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How we will know when a recession is coming?

brookings.edu

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Re: How we will know when a recession is coming?

#91

Post by scottlocklin »

nradov wrote: post #14
anm89 wrote: post #4

This is a really interesting metric but I'm going to argue that it doesn't say that much about our current situation given that our current unemployment numbers are highly skewed due to a strong shift towards low quality part time work and a large number of people opting out of the labor search (who are not considered unemployed in these statistics). I could see an argument made that given that this is statistic is r…

Right, unemployment by itself means little unless you have the labor market participation rate for context.

Working age labor participation; there's a huge demographic shift in place towards old people across almost all first world countries. Not sure if they measure this at all, as the historic assumptions was that the distribution of population across age didn't vary much.

Re: How we will know when a recession is coming?

#92

Post by benj111 »

SeeDave wrote: post #3

Will the US economy experience a recession in the next... 100 years? Yes!!!! 50 years? Yes!!! 25 years? Yes!! 12.5 years? Yes! 6.25 years? Yes 3.125 years? Yes? 1.5625 years? Maybe .78125 years? Maybe? .390625 years? No? 0.1953125 years? No 0.09765625 years? No!

People have been calling the next recession for more than 3 years, it'll be fun to return to this prediction when we actually do have a recession, as you think it's likely within 3 years.

By the way, a recession is technically 2 quarters of negative growth, so assuming we start from when we actually know we're in recession, it's a minimum of 6 months from now before we are in recession so ".390625 years" would be a definite no.

Re: How we will know when a recession is coming?

#93

Post by mudlus »

Massive (last I checked 13 trillion and rising) negative yields government bonds market all with. Lowering interest rates twice already, heading to another one next week (rumor). Instead of bailing out the homeowners in 2008, they bailed out the banks. "Too big to fail." Think about this stuff people. Nothing has changed, nothing ever changes, Governments are incentivized by the market to steal money from the working class to protect the stability of an economy. It's simple: SLOWLY separate money and state and we don't have to worry about manipulation of the money supply to "protect us." Buy Bitcoin.

Re: How we will know when a recession is coming?

#94

Post by dragonwriter »

gzu wrote: post #13

Why does it have to be just a recession with rebound a few years later? I’d argue many are thinking too positive following 2008 where everything will go back to normal and prices will rally to all time highs. The US economy almost blew up into a full blown depression in 2008. The Fed swooped in to save the day. Can the Fed do that again indefinitely with not only US but potential problems worldwide? The global econom…

> Can the Fed do that again

They've probably got more tools, as they've said that the foreign experience puts negative interest rates on the table as a realistic tool.

But, even if they can't, Congress could, in principal, step in with serious fiscal stimulus [0], which is less limited than the monetary tools available to the Fed. But they've been unreliable in the last few recessions, leaving the Fed holding the bag.

Re: How we will know when a recession is coming?

#95

Post by dev_dull »

tempguy9999 wrote: post #76
dev_dull wrote: post #38

I worry a lot less about a market correction then I do a political "correction" affecting the markets. We're so polarized. You can sense a desperation among those who took out an exceptionally high amount of student debt and have no realistic way of repaying it. Risk of medical bankruptcy is also extremely high. Among other things, these types of occurrences make people desperate, and desperate people are willing to…

This is pure fear spreading. Why are you doing it - is the future really so terrifying?

What fear am I spreading? I think the market is more volatile that many people believe, but more importantly the source of that risk might stem from a source they might not expect.

Re: How we will know when a recession is coming?

#96

Post by acdha »

graeme wrote: post #35
theturtletalks wrote: post #29

Earlier quoted context omitted.

You're right, but what if revealing the discrepancies wouldn't be beneficial to the company? Many people knew about the subprime mortgages before the 2008 recession and no-one came forward, although some shorted it.

