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

The U.S. just had the most Q1 layoffs in a decade

axios.com

Post reply on HN
Print view View original

231–240 of 243 posts

Re: The U.S. just had the most Q1 layoffs in a decade

#231

Post by 8note »

gbear605 wrote: post #110
throw0101a wrote: post #88

Earlier quoted context omitted.

I don't think there would be inflation. Inflation begins (IMHO) when there's a lot of money in circulation: too much cash chasing too few resources, bidding up prices. In a bank run, people are taking home bills because they want them to be "safe" in case the bank goes under (never mind FDIC, which most people probably do not understand). Money sitting under the proverbial or literal mattress is not in circulation, a…

It wouldn’t immediately cause inflation, but eventually they would start spending that money under their mattress, causing the amount of money in circulation to increase.

wouldn't that happen anyways? if people have money on banks, they're still going to use it eventually.

the thing that changes if the money is under mattresses is that the banks stop having money to lend and invest. I don't know if that creates inflation or not?

Re: The U.S. just had the most Q1 layoffs in a decade

#232

Post by inuhj »

coralreef wrote: post #207
diminoten wrote: post #195

Earlier quoted context omitted.

The problem being pointed out is that fewer people aren't coming in to buy burgers yet, but because the store managers heard rumors of a recession, they preemptively fire employees and order less meat, which puts fewer dollars in their employees pockets, which means less spending power per person on average which means people actually do spend less, even though there wasn't actually anything wrong in the first place.

Based on what I know about American consumer spending habits, people basically spend whenever they can (which is why consumer debt is so high). It's when they "physically" can't spend that it starts to slow down (slowing income, access to credit).

That's exactly right. Recessions are not behavioral patterns. They happen when borrowers can no longer borrow more to pay the interest on their existing debts.

Re: The U.S. just had the most Q1 layoffs in a decade

#233

Post by diminoten »

inuhj wrote: post #232
coralreef wrote: post #207

Earlier quoted context omitted.

Based on what I know about American consumer spending habits, people basically spend whenever they can (which is why consumer debt is so high). It's when they "physically" can't spend that it starts to slow down (slowing income, access to credit).

That's exactly right. Recessions are not behavioral patterns. They happen when borrowers can no longer borrow more to pay the interest on their existing debts.

Yes, that's the traditional understanding. We're talking about something new, something possibly different.

Re: The U.S. just had the most Q1 layoffs in a decade

#234

Post by aaron_m04 »

gdy wrote: post #229
Symmetry wrote: post #194

Earlier quoted context omitted.

In theory it would be better to cut everyone's pay than to lay off some people. But this brings lots of complications. https://www.econlib.org/archives/2013/09/why_dont_wages.html

And the best employees, who can find a new job even during recession, will leave.

There's more to a job than pay rate. If the best employees leave because of a recession-time temporary pay cut, maybe the company culture was rotten and the company deserves to go down!

Re: The U.S. just had the most Q1 layoffs in a decade

#235

Post by ric2b »

8note wrote: post #231
gbear605 wrote: post #110

Earlier quoted context omitted.

It wouldn’t immediately cause inflation, but eventually they would start spending that money under their mattress, causing the amount of money in circulation to increase.

wouldn't that happen anyways? if people have money on banks, they're still going to use it eventually. the thing that changes if the money is under mattresses is that the banks stop having money to lend and invest. I don't know if that creates inflation or not?

Yes, but now when it happens the newly created money is there as well.

Re: The U.S. just had the most Q1 layoffs in a decade

#237

Post by throw0101a »

gbear605 wrote: post #110
throw0101a wrote: post #88

Earlier quoted context omitted.

I don't think there would be inflation. Inflation begins (IMHO) when there's a lot of money in circulation: too much cash chasing too few resources, bidding up prices. In a bank run, people are taking home bills because they want them to be "safe" in case the bank goes under (never mind FDIC, which most people probably do not understand). Money sitting under the proverbial or literal mattress is not in circulation, a…

It wouldn’t immediately cause inflation, but eventually they would start spending that money under their mattress, causing the amount of money in circulation to increase.

At some point the panic would subside and they'd put their money back, though perhaps at another institution.

Re: The U.S. just had the most Q1 layoffs in a decade

#239

Post by ishjoh »

raesene9 wrote: post #130
ishjoh wrote: post #69

Earlier quoted context omitted.

I invest in index funds that follow the S&P 500 according to a formula. The data shows that they tend to outperform managed funds in the long term. With so many people following the same strategy it will be interesting to see if that stays true long term, but the problem is the same as it ever was. How do you identify an active fund manager that will outperform the market over a long time period? Do they still outper…

That's exactly what I think's happening, what you're doing is what a lot of people are doing. what will be interesting is, say there's a genuine market rout (e.g. what happened with Lehmans), which should depress stocks definitely in the sector, but also in the wider market. If all the money from the passively managed funds just stays put, will the stocks basically not take much of a hit? Of course if it gets bad eno…

> If all the money from the passively managed funds just stays put, will the stocks basically not take much of a hit?

The stocks will still take a hit, as we saw in the case of 2008 almost everyone loses money in a market-wide drop. Many active traders went bankrupt as well, the S&P500 lost 50% of its value but didn't go to 0.

> Of course if it gets bad enough for companies to go broke, that could go wrong for the passively managed crowd as they'll stay in there till the end, most likely.

It depends on how quickly the drop happens. S&P500 index funds will sell stocks as they exit the top 500 (this is a simplification of the actual mechanism), so if the drop is gradual then it's not so bad. If the drop is sudden then there is a bigger problem, but the sudden drop is a problem for everyone, active or passive unless you're doing HFT.

Re: The U.S. just had the most Q1 layoffs in a decade

#240

Post by raesene9 »

ishjoh wrote: post #239
raesene9 wrote: post #130

Earlier quoted context omitted.

That's exactly what I think's happening, what you're doing is what a lot of people are doing. what will be interesting is, say there's a genuine market rout (e.g. what happened with Lehmans), which should depress stocks definitely in the sector, but also in the wider market. If all the money from the passively managed funds just stays put, will the stocks basically not take much of a hit? Of course if it gets bad eno…

> If all the money from the passively managed funds just stays put, will the stocks basically not take much of a hit? The stocks will still take a hit, as we saw in the case of 2008 almost everyone loses money in a market-wide drop. Many active traders went bankrupt as well, the S&P500 lost 50% of its value but didn't go to 0. > Of course if it gets bad enough for companies to go broke, that could go wrong for the pa…

so the difference I thought there might be now, as compared to 2008 is the percentage of funds that are passively managed. If a proportionately smaller percentage of stockholders are selling then it seems possible/likely that any price swing will be smaller.

One example of this "stock markets not reacting to external events" that seems to fit the trend is, to me , the robustness of the FTSE100 since the Brexit vote.

It's clear that companies are taking a financial hit in several places and will continue to do so (perhaps precipitously if it ends in no deal) however the FTSE100 is current around 1000 points higher than it was a year ago.

That could be because a large percentage of the funds in those stocks are passively managed and therefore don't react particularly to those external events.

Post reply on HN