https://www.chicagofed.org/research/dual-mandate/dual-mandat...
There's no free lunch where you get to shut down big sections of your economy for a year or more and then afterwards it's like nothing happened.
Either high inflation causes a recession or the things you do to avoid high inflation causes a recession.
I'm not familiar enough with historical examples of inflation to know.
This reduction in spending will largely affect non core spending like services and luxury-ish/luxury goods like electronics, cars, houses, etc. This happens to be where the bulk of the US economy is focused which means a slow down in spending there will effect workers in those industries.
Couple that with higher core good costs and just natural momentum in regards to spending. You're left with large parts of the economy that experience a flywheel effect that make it harder to purchase things and further reduce the ability to spend on other non-essential goods and even when things start to change, peoples mindset on spending takes years to shift with it.
All of this leads to reduced demand and ultimately a recession.
Which sector(s) do you claim is gouging people for higher than normal profits? Have evidence in the form of profit/loss records?
Inflation alone will increase the numerical value of revenues and profits.
Gouging implies sellers are making significantly more than they used per same amount of sales.
So to demonstrate gouging you should demonstrate increased profit/revenue. I have looked at multiple industries main players, and find no evidence of this (as has many economists).
Again, does anyone have solid evidence for this claimed "gouging" in some sector other than opinions?
You realize the creative accounting companies do to make their profit as close to zero right?
For example, look at the number of stock buybacks. This is money that you're spending with these companies for them to go buy their own stocks, reducing their tax burden.
Theres a ton more. Do you have evidence price gouging isn't happening? Other than looking at the most basic thing of profits?
No. Companies pay tax on profit, then use post tax profit to buy back stocks. Learn tax law before making up stuff.
> You realize the creative accounting companies do to make their profit as close to zero right?
Anything they do illegal under tax law should (and is) prosecuted. There is no need for any entity, whether it be a person, a company, a non-profit, a charity, any entity, should pay more in taxes than the laws states.
>Do you have evidence price gouging isn't happening?
Yes, it does not show up in economic analyses of companies. Economists who also study such things have written they also don't fund evidence.
So, now do you have evidence there is any sector wide gouging, other than hand wavy pop culture feelings and rambling?
I told you really solid evidence that the allows checking the pop ignorance on the issue. Now provide the solid evidence to the contrary. Invoking wizards and magic and conspiracies is not evidence.
Are you saying it feels like a recession or that we have already had two quarters of declining GDP?
Otherwise, language would be impossible.
What is the definition of “being sick”?
You can see prices going up, people losing huge amounts of buying power, companies laying off people, all at the same time and almost none of the opposite.
Whatever the time it takes, that is a recession.
That's the problem with applying "I know it when I see it" to an economy. Anecdotes from our daily lives and viral social media posts don't even begin to tell the full picture of activity among 330 million people. And the aggregate indicators are necessarily lagging.
if they had been hiring, they wouldn't need the help wanted signs - now when i see help wanted i think "doesn't offer high enough wages to get help"
Actually, as you're seeing, defining words based on how you feel makes language more difficult than just understanding what the article is about.
The Economist is using the word "recession" to mean what economists define it as: two consecutive quarters of negative GDP growth.
So what's the point of commenting on the article and then rejecting the article's assumption? If someone wrote an article on compilers, would you jump in to say that Microsoft Word is a compiler in your heart?
The accepted definition of the word "recession" is not "how pfortuny feels about his financial prospects whatever the GDP says."
We have a somewhat sane definition, but we can’t use said definition because we don’t feel like it, and that makes everything clearer (“language would be impossible”).
Feel free to define your own terms, don’t pretend terms are undefinable…
US GDP dropped 1.4% in the first quarter, so it's entirely possible that a recession has already started. If GDP declines again in the next quarter, then at that point it will (retroactively) be confirmed that there is presently a recession.
https://www.federalreserve.gov/newsevents/pressreleases/mone...
The effects of raising interest rates in May take at least 12 months
But in any event it might get worse before it gets better.
You mean Mar-Nov 2001?
That’s kind of my fear. Because while it was an extremely mild and short recession in aggregate terms, the recovery afterward had the worst distributional profile of any recovery in recent memory, seeing declines in the bottom three quintiles, the second-from-the-too quintile mostly flat, and almost all the gains concentrated in a very narrow slice at the top of the top quintile, which was a big reason for how bad the Great Recession was.
