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JPMorgan says the U.S. is probably headed for a recession

fortune.com

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Re: JPMorgan says the U.S. is probably headed for a recession

#31

Post by peepeepoopoo3 »

wahern wrote: post #28
peepeepoopoo3 wrote: post #19

Earlier quoted context omitted.

Geece had to massively increase taxes and implement austerity programs, to say nothing of the EU bailout. Since then, they've been able to survive on low interest rates. Low interest rates which are now gone, as the world is busy fighting inflation.

Inflation cuts both ways, eviscerating older debt. That's the whole reason for the present banking crisis. In any event, the debt-to-GDP ratio being higher than Greece's at the time of its debt crisis says absolutely nothing by itself about the U.S. situation. Pointing it out is a baseless, cheap insinuation.

Except it's not, because our interest rates are also in the same range as when their debt crisis began. Greece was fine at those debt levels until their bond yields hit 5%, at which point they entered into a self-reinforcing spiral of insolvency. The Federal Reserve is currently targeting interest rates above 5% to fight inflation.

Re: JPMorgan says the U.S. is probably headed for a recession

#32

Post by wahern »

csomar wrote: post #22
wahern wrote: post #18

Earlier quoted context omitted.

Greece's debt-to-GDP ratio never stopped climbing; it peaked at over 200% in 2020. The crisis, meanwhile, was short-lived as the ratio per se was not among the most salient factors.

Greece crisis is short-lived? Greece never recovered from the crisis. Employment in Greece in 2010: 4.6 million. Employment in Greece now: around 4.0 million. Sure the unemployment rate has gone "down". That's because the youth gave up and simply moved from Greece. The GDP per capita will improve because of that but their GDP in constant prices never recovered (and is around 2002-2004 levels).

The crisis itself pertained to bond defaults, and in particular the reverberations through the international financial system. But the extra context you've provided only drives home my point: facial nominal figure comparisons are worthless.

Re: JPMorgan says the U.S. is probably headed for a recession

#33

Post by andrekandre »

peepeepoopoo3 wrote: post #16
carterschonwald wrote: post #14

Earlier quoted context omitted.

The us debt is denominated in usd. Countries in the EU don’t have the same luxury.

You're proposing to print away the debt during a period of already high inflation. While you're technically correct that we can avoid default by printing more money, the practical consequences of monetizing the national debt right now, would be catastrophic hyperinflation.

  > we can avoid default by printing more money
isnt "printing" usually done through issuing bonds?

do those increase inflation?

Re: JPMorgan says the U.S. is probably headed for a recession

#34

Post by dragonwriter »

lmm wrote: post #15
dragonwriter wrote: post #11

Earlier quoted context omitted.

Since a recession is the period after an economic peak, the US is always in one of three stages: (1) In a growth period that will last until the US ends, or (2) In a recession, or (3) Heading for a recession (equivalently, “in an economic expansion”, if you are more a “glass currently full” than a “glass will sometime in the future be empty” type). There are literally no other options. OTOH, I hope that the Fed think…

> (3) Heading for a recession (equivalently, “in an economic expansion”, if you are more a “glass currently full” than a “glass will sometime in the future be empty” type). > There are literally no other options. When growth is increasing or steady you're heading away from a recession; it's only when growth is declining that you're heading for a recession.

There might be a sense where that would necessarily be true, if potentially only evident at finer resolution than economic statistics are normally gathered, if the “aggregate economy” curve whose peak marks the beginning of a recession (GDP to a first approximation, but recession is not assessed on a single indicator or simple function) were constrained to being a function that is differentiable (and whose derivative also is) everywhere, but…it’s not. There’s no reason it has to, from expansion, smoothly turn around through a level point to start going down, so that you could assess “heading toward a recession” as where the second derivative as where the second derivative is negative.

(In fact, there isn’t even an actual function, just declared peaks and troughs; between peak and trough is “recession”, between trough and peak is “expansion”, and if you are in one – unless it goes on forever – you are heading for the other. The only nontrivial prediction regarding “heading for” is how soon, not are we.)

Re: JPMorgan says the U.S. is probably headed for a recession

#35

Post by dragonwriter »

csomar wrote: post #21
dragonwriter wrote: post #8

Earlier quoted context omitted.

The US has a recessions about twice a decade; its also had several depressions, though not for quite a while. They do not mean “the US dies”.

This is the first time the US gets challenged on multiple fronts from multiple actors. China, Russia and non-alignment members are all challenging the status quo. The US dollar is being challenged from multiple fronts and one of them is Crypto. (though also the fact it's being mismanaged by its own creators is not helping either). We are definitively in an interesting time. More interesting than the cold war era? I d…

> This is the first time the US gets challenged on multiple fronts from multiple actors.

Its not even the first time since the end of the Cold War.

> The US dollar is being challenged from multiple fronts and one of them is Crypto. (though also the fact it’s being mismanaged by its own creators is not helping either).

So, I’m just about a half-century old, and since I became politically aware – which was pretty young – I’ve been hearing that exact line (except with something else, usually “Gold”, in place of crypto until recently) continuously that entire time.

