Recession?

[Darat]

Thankfully in the UK we are not going to see a recession, in fact our economy is now going to grow 2.5% each and every year going forward, our dynamic new PM and her team have assured us they've taken the necessary steps to make this happen.

 

[SpuriusMaximus]

Combine that with China heading into deep trouble and I think there's a very nasty period about to start, albeit with very full employment.

In the past, full employment has cushioned recessions, but this time, wage-earners are under severe monetary pressure and there doesn't seem to be an easy fix.

It's not that simple. I'll point you at the Phillips curve. Very low unemployment tends to push inflation up.

And really, I wouldn't say we're in a recession per se. We haven't stopped making stuff or anything. We're just in an inflation burst.

 

[The Atheist]

Thankfully in the UK we are not going to see a recession, in fact our economy is now going to grow 2.5% each and every year going forward, our dynamic new PM and her team have assured us they've taken the necessary steps to make this happen.

The good news is, if you travel to America you won't have to worry about silly exchange rates. 1 = 1.

Very low unemployment tends to push inflation up.

Yes, I've mentioned that, which is why interest rates are increasing.

Trouble is, because the inflation has mainly come from outside the wage system, workers are playing catch-up, exacerbating the economic impact.

We're caught in a feedback loop and there doesn't seem to be an easy way out.

And really, I wouldn't say we're in a recession per se. We haven't stopped making stuff or anything. We're just in an inflation burst.

People still make things during a recession, so that's not relevant.

Whether it's a recession or not depends on what metric you use. I see nothing wrong with the traditional two consecutive negative quarters, and we're already there.

China's just spent $US1T failing to halt the fall of the yuan. It looks to me like Xi's and the CCP seem to think they won't end up with the same results as every other country who tried that, much like the no-covid rule they're crippling themselves with.

 

[Roger Ramjets]

Whether it's a recession or not depends on what metric you use. I see nothing wrong with the traditional two consecutive negative quarters, and we're already there.

Who is 'we'?

United States Economic Forecast

15 September 2022

Every day, observers change their stance, as one day’s news provides a different picture from the previous day’s news. And often, it seems like a never-ending stream of bad news...

And yet, for all the noise, the US economy doesn’t look that bad. Employment growth remains strong, and many measures of economic activity are growing—even if more slowly than last year. Oil and food prices have been falling at the wholesale level, and consumers are beginning to see the results in stores. Gasoline prices fell below US$4 per gallon in August. Consumer spending remains positive...

Talk of a recession occurring in the first half of 2022 was premature. Our experience in following the economy suggests that the state of the jobs market alone precludes the possibility that the economy was in recession before August. Two-quarters of negative GDP do not define a recession (see the sidebar, “Defining recessions (and the danger of revisions)” for more details).

Defining recessions (and the danger of revisions)

When the first estimate of GDP in the second quarter was negative, some commentators declared that the economy must be in a recession. After all, it was the second negative quarter in a row, and two negative quarters define a recession, right? Actually, this definition of recession has never been used in the United States.

China's just spent $US1T failing to halt the fall of the yuan. It looks to me like Xi's and the CCP seem to think they won't end up with the same results as every other country who tried that, much like the no-covid rule they're crippling themselves with.

China's in trouble alright, and it started long before Covid. Hopefully the Ukraine war will dissuade Xi from adding another straw to the camel's back (attempting to invade Taiwan).

 

[The Atheist]

Who is 'we'?

Most of the countries already showing one negative quarter.

https://stats.oecd.org/index.aspx?queryid=350

A significant majority of the non-American world considers recession to be two consecutive negative quarters, so what some clown in America writes concerns me about as much as their inability say or write aluminium.

 

[The Atheist]

Bloomberg's front page today:

 

[The Atheist]

Looks like a lot of people agree with my analysis:

The managing director of the Swiss-based World Economic Forum, Saadia Zahidi, says dark clouds detected in May seem to be turning into “a full-blown economic storm”.

A survey of senior economists it released on Wednesday found most believed a global recession next year was either very or somewhat likely.

World Trade Organisation director-general Ngozi Okonjo-Iweala said on Wednesday that it was in the middle of revising its forecasts but all the indicators were pointing to “downside numbers”.

The IMF revised down its global growth projects to 3.2% in 2022 and 2.9% next year, in July, but there may be room for a further downgrade when it reviews its numbers next month.

Credit ratings agency S&P said on Thursday that the performance of the global economy over the next few quarters was “increasingly a one-way bet”.

https://www.stuff.co.nz/business/130037568/global-recession-risk-why-the-worry-and-what-to-watch-for

 

[The Great Zaganza]

I think that a significant part of the current economy woe is the result of economic analysts not being able to adopt to an economy of microtransactions and freemium content, better public transportation, lower transaction cost: in short, people are getting more for less, but in economic terms it looks like consumption is dropping.

