Is the American economy going into recession? (employment, poll, retirement)

[thrillobyte]

The corona virus's effects on the stock market could be Trump's Waterloo. This thing is like a snowball going down a steep hill. At some point it will take on a life of its own and there's nothing Trump will be able to say or do to to prop up the battered economy it leaves behind. Trump will lose the election as the country goes into its first recession since 2008-2012.

[banjomike]

Originally Posted by 1AngryTaxPayer

Housing hasn't dropped a penny here on the coast. Solid NOPE.

Housing won't drop even if there is a recession. The demand is still greater than the supply, and it would take quite a while for the prices to drop appreciably with the demand as great as it is.

We aren't in a recession yet, but the coronavirus could put us into one if it sticks around when the weather warms up and lasts until next winter. These plagues usually hit during cold weather and disappear when it's hot. It that happens, the world's medical community may get enough time to be half-way prepared for the next outbreak.

Covid-19 has already messed up the world's industrial supply chain, and if that persists, we are in for a recession. China is now the world's factory and it's making parts that are sent out to every other country for use in their manufactured goods. And it isn't just parts; China now makes most of the raw materials such as plastics, paper products, mill goods and finished metal products like steel and aluminum. They're also making high-tech parts like motherboards and other electronic parts, and things like switches, valves, advanced optics, etc.

If a critical part can't go into assembly, everything stops and waits until replacements arrive.

The virus has also stopped some other segments of our economy already, like tourism and international relations, so until the supply chain is up and running full blast in China again, the supply chain may be the final blow. It will hit everyone in the developed world, not just us.

The nations that are going to become the sickest from this virus are the ones that are in bad shape, like Syria and other similar places. These countries could become breeding grounds that allow Covid-19 to become an established epidemic.

[natalie469]

Originally Posted by bobbythegreat

Same people that have been begging and praying for the pain and misery of the American people to help advance a political party are attempting to spin the effects of the coronavirus into a recession..... so transparent

Most ridiculous post I've seen here. And I've seen a lot. To think that anyone would wish harm on others because of politics is just mind blowing to me.

[GMJag]

There's already some promising antivirals with a possible vaccination by April. IMO, this virus talk is way overblown and will be over by May. On the other hand, this correction was much needed and is a plus for anyone looking for a deal. I'm not rich, but I'm tempted to reverse mortgage the house and max the card on American and JetBlue when the market turns. Recession? Not yet, not yet.

[godofthunder9010]

It's all about COVID-19, which may or may not rampage across the planet, killing many millions of people. COVID-19's predecessor in doing exactly that, The Spanish Flu, killed between 40 to 100 million people in 1918-1919. Immediately following that, the United States experienced "the Roaring Twenties" which saw the most explosive economic growth the United States had ever seen up to that point. The economy did so well, nobody was really and truly ready for how good things went. Basically an entire decade of runaway economy growth.

My point is, a pandemic does not cause long-term collapse on its own and economic systems are not necessarily defined by a pandemic's impact.

In this case, we don't yet know how large the impact of COVID-19 will be. I think it exposes the absolute stupidity of setting up China as the manufacturer of pretty much everything on earth. Much of the manufacturing US companies sent there will inevitably come back home to the USA and Europe. The price of goods may increase as a result, but the long term effect would be a jobs boom in the USA and Europe and a bust in China. Should be interesting to see how it shakes out. China has to convince the whole world that keeping their manufacturing bases in China really is a good idea. It's possible that they actually succeed to some degree, but I think that COVID-19 has exposed the foolishness of "putting all your eggs in one basket."

But the West is addicted to cheap labor. It would seriously surprise me if we don't see the other massive supplier of cheap labor getting a boost as companies seek redundancy or outright replacement for China. That would be India and it's 1.339 billion people (vs China's 1.386 billion people). Will companies seek a less authoritarian state in India, one that is less likely to spy on them and steal their intellectual property? Will manufacturing go to lots of other poor and overpopulated nations?

We're sure to see a temporary dip. What happens next is almost impossible to say for certain.