Re: JPMorgan says the U.S. is probably headed for a recession

#36

Post by peepeepoopoo3 »

andrekandre wrote: post #33
peepeepoopoo3 wrote: post #16

Earlier quoted context omitted.

You're proposing to print away the debt during a period of already high inflation. While you're technically correct that we can avoid default by printing more money, the practical consequences of monetizing the national debt right now, would be catastrophic hyperinflation.

> we can avoid default by printing more money isnt "printing" usually done through issuing bonds? do those increase inflation?

The treasury takes on debt when it issues bonds, but the Federal Reserve expands the money supply when it buys those bonds. It's a two-step process.

Re: JPMorgan says the U.S. is probably headed for a recession

#37

Post by monkeydreams »

csomar wrote: post #21
dragonwriter wrote: post #8

Earlier quoted context omitted.

The US has a recessions about twice a decade; its also had several depressions, though not for quite a while. They do not mean “the US dies”.

This is the first time the US gets challenged on multiple fronts from multiple actors. China, Russia and non-alignment members are all challenging the status quo. The US dollar is being challenged from multiple fronts and one of them is Crypto. (though also the fact it's being mismanaged by its own creators is not helping either). We are definitively in an interesting time. More interesting than the cold war era? I d…

> This is the first time the US gets challenged on multiple fronts from multiple actors. China, Russia and non-alignment members are all challenging the status quo.

Two blocs are emerging. One is largely unified around shared cultural interests in resilient democracy and defence of human rights. The other is a hodge-podge of malcontents, allies-of-convenience and one strong but largely regional power (i.e. China).

If we look at this as a political struggle then we have to look at the problem-solution ledger to see who holds the advantage.

The US (and the West) have issues with an imbalance of power and wealth, and growing numbers of disillusioned, young voters - this is the problem statement. What is the solution that the non-aligned movement can offer? Worse inequality? Fewer rights? What?

The non-aligned countries have fractuous political bases and are shoring up their systems by cracking down on dissedents, attacking neighbours and attempting to corrupt other nation's foreign policies. No one is lining up to migrate to these countries, no one is holding them up as a beacon of rightousness (outside of the wingnut extremes, of course).

Contrast this to the Cold War. The Soviets held a significant sway over the "International Left". They had answers to the problems of the West. Not good answers, but good enough to sway a lot of students and intelligentsia.

China has no allies of note. Russia is a basket case. The rest of the non-aligned bloc are essentially local dictators trying to keep the pin in their respective grenades. All of them are experiencing the same struggle of either a rapidly aging population with no migration, or a rapidly growing youth who want a better life. For example, China's median age is rising 6 months for every year that passes, and they are a long way from being a sustainable, powerful economy.

These are interesting times in the political sense but unless the West starts kicking a lot of "own goals" - which is very possible but not exactly probable - then the US (and to a lesser extent the EU) will own this century as well.

Re: JPMorgan says the U.S. is probably headed for a recession

#38

Post by space_fountain »

downrightmike wrote: post #6

Already has been, just the stock market is catching up to the real economy. This is the logical conclusion to the K-type recovery from helicopter money.

By what metric do you say this? GDP has continued to climb, the unemployment rate is basically as low as it ever has been?

Re: JPMorgan says the U.S. is probably headed for a recession

#39

Post by dragonwriter »

peepeepoopoo3 wrote: post #16
carterschonwald wrote: post #14

Earlier quoted context omitted.

The us debt is denominated in usd. Countries in the EU don’t have the same luxury.

You're proposing to print away the debt during a period of already high inflation. While you're technically correct that we can avoid default by printing more money, the practical consequences of monetizing the national debt right now, would be catastrophic hyperinflation.

> You’re proposing to print away the debt during a period of already high inflation.

Current inflation isn’t that high (YoY is still high because its trailing), and if there is a recession, it will naturally fall faster, and easy money is the natural policy in those conditions, independent of debt concerns (which monetary policy generally is, that’s kind of the point of an independent central bank.)

Re: JPMorgan says the U.S. is probably headed for a recession

#40

Post by dragonwriter »

chamakits wrote: post #9
vague_vagaries wrote: post #4

I just leaned that employers are required by law to report layoffs in advance to the state and you can see the list here: https://edd.ca.gov/en/jobs_and_training/Layoff_Services_WARN Salesforce, Atlassian, Truepill, Waymo, Zoom, Rivian, Impossible foods, etc

Multiple states have a similar law but it gets worked around. They usually work around this by providing a “severance” that covers the legal period of time before they have to notify their employees; and they only have to do any of this above a certain threshold of how many employees are getting laid off. So if the law says you have to notify 2 months in advance, they’ll instead give you at least 2 months severance,…

> Multiple states have a similar law

There is also a federal WARN Act.

> They usually work around this by providing a “severance” that covers the legal period of time before they have to notify their employees;

This is, IIRC, possible in some state systems and under the federal WARN Act, its technically not possible under the California WARN, though the somewhat similar practice of fully-paid no-duties “employment” for the notice period is. This is worse in some respects (a during-employment non-compete can remain in place) and better in others (you are employed for health benefits purposes, so the COBRA clock of 18 or 36 months doesn’t start until the end, not the beginning, of the notice period, etc.)

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