And there is a lot of indication that a 2024-ish recession could see a similar, or even worse, policy environment in the US to the one that produced the bad outcomes of the recovery from the 2001 recession.
By not being permitted to increase energy usage, all the money is being made with capital, instead of physical things, which helps those at the top.
The only fields "available" if you will, to making money with are those that are intangible, capital, intellectual property, things like that. And those types of things help those at the top.
Sure, but I will still take a mild recession over the multi year double dip 1980 variety.
Seems like what you are really saying is that you want an 80s style boom recovery - me too!
No, I’m worried that the recession, even if not severe in aggregate terms, will be the occasion of a policy response that will set us up for an extended period of bad economic experience for most of the population despite a strong aggregate economy culminating in a catastrophic aggregate collapse both caused by and compounding the bad experience of the bulk of the population.
Top line aggregate numbers don't capture the general experience of the economy.
> Seems like what you are really saying is that you want an 80s style boom recovery
No, I am saying (to the extent a recent historic precedent is the model, though I don't expect the specific causes can or should be replicated) I want a 90s style boom recovery; the 80s “boom“, while not as bad as the 2000s expansion in distributional terms, was far worse than the 90s boom (e.g., real hourly wages fell through 1980s expansion, while rising overall—leveling out in the first few years, and rising strongly after—in the 1990s expansion.)
Ceteris paribus, I would agree, but I don't think that policy response and the effect on the distributional shape of the post-recession recovery is independent of the dimensions of the recession (though there are other aspects of the economic and political context that play a role.)
There was a general feeling that the preceding recession never ended leading into the Great Recession and the reason for that is that if you look at the experience across the economy adverse conditions persisted across most income segments despite aggregate expansion. It is my contention that as well as an alignment of the right political conditions when the recession occurred, the policies which contributed to this were able to be implemented and sustained, in significant part, because the aggregate recession was short and mild.
https://www.cnbc.com/2022/05/24/bank-of-america-ceo-says-not...
The tricky thing about inflation, is once people start to believe inflation will continue it takes a whole lot of pain to stop the wage / price spiral and convince them otherwise.
Let inflation get out of hand, and it's very hard to put back in the bottle.
lol no, US didn't have 30 trillion in debt last time and didn't have a peer competitor to offer an alternative currency like China. Eventually other countries are going to get tired of subsidizing poor US government decision making and move to something else. The US pulling financial stunts like they did with Russia is making even neutral and allied countries look for alternative or backup financial systems
US has to stop inflation which also makes their debt more expensive to manage. Worst case scenario is basically a death spiral. Best case is still vastly lowered living standard for US citizens.
our economy has been propped up by massive debt spending that hasn't been efficient at all. Productivity can't be faked using financial tricks, only innovation that boosts productivity matters
Until China is a lot more transparent, the yuan won't be a major reserve currency.
> US didn't have 30 trillion in debt
That's not how national debt works, like, at all.
That means that food security issue is far less of a problem.
but China won't have many worries about food or energy insecurity now because US sanctions have forced Russia into their arms. China will have all the food and oil they need via Russia and they'll get it cheap
>That's not how national debt works, like, at all.
rapidly increasing debt with no economic growth is a good thing?
my latest conspiracy is that china conned russia into getting embroiled in a war via bad intelligence in order to:
A : evaluate western response and capabilities
B : bottom out the cost of russian food and fuel for their own benefit
That's pretty much the whole point of Fed monetary policy, balancing the desire for price stability (low volatility) and low inflation with that for full employment by moving the right money vs. loose money lever.
(Fine tuning distributional impacts is not their job, but retained by Congress which has more levers to pull, but unfortunately Congress tends to be asleep at the switch on economic policy when they aren't actively pushing in the wrong direction.)
The trick for both companies and individuals in down turns is adaptability. Some people will say "stay put!" other will say "find your next job quick before it's too late", but you can be sure of neither of these.
The only dangerous plan is to try to find stability in unstable times. This is a trap a lot of people fall into.
Make sure your resume is up to date, think about what's important to you, and keep any eye on where the world is evolving. A lot of career changes happen during down turns so don't expect to do what you're doing this year next year. This is more true the more severe the situation. The key to survival if it gets that bad is not hesitating to adapt and try something new, this is also the key to finding success in these times if you're looking for more than survival.
Of course, this may not be necessary if you have 3x your yearly expenses in investments you can cash out if needed, but better safe than sorry.