[Cruz Azul Guy]

Originally Posted by Mircea

I can't help but wonder where you learned economics.

Repeat after me until you fully understand: The stock market has never -- meaning "at no time ever" -- caused a recession nor is it possible to cause a recession.

At any point did I suggest that the severe market correction was causing a recession? Nope. I do think that it is a useful data point as it reacts to events or data which have implications for the economy, such as consumer confidence, jobs reports, inflation, global unrest and instability, etc. The Coronavirus is the latest but there was other evidence leading up to it that suggested that a recession was coming:

-inverted yield curve on treasury bonds
-historically high student loan levels, was $1.6 trillion in mid-Jan
- historically high outstanding auto loans at $1.2 trillion in mid-Jan with 5% of the loans more than 90 days delinquent.
-the continued decline of US manufacturing
-the continually growing trade deficit
-the continuing decline of retail
-farmers going into bankruptcy due to the trade war

Economists like Peter Schiff have been predicting this for a while. I understand that by definition the economy isn’t in recession but I do think this is the beginning of one. I hope I’m wrong.

[Mircea]

Originally Posted by Cruz Azul Guy

At any point did I suggest that the severe market correction was causing a recession?

Yes.

Originally Posted by Cruz Azul Guy

Is the American economy going into recession?

Originally Posted by Cruz Azul Guy

At market close on Thursday it is looking like the worst week on Wall Street since 2008. At this point I can’t help but wonder if it’s officially the beginning of an economic recession?

And, objectively, the "market correction" (snicker) is neither severe nor a correction.

Dow Jones -1.39%
NASDAQ +0.01%
S&P 500 -0.82%
Global Dow -2.20%
Dow Jones Utility -2.95%
NYSE Composite -1.33%
NYSE American +0.15%
Russell 2000 -1.43%
PHLX Semiconductor +2.21%

There's no evidence of a correction and the losses are anything but "severe."

Apparently, you don't understand that the Dow Jones is 30 publicly-traded corporations. There are 880,000+ publicly-traded corporations in the US.

So...

30 / 880,000 = 0.0034%

You're in a tizzy panic because the stocks of 0.0034% of publicly-traded corporations took a slight dive?

The S&P 500 is, well, 500 publicly-traded corporations, so...

500 / 880,000 = 0.059%

0.059% of publicly-traded corporations taking -0.82% drop in stock prices is not a sign of recession nor is it a "correction" nor is it "severe."

And for the record, publicly-traded corporations are 3% of all US businesses.

97% of companies in the US are not publicly-traded corporations, are barred by law from selling stocks, and employ 94.6% of the work-force.

Originally Posted by Cruz Azul Guy

The Coronavirus is the latest but there was other evidence leading up to it that suggested that a recession was coming:

Wow, you get my vote for least informed poster.

Originally Posted by Cruz Azul Guy

-inverted yield curve on treasury bonds

The curve inverted in 1966. Did you have a recession?

No, and in fact, you were in the middle of what was then the longest economic expansion in history which ended at 106 months.

The curve inverted in 1959. Did you have a recession? Nope.

The curve inverted in 1970. Did you have a recession? Nope.

1974? That's a trick question. You were already in a recession when the yield inverted, so no.

1979? Nope.

2000? Nope.

2006? Nope.

Originally Posted by Cruz Azul Guy

-historically high student loan levels, was $1.6 trillion in mid-Jan

Disinformation/Misinformation.

Actually, it's $1,550,922,884,061, or $1.56 TRILLION (aka sensationalized and hyped by the media as $1.6 TRILLION).

That is the total amount of federal student loans issued from 1976 through 2018.

Anyway, 5.22 Million are currently in default. There are 128 Million households in the US.

That 4% of households. If you think 4% of households is going to crash your economy then you need to REDO FROM START ECONOMICS 101.

Also, 3 Million of that 5.22 Million are age 62 and older or disabled, because Social Security is withholding money for defaulted student loans from 3 Million persons receiving Social Security Retirement or Disability benefits.

