Are we actually in a recession?

[Roadvirus]

leading-economist-issues-stark-recession-warning-for-struggling-us-economy

MSN

A leading economist is warning that the U.S. economy is on the brink of recession after incoming economic data last week signaled labor market conditions are softening as inflation is rising, which could complicate the ability of the Federal Reserve to support the economy.

Mark Zandi, chief economist at Moody's Analytics, on Monday wrote a post on X that the "economy is on the precipice of recession" – citing the weaker-than-expected jobs report released Friday and the inflation data from the previous day that showed consumer prices rose as indicating the economy's precarious position.

"Consumer spending has flatlined, construction and manufacturing are contracting, and employment is set to fall. And with inflation on the rise, it is tough for the Fed to come to the rescue," he wrote.

Once Trump get's the right obedient toady into the BLS, that'll change. Trump will have licked a recession before it even started.

 

[iliveonramen]

Once Trump get's the right obedient toady into the BLS, that'll change. Trump will have licked a recession before it even started.

1% unemployment and 1% inflation for his glorious reign.

 

[Plasmaball]

Also not a bad idea. The current TVs I have are about 8-10 years old. It makes sense that one of them is starting to go on the fritz.

Yeah. Thats a good run honestly.
Just remember the more you leave it on the more you kill.its lifecycle

 

[vanceen]

The most common measure that is used to signal the country is in a recession is two straight quarters with a decline in GDP growth. ...

It's actually two consecutive quarters of GDP contraction, i.e. negative growth. A decline in positive growth is something different.

https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-is-a-recession

 

[vanceen]

We have a tv that seems to have a bad capacitor in the back living room, so we may up purchasing one. We may just end up grabbing one from facebook marketplace though, given the tariffs. We can easily afford one, but its better to save money right now and purchase when the political and economic landscape is more stable.

FWIW, capacitors are cheap and easy to replace. You probably don't need to replace a TV if its only problem is a bad cap. You might save a good bit of money using a reputable repair shop.

 

[Peacenik]

Rising prices and uncertainty have consumers slowing down on buying. Many are already running larger credit card balances, can't afford to buy more. When demand is low, the jobs they do go. Low employment, fewer jobs, plus rising prices is going to slow the economy down.

Trump caused all of this by upsetting the economic applecart with all his changes. Huge uncertainty over taxes on imports already has prices rising. Sending workers out of the country has impacted businesses. Food industry and construction industry are particularly hit. Projects have been slowed or halted. Fewer workers taking home paychecks, fewer consumers buying. Sending workers out of the country also means sending their consumerism out of the country.

The economy is definitely slowing down. We are headed towards recession if this keeps up.

 

[Visbek]

This response is an example of the glaringly thoughtless obtuseness we have seen before:

Here we go

The economy is engine, if one throws sand into mechanisms of supply, the "fix" is not to press the accelerator to overcome the resistance.

That.... isn't what happened.

Yes, there were lots of supply shocks. But the reason for the stimulus is that unemployment spiked, and consumer spending cratered, thus there was a giant drop in demand. We've learned from decades of experience that if the government does nothing, then the recession can turn into a depression, and it can take years to dig out of it.

We should also note that while some goods were hard to get, most weren't. Even the few shortages we saw were largely a result of hysteria, e.g. people panic-buying toilet paper, which caused some shelves to go empty, which fueled weeks of total hysteria.

The massive stimulus spending helped get the economy back on track in record time. It took about 18 months to get back to normal. Compare that to the 6 years it took to recover from the 2008 recession... when, we should note, Republicans did everything they could to thwart stimulus spending.

We saw its effects in Covid when the supply chain was choked and the nonsense of stimulus was pursued with more money (and low interest rates).

Effects like... people not getting evicted from their homes? Being able to survive until employment got back on track? Paying down debt? A decline in the number of bankruptcies?

Do you think the US would have been better off with, say, 3 years of double-digit unemployment?

The problems are the tariffs restricting the chain of supply, and so lowering the interest rates will only increase the money supply, which is a proven method fuel more inflation. It happened under Biden and it would happen here.

Tariffs can have some impact on supply, when importers choose not to import. But that's because tariffs increase prices, which reduces demand, and the importers believe they can't sell what they've ordered at the higher prices they need to charge. That's not the same thing at all.

On a side note: Lowering interest rates can cause inflation -- but only if there are not any deflationary pressures present.

El Jefe slapping allies with extortionate tariffs is not even remotely the same thing as what happened during the pandemic... especially since it's a self-inflicted wound, rather than an attempt to get the economy back on track.

This isn't news - economists have pointed this out for many decades.

