The U.S. Is Getting Closer to a Recession, Data Show

If there were a way to predict future recessions, and it was reliable, and it was well known to the point of being published on a public web page, then it wouldn't work. As soon as it predicted a future recession everyone would sell their long positions and the recession would happen almost instantly.

There have been ways of predicting market movements in the past that, kept secret by their discoverers, were later turned into trading empires before they stopped working. But there are no ways of predicting future market movements that both (A) work and (B) are on the front page of Hacker News.

Part of me wonders if we are talking ourselves into a recession, the market is definitely spooked about how China's growth slowdown affects the global economy but in terms of wages and unemployment the US economy still has a long ways to go. For instance African American unemployment is at record lows but still around 6%. Many people are working gig economy jobs and part time and would love a full time opportunity. Growth (discounting tax cuts) is low but stable, so is wages.. so is inflation.

If anything is going to trigger a recession I would put my money on corporate debt, so many companies are loaded with debt that will rear it's ugly head the moment any slowdown in growth is on the horizon. That will trigger lower spending, job cuts, and other means that would bring us into recession.

> This matters to investors because, although bear markets are only fair predictors of recessions (seven of 13 postwar bear markets were followed by economic downturns)

Roughly the same predictive power as flipping a coin isn't what I'd call a "fair predictor".

"The U.S. Is Getting Closer to a Recession, Data Show"

Of course the U.S. is - every day we are one day closer to the next recession. It's that nobody knows when that day is. A lot can happen between now and "that day".

A google search of past failed predictions of recession shows people ,including experts with PHDs, are generally not good at this. In hindsight they can explain why the economy went into recession but are hopeless at predicting when

These articles on the “coming down turn” are written in such a way that they seem so matter of fact.

The article basically says that they had people study past recessions and therefore the markers are there, but things in the real world don’t work like this at all. They say that the tax cuts extended the bull run for two years but now it’s over, as if they are 100% sure.

Fidelity who, I guess, sponsored the study should follow its own advice that they give their customers “Past performance does not guarantee future results”.

Therefore I just feel these people are shorting the market and trying to move things in their preferred direction.

However, in reality no one knows what will happen next and no Model can tell us. There are so many variables at play right now in our modern economy and saying that there will be a recession in the future is like saying everyone has to die at some point.

Hitting close to home, I wonder which software companies would survive and where would VCs be willing to invest during a recession?

During the dot com bust in 2000, my local job market for developers full of just regular companies writing internal apps wasn’t affected at all. The company I worked for in the bill pay industry, kept humming along.

During the 2008 recession things were a lot crazier until 2011. The investors weren’t willing to invest in our pivot from writing software for ruggedized Windows Mobile/Windows CE devices for large companies to smart phones.

I would think that companies working in the health care industry would still be attractive.

I think we're already in it.

Over the past year or so, each of my friends from a broad swath of industries say their company is going through layoffs. Almost across the board, everything from marketing to engineering.

> in June the economy will celebrate a decade of recovery from the Great Recession

Or the US already suffered a mild recession in 2015 and the recent higher growth is a bounce out of that.

S&P 500 corporate profits contracted for four straight quarters from mid 2015 to mid 2016. Sales contracted for six straight quarters.[1]

From July 2015, to November 2016, manufacturing employment contracted slightly (essentially was flat). Manufacturing employment has exploded higher since that month.

The U6 unemployment rate was stuck between 10% and 9.6% between Sept 2015 and Oct 2016.

The civilian labor force participation rate for 25-54 year olds (the single most important participation rate), was fairly stable from January 2013 until mid 2015 (after finding a new general floor post great recession), and then suddenly plunked to a new post great recession low of 80.5% in July 2015. It has been setting higher lows and higher highs ever since that drop.

Consumer confidence, which had been rising persistently for years post great recession, stopped going up and then declined from early 2015 through early 2016.

The S&P 500 index was near a peak in May 2015 at around 2134, then proceeded to go nowhere for a year to ~June 20 2016 when it was at 2032. During that weak year, it hit a low of around 1810 (~15% decline).

The small business confidence index tanked from the first quarter of 2015, until early to mid 2016.

The markit US manufacturing PMI began tanking from a high in mid 2014, until it bottomed out in the second quarter of 2016.

The consumer price index had been rising for years post great recession, stopped rising in mid 2014, flattened out until Oct 2014, plunked lower until Jun 2015, then proceeded to go nowhere for another nine months. In net the consumer price index went no higher from Jun 2014 until Mar 2016. The price index then resumed climbing after Mar 2016. That ~20 month dead spot was the longest post great recession.

In 3Q15 GDP growth dropped dramatically from the prior five quarters, to 1% (3Q14 was 4.9% by comparison). 4Q15 GDP growth dropped further to 0.4% (4Q14 was 1.9%). 1Q16 was 1.5% (1Q15 was 3.3%).

If you've got 1% and 0.4% quarterly growth back to back, with a near zero fed rate, what you've got is a recession.

There are countless more data points that indicate the US suffered a mild recession at some point over that year.

[1] https://www.wsj.com/articles/corporate-profits-set-to-shrink...

And in the long run we re all dead

My God, the grammar of that title.

I really dont think that lack of growth of the quantity of goods produced for a few quarters is really so big of a deal

This is how recession and depression are defined, when gdp simply isnt growing a fraction of a percent quarter over quarter. Is this really a proxy to give insight into everything effecting the general population? The words recession and depression are loaded with so much more than what they actually track, I think just saying them slows down the business spending and lending facilities more than the actual trend of printing slightly lower gdp numbers per quarter.

I'm from Europe and I remember very well the 2008 financial crisis. The corrupt banks in America and their massive bailout waved over the ocean and crashed the markets here in Europe, then I was pretty young and I could hardly understand how the housing loans there can lower my salary here. It's funny how naturalized the language is, as if markets are some natural force that goes up or down independent of people's will. Living under capitalism at it's best.