Lots of people gave warnings. I was reading warnings about it in the Economist for years. It was a damned complex system and so is the economy. A lot of stuff is only fully obvious in hindsight. You also have the problem of knowing who to listen to. Many people are warning about many things right now. Some are prescient, some are wrong. How to judge? 2008 could have been better predicted and better prevented, but it'…

It’s also worth remembering just how much money was at stake: everyone who stayed in was going to make a lot more until the crash so there was an enormous incentive to tell yourself that you could time it tightly. If the people making those calls get their bonuses now with little perceived long-term personal risk, that dynamic gets even more toxic.

Re: How we will know when a recession is coming?

#97

Post by seansmccullough »

nickpinkston wrote: post #32
MegaButts wrote: post #23

Out of curiosity, how reliable are all of the metrics we use for measuring economic health? For instance, how reliable is the unemployment rate when it is a highly political number with lots of incentives to misrepresent (ie the chronically unemployed are excluded from the count)? Beyond that, how much are these indicators just fudged or straight-up lied about? Everybody is happy to agree with me when I say that Chin…

The unemployment rate is definitely not the whole picture and is kind of a BS metric. I think you'll find the Labor Force Partcipation Rate gives a more accurate assessment of what you're looking for. "Make-Believe America: Why the US Unemployment Rate Doesn’t Indicate Economic Recovery" https://www.foreignpolicyjournal.com/2018/03/08/make-believe...

I'd go even further and say the 25-54 year old workforce participation rate is a better metric, since the regular workforce participation rate is influenced by demographic changes (i.e. the baby boomers retiring).

https://fred.stlouisfed.org/series/LNS11300060

Re: How we will know when a recession is coming?

#98

Post by rdtwo »

JamesBarney wrote: post #90
MegaButts wrote: post #23

Out of curiosity, how reliable are all of the metrics we use for measuring economic health? For instance, how reliable is the unemployment rate when it is a highly political number with lots of incentives to misrepresent (ie the chronically unemployed are excluded from the count)? Beyond that, how much are these indicators just fudged or straight-up lied about? Everybody is happy to agree with me when I say that Chin…

The U.S. isn't perfect, but it's not China. Also most of the important numbers that the average person cares about such as inflation or unemployment are collected in a very rigorous way that is hard for a government officials to modify without leaving a damning paper trail. Not to mention the vast majority of private measures match up with these numbers. These measures are by no means perfect. The unemployment rate h…

Inflation is super easy to game and everyone wants to push that number as low as possible. The basket used for inflation is ever changing and the percentages aren’t real. For example medical costs are intentionally significantly under counted, and how do you objectively qualify how much better a lcd tv is than a crt tv?

Re: How we will know when a recession is coming?

#99

Post by rdtwo »

kasey_junk wrote: post #25
MegaButts wrote: post #23

Out of curiosity, how reliable are all of the metrics we use for measuring economic health? For instance, how reliable is the unemployment rate when it is a highly political number with lots of incentives to misrepresent (ie the chronically unemployed are excluded from the count)? Beyond that, how much are these indicators just fudged or straight-up lied about? Everybody is happy to agree with me when I say that Chin…

The markets watch the BLS numbers like crazy and compare them to estimates from private sources that come from a wide range of methodologies. Frequently the big moves in the markets are not triggered by the bare numbers but from the difference between the expectation and the numbers. If there was a systematic fudging of those numbers lots and lots of people would notice.

A lot of people do notice but it’s not something that is tradable because you don’t know when the correction will happen or how the rules will change when it does

Re: How we will know when a recession is coming?

#100

Post by rdtwo »

fuzz4lyfe wrote: post #87
50656E6973 wrote: post #65

Earlier quoted context omitted.

Do you consider it a free market if the government bails out big price manipulators when their scheme implodes?

I don't. Most free market thinkers aren't the GOP talking heads you see in the news. Those guys made their fortunes via regulatory capture, war and protectionism for the most part. Frankly it seems they have ridden that train into the ground the values of conservatives can only bend so far before voters start asking questions the politicians can't answer. Only socialism can provide the level of market control that th…

Free markets only exist in heavily regulated industries because otherwise everyone cheats and there is no price discovery. Kind of ironic really.
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