I am fairly confident that no economists will say that "Trump's tariffs have the exact same effect as a pandemic plus a big stimulus."

 

[Visbek]

FWIW, capacitors are cheap and easy to replace. You probably don't need to replace a TV if its only problem is a bad cap. You might save a good bit of money using a reputable repair shop.

There are TV repair shops still in existence?

Who knew?

 

[Variant]

People naturally avoid taxes, if you shift the tax burden onto consumer spending people are going to find a way to not spend as much.

That won't automatically cause a recession but it will cause a drop in consumer spending and confidence.

We've also got AI and tariffs causing uncertainty so companies aren't hiring while they wait until they have more information on the state of things to make long term investments.

 

[OrphanSlug]

On a technical level, no, we have not seen two consecutive quarters of negative GDP growth. But is still a possibility later this year into 2026.

 

[Variant]

On a technical level, no, we have not seen two consecutive quarters of negative GDP growth. But is still a possibility later this year into 2026.

Yeah we're not really fully into the "find out" part of this equation yet.

The housing market, unemployment, consumer confidence and consumer spending all look like they could fall off a cliff at any minute though.

 

[Slartibartfast]

FWIW, capacitors are cheap and easy to replace. You probably don't need to replace a TV if its only problem is a bad cap. You might save a good bit of money using a reputable repair shop.

I spent like $125 on the tv and it’s nonhdr 1080p. A new one would be a decent upgrade.

 

[RedFishBlueFish]

Tell it to Jerome Powell. Lower rates and you will see more growth. It's doesn't have to be insane but start freeing up money by reducing the fed rate.

There is a flip side to that, you know. Lowering rates tends to increase inflation. That's the reason the Fed is sitting on this. They see potential inflation from Trump's tariffs. They don't want to exacerbate that.

 

[maxparrish]

Here we go


That.... isn't what happened.

Yes, there were lots of supply shocks. But the reason for the stimulus is that unemployment spiked, and consumer spending cratered, thus there was a giant drop in demand. We've learned from decades of experience that if the government does nothing, then the recession can turn into a depression, and it can take years to dig out of it.

LOL... we have learned that the only great depression was 95 years ago and the cause of that depression were loss of banks and their reserves creating deflation. We also saw the same thing happening in 2008, this time from the implosion of CDOs and subprime mortgages, and again the threat of deflation - the difference being a wise federal policy of backstopping our financial institutions with loans and infusions.

That had NOTHING to do with stimulus policies, and our current problem isn't based liquidity loss issues (as the two above were).

We should also note that while some goods were hard to get, most weren't. Even the few shortages we saw were largely a result of hysteria, e.g. people panic-buying toilet paper, which caused some shelves to go empty, which fueled weeks of total hysteria.

Totally irrelevant. No one is talking about short term hysteria or resultant shortages of grocery shelf products. We are talking about that which impedes the supply chain, and as long as the supply of goods and services is choked, while the money supply is increased, the groundwork for inflation (or a fall in nominal wages) is laid - a totally predictable outcome when the money supply grows faster than the economy itself.

And, btw, when there is no slack in capital and labor, the inflationary effects are even greater.

The massive stimulus spending helped get the economy back on track in record time. It took about 18 months to get back to normal. Compare that to the 6 years it took to recover from the 2008 recession... when, we should note, Republicans did everything they could to thwart stimulus spending.

I'm afraid you are drinking from the poisoned well of partisanship. '

First you need a correction on a few facts:

1) Obama administration projected these rosy growth rates from their stimulus spending (the American Recovery and Investiment Act) in 2009...

2009: -1.2%
2010: +3.2%
2011: +4.0%
2012: +4.6%
2013: +4.2%

Here is what it actually was:

2009 -2.8%
2010: +2.5%
2011: +1.6%
2012: +2.2%
2013: +1.7%

The historic average US growth rate was 3.5 percent. So as you can see, as has been the history of stimulus spending, the multiplier effect is very weak to nonexistent from government spending - its multipliers being as little as "1" (no effect).

2) Added fact:

In December of 2008, Nick Bloom of Standford, using his consumer and business sentiment model predicted the bottom and a recovery to start to in the summer of 2009, WITHOUT a "stimulus". And he rightly pointed out that in economic theory, the "stimulus" is too late to mitigate the downturn and therefore implicitly not needed.

And he turned out right. The market bottomed out in late March or April, and recovery followed.

So no, it's laughable to claim that Obama's "stimulus" prevented a depression. That isn't to say that OTHER measures by the Fed (eg funding bank reserves) didn't help BUT the stimulus wasn't one of them. It was a waste of money and substantially contributed to our huge debt problem.

More to follow...