As the old saying goes "Economists have accurately predicted 11 of the last 8 recessions".
All current economic indicators have been quite strong... employment, GDP, retail sales, wage growth. Nominal GDP is running close to 10%, which is massive relative to recent history.
There has been a pervasive media narrative that recession is imminent though. Many leading indicators are looking poor... survey metrics, shipping costs, growth rates have slowed (while still being strong). I consider these more "soft" datapoints though. A lot is a normalization of covid era excesses.
It's pretty clear from history that Fed tightening cycles end in recession the vast majority of times, but my bet is that long end rates (10y) will have to spike again to at or above 4% before we trigger an actual recession. The market has frontrun it far too early which became self-defeating
Yeah, everything that went on during the "peak COVID era" has definitely flipped a lot of things around, and confused the issue in many areas. I expect that's one reason it's so hard right now to be sure what's really happening.
The other thing that strikes me about this is that the fed has been looking for a good chance to start raising rates for a LONG time now. Interest rates have been running really low by historical standards for a long time IIRC, to the point that there was talk about the possibility of negative interest rates possibly being needed in response to some future economic downturn. They wanted rates up a bit to have "dry powder" to expend in response to the next (actual) recession. The risk, obviously, is the possibility of triggering a recession through that very act of trying to get rates back up to a "normal" level.
And the easing of financial conditions over the past few months has buoyed the previously declining housing metrics. Markets front ran the recession far too early, which led to the recession not happening. Now Fed likely has to hike even more than they would have otherwise
I do imagine we underestimate the boomers here, the amount of wealth they sit on and the completely inelastic consumer spending they represent along with giving them an 8.7% raise in 2023. The people I know that get social security already have more money than they can ever spend in investments alone. They don't even spend their pensions let alone touch the SS check.
That's not to say that there aren't issues: inflation being the obvious thing, and the corresponding interest rate hikes and the end of "cheap money" being another.
This isn’t to weasel out of taking responsibility. This is an extremely hard problem. (How many recessions have there been for which we have good data? Probably fewer than 20.)
If you base your whole argument for recession off of Axios' year of year gdp change percentage you are hyperfixating a complex economic outlook and dumbing it down into a cherry picked metric that is showing up for any number of correlations such as return to work post lock downs.
You can take a look at the quarter of quarter change https://fred.stlouisfed.org/series/GDP#0
In my opinion it doesn't align with axios' narrative.
Additionally, unemployment, which almost invariably rises starting before a recession is low and flat.
Real (inflation-adjusted) wages have risen the last two quarters, after falling due to inflation. [0]
The upper middle class (i.e most software professionals on this site) and tech billionaires are having a shit year as tech stocks crash and weigh on the market. Don’t discount that you’re in an info bubble. The worst info bubbles are ones that affect the journalism industry and extremely online communities like the ones frequented by software engineers.
If energy includes gasoline well that is going back up to almost triple the price from 2-3 years ago in my area.
Sure wages may have gone up some (mine did) but I can barely afford this economy now where before I was doing alright.
Wages are stagnant, energy costs are going up.
Hourly Wages change yoy https://fred.stlouisfed.org/graph/?g=Zeb7
Energy Price Index https://fred.stlouisfed.org/graph/?g=Zebr
>food prices have come down
False, and before you blame the egg crisis on the reported avian flu, milk and bread demonstrate the same rise. Pick a product, it's gone up, PPI for all commodities shot up indicating macro changes to the economy (in this case reactions to inflation where producers raise rates) https://fred.stlouisfed.org/graph/?g=Ze8G
eggs https://fred.stlouisfed.org/graph/?g=Ze80 milk https://fred.stlouisfed.org/graph/?g=Ze8b bread https://fred.stlouisfed.org/graph/?g=Ze8h
>housing is crashing
True, but not in ways that helps consumers. Landlords are doubling down and renting. Properties are sitting on market far longer than normal. Median sales price will decrease with interest rate changes, but with the root cause issue unresolved of lack of construction (supply), very large demand as the new generations age, and flippers and renter barons unchecked.. The housing market is not going to be affordable for low, middle, or even upper middle class citizens. I also think this kind of talk completely belittles how massive of a change occurred to housing prices in the last 5 years. Compare that to wage increases and viola, your normal every day person is in bad shape.
median sales price https://fred.stlouisfed.org/graph/?g=Ze67
Do you want anecdote? People aren't doing well. Go talk to your neighbors. A single corrective change percent movement from GDP reported by Axios is manipulative and a narrative article in my opinion.
The graph you linked shows wages increasing every month, consistently, over the last two years.
It is also not measuring YoY, it’s MoM.
I don’t think there is much of any evidence that the broader labor market is going to ease anytime soon. Particularly given the fact that boomers are at the height of retirements.