Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Why a global recession is inevitable in 2023

economist.com

Post reply on HN
Print view View original

191–200 of 281 posts

Re: Why a global recession is inevitable in 2023

#191

Post by Izkata »

dragonwriter wrote: post #187
Izkata wrote: post #180

Earlier quoted context omitted.

Take a look at the comment I was responding to, as well as some others on this page: It's a common misconception that the unemployment rate spikes ( spikes , not fluctuates slightly higher ) before recessions. It doesn't.

The fact that you were responding to an incorrect description does not make your description that “The low unemployment rate indicates we’re likely either in or about to start a recession” correct. 1+1=3 is wrong, but that doesn’t make the response “1+1 is actually 1” correct.

Allow me to repeat: spikes, not fluctuates slightly higher.

1948, 1953, 1960, 1974, 1980, 2001, and 2008 all fit what I said.

1957, 1970, 1981, and kind-of 1990 are the exceptions.

As for the extended low unemployment... If you ignore the covid anomaly (as most people seem to since it wasn't a natural market reaction but caused by lockdowns), we're at the same 3 years of the previous maximum duration.

Re: Why a global recession is inevitable in 2023

#192

Post by toast0 »

JKCalhoun wrote: post #105
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…

You could as well single out the average cost of a new car in the U.S. At $47K I suspect that too has fast outpaced inflation. I am not aware of an automotive parallel to a "housing crash" (aside from the obvious joke that, though it begs, I will not stoop to giving voice to).

> I am not aware of an automotive parallel to a "housing crash"

New car manufacturers don't like to drop prices, but they do like to offer cash back and below market rate interest incentives. Especially towards the end of the model year. Very low cost leases show up from time to time as well.

You also see things like pausing production when supply is outpacing demand. Sometimes it's subtle like stopping the line a few weeks before the scheduled stop, or starting it back a few weeks later, and sometimes it's a month off during the model year.

Re: Why a global recession is inevitable in 2023

#193

Post by dh2022 »

lamontcg wrote: post #155
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…

"Allow a wage-price spiral of about 6% a year, " - Fed cannot create this wage-spiral. Fed only controls interest rates. From 2009-2016 interest rates were below 0.2% - and wages did not move.

Only employers can create this type of wage spiral - and I do not think they will do this. Employers are now looking into automation as much as possible to replace labor (supermarket checkouts, at fast foods order kiosks, online ordering, robots for cleaning hotel rooms, etc...)

Re: Why a global recession is inevitable in 2023

#194

Post by wonderwonder »

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…

I'm not so sure it would bring housing prices down as the owners can just rent them out for more than their mortgage as rent demand is also high. Rents have accelerated upwards along with the price of homes. Additionally I see most current owners just staying where they are as the cost to move is too great with increased borrowing costs.

Anecdotal but I have 150k of equity in my house that I bought ~3 years ago and a 4.15% interest rate. Not a great rate but if I was to refinance I am looking at 6%. Even if I was to sell, and get 150k out, any house I want to buy afterwards has appreciated at the same rate as my current one, so it is more expensive as is the loan.

I think the only fix is building more housing but now the loans builders need to take out to build are more expensive as well as are building materials so even new construction is very expensive. In addition, the rate at which new houses are built in so low that they don't appreciably affect existing supply in a hard enough way to even approach demand so prices stay high. The only real fix would be a government financed program that dropped hundreds of billions in near 0 % financing to builders to build hundreds of thousands of homes. That isn't happening.

Re: Why a global recession is inevitable in 2023

#195

Post by rcarr »

jonahx wrote: post #49
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…

> Are recessions a healthy part of a normal economic ebb and flow? (Over the long-term) Ray Dalio discusses this in his video here: https://www.youtube.com/watch?v=PHe0bXAIuk0&t=483s And basically the answer he gives is "yes".

I look at recessions as being analogous with a bodybuilding cut cycle. You go through a bulking cycle to build muscle and to do so you consume a calorie surplus. Because it's difficult to tailor your macros precisely, you most likely put on a bit of fat at the same time. So after a period of bulking you undertake a cut cycle, where you burn off all the fat you don't want.

In economic terms, in the bulk cycle there's lots of resources sloshing around so it's easy to start a business, get finance and grow. Then in the cut cycle, the businesses that prove their value remain and we collectively dispense of the ones that don't.

Whilst it is healthy for the overall group, it's not much comfort for the individual humans on the losing end and we should probably do more to help them rebuild their lives afterwards.

Re: Why a global recession is inevitable in 2023

#196

Post by za3faran »

lamontcg wrote: post #140
opportune wrote: post #124

Earlier quoted context omitted.

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…

Because unemployment is low that means that the Fed can't drop rates at all or else inflation will come back. And it is likely that if the Fed pauses rate hikes and the economy doesn't fall into recession that there will be another boom and high inflation again, which will kick off more rate hikes. This is the difference between short-term reactions of inflation to rates and long-term reactions. What the Fed needs to…

I'm not a financial person so help me understand. Is it a requirement for the current financial system to maintain an unemployment rate in a certain range (be it 6-8% or something else) in order to keep functioning and not spiral into an inflation death cycle? What happens if we have an unemployment rate close to 0?

Re: Why a global recession is inevitable in 2023

#197

Post by oneoff786 »

marcosdumay wrote: post #148
oneoff786 wrote: post #12

Earlier quoted context omitted.

Not at all. A global recession has not been strongly forecasted like this for a long time. Sure, anyone can make a prediction, and you will always find some people predicting both directions, but that doesn’t form a common consensus. A likely recession does not mean that selling stocks is advisable either.

I don't think there has been a consensus recession forecast since the early 90s. At the 00 and the 08 ones there were plenty of people denying it.

Those recessions were much harder to predict. Suppose a solar flare destroys all electronics. Will we enter a recession? Yes. Obviously yes.

Right now we face an energy, food, and fertilizer shortage. Will that cause a recession? Almost certainly. Or at least it’s a downwards effect. Maybe you think the economies will grow more than they shrink in spite of this for other reasons. But this is a rare easily observed negative pressure for everyone.

Re: Why a global recession is inevitable in 2023

#198

Post by za3faran »

brookst wrote: post #42
curation wrote: post #33

Why are global symptoms of capitalism (recessions, financializations, slow motion crashes aka inflation) subjects of speculation but the cause - capitalism itself - not?

I’ll one-up you: capitalism isn’t the problem, people are the problem.

But we know that when we don't have boundaries, people will go to whatever extent to maximize their personal gains at the expense of others. That's why we have laws.

Re: Why a global recession is inevitable in 2023

#199

Post by [deleted] »

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.

[deleted]

Re: Why a global recession is inevitable in 2023

#200

Post by w1nst0nsm1th »

Zaskoda wrote: post #77
BirAdam wrote: post #55

Earlier quoted context omitted.

Yes. And it’s actually correct. I’ve thought that US financial system and US dollar would fall since I was roughly 13. The problem is that at some point central banks and governments will be unable to avoid hyperinflation due to debt accumulation. They will be forced to print. Additionally, the debt is inevitable when politicians are bought and paid for and therefore incentivized to provide lucrative contracts to don…

> On another note, there is inherent instability in debt-based economics From an adequate distance, fraction reserve banking looks a whole lot like a ponzi scheme.

No. It's not.

The 2 phenomenons are very different, if you trace monetary movements from one economic actor to another. They are not even close. It's like comparing a hat and a car.

https://www.investopedia.com/terms/f/fractionalreservebankin...

https://www.investopedia.com/terms/p/ponzischeme.asp

Post reply on HN