 

[The Atheist]

Seems extremely unlikely to me.

I think they're drops in the ocean.

 

[The Atheist]

Gotta say, this is the most bearish I've seen Bloomberg since the GFC:

 

[Darat]

Surprisingly looks like we missed contraction last quarter and GDP increased by 0.2%.

https://www.ons.gov.uk/economy/gros...ins/quarterlynationalaccounts/apriltojune2022

But that's nothing compared to the next quarter when we will see 2.5% growth.

 

[theprestige]

I think that a significant part of the current economy woe is the result of economic analysts not being able to adopt to an economy of microtransactions and freemium content, better public transportation, lower transaction cost: in short, people are getting more for less, but in economic terms it looks like consumption is dropping.

You seriously think that economists don't account for infrastructure improvements and lowered transaction costs?

Also, I'm pretty sure nobody thinks that microtransactions and freemium content are actually more for less, except the corporations using those techniques to get more money for less product.

 

[Dr. Keith]

The only treatment we have for inflation is increased rates. Rates have been historically low for so long that it seems like increased rates are inevitable. So, I’m selling the real estate I intended to sell next year. I missed the peak by about two months and am selling for about 90% of peak prices, but I don’t think we will be back at those prices for another couple of years, at best.

With the high employment and supply shortages I don’t see the increased rates having much effect. I expect they will continue to be increased for the next six months at least and will stay above current levels for at least a year, more likely two years.

I also bought a much smaller piece of real estate. So I’m not completely shorting the market.

 

[The Atheist]

Surprisingly looks like we missed contraction last quarter and GDP increased by 0.2%.

https://www.ons.gov.uk/economy/gros...ins/quarterlynationalaccounts/apriltojune2022

But that's nothing compared to the next quarter when we will see 2.5% growth.

You'll be considering yourself lucky if the economy only contracts by 2.% in Q4.

There's a point hidden in those numbers that suits politicians - inflation in Q2 was 3.5%, while GDP was only +0.2%. Obviously, GDP rises in conjunction with inflation, so it's taken into account via a GDP Deflator, so whatever numbers get shown are liable to manipulation or bias, because the deflator number is decided arbitrarily. There just isn't any way you can accurately get a real number, so it's only ever a best guess, and when you're dealing with fractions, one person's +0.2 is someone else's -0.2.

Also, your GDP is still lower than pre-covid, so in any non-depressed economy you'd expect to see much higher growth from simply catching up.

The only treatment we have for inflation is increased rates. Rates have been historically low for so long that it seems like increased rates are inevitable.

Already here.

With the high employment and supply shortages I don’t see the increased rates having much effect. I expect they will continue to be increased for the next six months at least and will stay above current levels for at least a year, more likely two years.

I've been doing international economics for 40 years and I've never seen anything like the scenario we have right now.

Labour shortages and high employment are an international problem, and it's causing a two-pronged assault on people. They're obviously spending more, but their wages have gone up. Then wage packets have increased further through overtime, with significant numbers of people working extra hours.

This is putting even more pressure on the bottom tier - which is evident at all ends of the globe: NZ, UK, USA, Germany*...

(*Props to the Krauts for using a photo of 2 non-white kids in the poverty story, you'd lose your balls for that here!)

I made the comment at a board meeting last week that people are being stretched like rubber bands, and sooner or later, people will start to go PING!

 

[The Atheist]

IMF's predictions for 2023:

A third of the global economy will be in recession this year, the head of the International Monetary Fund (IMF) has warned.

Kristalina Georgieva said 2023 will be "tougher" than last year as the US, EU and China see their economies slow.

https://www.bbc.com/news/business-64142662

 

[rjh01]

IMF's predictions for 2023:



https://www.bbc.com/news/business-64142662

Annoying thing is that many banks (ie Governments) are still increasing their interest rates

 

[The Atheist]

That's because they need to drive down spending. Our central bank has been openly honest that it's driving the economy into recession to solve the labour crisis, and thereby stop wage growth.

 

[The Don]

Here in the UK, we're experiencing that 1970's favourite, Stagflation which is a combination of economic stagnation (or recession) combined with significant inflation. It's a double whammy which hits people harder than standalone recession (which tends to drive down prices due to lower demand) or standalone inflation (which can lead to economic growth).

The UK is affected by external factors such as the increase in energy and food prices due to the Russian invasion of Ukraine and by the slowing of the global economy due to Covid and the war. Unfortunately the UK is also badly affected by internal factors like Brexit (which has reduced exports and driven up prices) and the UK's particularly badly bungled Covid response.

Were ****** for at least the next couple of years