Thanks for the nothing-burger just the same.

Originally Posted by Cruz Azul Guy

- historically high outstanding auto loans at $1.2 trillion in mid-Jan with 5% of the loans more than 90 days delinquent.

Not relevant. Delinquencies rise in January because people spent large over the holidays, and I'm guessing those are probably sub-prime auto loans which makes it even less relevant.

Originally Posted by Cruz Azul Guy

-the continued decline of US manufacturing

So?

You're a 4th Level Economy.

2nd & 3rd Level Economies need manufacturing. There's no evidence 4th or 5th Level Economies do.

Originally Posted by Cruz Azul Guy

-the continually growing trade deficit

Irrelevant.

Sorry, but $1 of imports does not equal $1 of GDP.

$1 of imports generates $6-$22 in GDP. You are better with a trade deficit than without.

The US imported $528 Million in rattan in 2014 generating $4.35 Billion in sales.

Rattan cannot be grown in the US. It can only be imported.

For each $1 of Rattan imports, $8.24 in GDP was generated.

And that's just the sales.

That does not include the GDP generated from port to buyer's residence or place of business.

It does not include the GDP generated by the longshoremen offloading the rattan, the bailors, holding companies, truck companies, workers at warehouses and distribution centers, factories and such.

And what did those workers do with that money? Oh, yeah, that's right, they spent it in your economy driving GDP higher.

You import what you don't have or what is too stupid to do.

You don't have the labor to produce plastic kitchen gadgets and also produce high-tech electronic equipment.

Common sense dictates you send plastic kitchen gadgets to the Philippines, Vietnam or China and you keep the high-tech electronic jobs.

Of course, you would probably do it backwards and send the high-tech jobs to China and keep the plastic kitchen gadgets here.

Originally Posted by Cruz Azul Guy

-the continuing decline of retail

Retail is not declining.

Brick & Mortar retail is closing, but on-line retail is up.

That is a demographic and cultural change, not an economic change.

You want to round up Generation Y and Z and drive them around in trucks and buses to Brick & Mortar stores and force them at gun-point to shop there, be my guest.

Good luck with that.

Originally Posted by Cruz Azul Guy

-farmers going into bankruptcy due to the trade war

I have seen no evidence those farmers were engaged in farming directly affected by tariffs.

If you have evidence, let's see it.

You can start by showing a comparison of filings.

Oh, I forgot....you probably don't understand that people -- including farmers -- file bankruptcies under Chapters 7 and 13.

Farms file bankruptcies under Chapter 12, which is not available to people.

So, these farmers, are the filing personal bankruptcies under Chapters 7 or 13, or farm bankruptcies under Chapter 12?

Don't forget....Chapter 12 also includes fisheries and hatcheries in addition to family farms.

So, are we talking about farms? Or fisheries? Or hatcheries?

Originally Posted by Cruz Azul Guy

Economists like Peter Schiff...

Nobody cares what Peter Schiff says.

[Fisherman99]

"Nobody cares what Peter Schiff says"

I do...he is a UC Berkeley Haas School Economist and CEO that correctly predicted the great recession back in 2006. More on Peter Schiff here...

https://en.m.wikipedia.org/wiki/Peter_Schiff

[BoBromhal]

Originally Posted by Cruz Azul Guy

At market close on Thursday it is looking like the worst week on Wall Street since 2008. At this point I can’t help but wonder if it’s officially the beginning of an economic recession?

this is remarkably ignorant of what creates a recession.

[BoBromhal]

Originally Posted by kanonka

Manufacturing failing for 7 straight months now:
https://tradingeconomics.com/united-...ing-production

FedRes pours about $75Bln into economy each month for this period (another QE, just like 2009-10):
https://www.federalreserve.gov/monet...centtrends.htm

Great economy! No recession ahead! Buy more stocks!

I'll assume this was a typo, and not a Freudian slip.

Manufacturing has indeed fallen year-over-year for 7 straight months. Not fallen 7 consecutive months, per se.