Comment by InefficientRed | Hacker News Reader

Comment by InefficientRed | Hacker News Reader

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Descriptions of economic conditions are obviously politicized. This was probably always true to an extent, but it really took off during the early Obama years.

That said... my wealth manager has been and still is waffling when I ask him if we are in a recession. It's NOT just political; I don't even know my wealth manager's politics and I have absolutely no doubt he puts fiduciary responsibilities first and makes fact-based assessments.

Unemployment is low and the trend is mostly flat. Housing is doing fine. Consumer balance sheets are strong. Are we entering a recession? I think so. But there are a lot of "but"s which really do impact how smart and impartial people are thinking about where and how to deploy capital.

When I ask my wealth manager "are we in a recession?", he basically says "We might be in a recession. We might not be in a recession. Either way, we should not invest as if this is a typical recession."

Which I think pretty much sums things up.

> Consumer balance sheets are strong.

Consumer debt is at record highs for overall debt, and household credit card debt is climbing towards record levels.

https://www.google.com/amp/s/www.cnbc.com/amp/2022/05/10/hou...

https://www.google.com/amp/s/www.cnbc.com/amp/2022/05/10/con...

The fastest-growing (and largest) category of that debt was mortgage debt, which is probably a positive economic indicator if anything, though note that that's based on Q1 data. Household debt servicing costs as a percent of disposable income are still lower than at any point between 1980 (the earliest data available) and the start of the pandemic. https://fred.stlouisfed.org/series/TDSP

Also keep in mind that those debt figures are in nominal USD. One positive effect of inflation is that it reduces the real cost of paying off debt.

Is this a positive effect? I think it is for lower inflation rates, but above a certain threshold the borrowing can get out of hand, people will go and get more loans, which will drive prices higher. Eventually the bubble pops and people go underwater.

Hey, remember back in 2009 or so when everyone was cheering that we were "out of" the Great Recession, but everyone not part of Wall Street was still bleeding? I feel like this might wind up being a reverse of that; and the reason for this is that most economic data are aggregates that are missing the whole picture.

GDP numbers are back up? Great - except that's just higher because the handful of companies that can really capitalize on 0% interest rates are doing so. Everyone else is still down from 2007.

Unemployment is falling? Great - except that those people are leaving the labor force or taking lower-wage jobs than they had before.

There's all sorts of ways that the headline numbers can hide the discontent of a large group of people under the rug. And likewise this can happen in the opposite direction. The economy as a whole can be screwed over in ways that happen to give small business owners or the working class more negotiating leverage or a greater share of the pie.

> Hey, remember back in 2009 or so when everyone was cheering that we were "out of" the Great Recession, but everyone not part of Wall Street was still bleeding?

I also remember the whole expansion preceding the Great Recession, during which the bottom three quintiles all did worse, the second-to-top was basically flat, and most of the gains were in a narrow segment at the top of the top quintile.

“Recession“ vs “expansion“ (multidimensional as it is) is still not, and not intended to be, the same as any individual person’s, or even the median person’s, experience of the economy.

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