higher rates across the yield curve. In nominal terms they would be able to maintain more of their price while wages would inflate to the point where people would be able to buy houses and be able to pay back debts (particularly college loans).

Instead the Fed jacking up short rates right now is going to cause a recession, create high unemployment and cap wage growth and break unionization. This will be combined as usual by massive tax cuts for the rich as a bailout package, which will be the only thing possible to get past the Republican House. And the Fed will have to then sharply cut short rates and the cycle will continue. I doubt we'll be able to maintain rates at 0% for another ten years, but they're firmly opposed to trying to wage-inflate our way out of this, so we'll probably see shorter cycles between boom and bust as inflation starts to come back faster. There are no signs that they're going to start to give up on the way they've been running the economy though, I don't think there has been a massive fundamental shift in the economy -- other than no more 10 years of 0% with no CPI inflation.

Re: Why a global recession is inevitable in 2023

#156

Post by jjeaff »

cm2187 wrote: post #59
brookst wrote: post #38

Earlier quoted context omitted.

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)

The fact that the inflation predates the war in ukraine by several months should be evidence that Ukraine isn't the primary reason. That at least shouldn't be in dispute. I am not sure what sort of evidence you would expect. Every time you print money you create inflation. Even the post 2008 QE created massive asset inflation that wasn't captured in the main CPI, but the logic still stands.

While money supply is one of the factors, most economists don't seem to think it is the largest factor nor the most important. The world supply chain is still catching up from covid shutdowns. The auto industry is a perfect example of this. There are still waitlists for many new vehicles. Which has also caused increases in the used market. Now that supply chains are finally starting to catch up, we are already seeing prices fall in the used market, despite overall inflation.

Re: Why a global recession is inevitable in 2023

#157

Post by tremon »

gruez wrote: post #130
Zaskoda wrote: post #93

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 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…

In a supply shortage (which is the housing market in most areas), prices follow the purchasing power of the buyers, not the goods' value. And since we've had years of 0% interest rates and accompanying mortgage rates, purchasing power was astronomically high even for owner-occupier buyers. Property investors add even more high-power buyers to the market, and further reduce the supply.

The only way to bring down housing prices is to out-build the demand -- which no constructor will do voluntarily, because it's a guaranteed loss proposition. Personally, my only hope is that remote work will even out prices between low-value and high-value areas -- but I'm aware that proximity to the job is not the only factor determining the value of an area.

Re: Why a global recession is inevitable in 2023

#158

Post by olonn »

hdjjhhvvhga wrote: post #134
oliwarner wrote: post #116

Earlier quoted context omitted.

Major economies are already in deepening recessions. Major producers are starting the year with significant impairment from COVID and supply line pressures. The threat of Russia's aggression affecting other countries remains. Energy prices are still obscene in Europe. I hope things get better, but I think you'd be mad to plan for global growth this year.

> The threat of Russia's aggression affecting other countries remains. Like what countries exactly? They can't even hold the ground they conquered in the previous months in Ukraine. Armenia already asked Russia's help and they refused - it was effectively a fatal blow to CSTO and has far-reaching consequences to the way Russia is perceived among its current and former allies.

probably finland and other countries near russia

Re: Why a global recession is inevitable in 2023

#159

Post by dragonwriter »

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),

This isn't obvious, wages can drive as well as lag inflation.

> but house prices remain stagnant with no increase, would that bring them down in real terms

Yes.

> without a “housing crash”?

Perceptually? Likely. Substantively? Only if it was a long, slow inflation, and therefore a long, slow real-value decline.

> Could this be a “good thing” and does that even make sense?

It’s the same thing, requiring the same conditions, as the real-value decline without inflation, but with inflation.

What I think you actually want is wages rising greater than both inflation and housing prices (not real decline in housing prices as such), so that wages rise with respect to housing. But the problem isn’t defining the output on that level, anyway, its dealing with housing supply/demand to make either scenario happen.

Re: Why a global recession is inevitable in 2023

#160

Post by jjeaff »

nuc1e0n wrote: post #91
cj wrote: post #4

Earlier quoted context omitted.

> 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.

I think most honest economists would tell you that economists have never been very good at predicting the future. They can do a pretty good job of explaining the why of the past and how markets work, but there are too many factors, either known or unknown that always come into play. But people really want predictions, which is why you get headlines like this one.
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