No one knows anything with certainty right now, but that doesn't stop people from speculating. Some people speculating will be right, some will be wrong.
I see almost as much speculation that "we've already seen the worst" for this recession as I do that "it's going to get much worse". Even among the crowd that thinks it's going to get worse in 2023 before recovering in 2024, they can be right and also wrong (it could continue to get worse until 2025)
I think this one is a little different because the Federal reserve is trying to induce a downturn, i.e. lower consumer demand in order to fight inflation. In spite of the Fed's efforts, consumer demand remains stubbornly high, as are unfilled job openings.
It's not really though, look at the reverse repos. The fed is literally playing both sides of the board. Raising interest rates to squeeze private equity and housing but injecting trillions to keep commodity and equity prices inflated. There is a very real and growing recession / equity crash, the fed has been inflating the market with reverse repos since early 21 to keep the markets somewhat stable. (2 Trillion, extremely unprecedented, look at the max table on St Louis Fed) That has resulted in inflation because the actual economic growth is not occuring. The only way to keep the GDP from showing a drop is for prices to go up outside of the inflation index. Part of the reason for the official calculation formula change recently. The trajectory here is anything but predictable.
Yeah, it seems a little crazy to me the FOMC FFR decisions are burying the lede on RRP and TGA activities. I can't think of another similar period in Federal Reserve and Treasury history to compare to.
I recently saw a headline that some economists' model showed a 100% certainty of a recession in 2023. Made me think, there's not going to be a recession. Economists have never been good at predicting anything.
Look at the signs. We have high inflation, rapidly increasing interest rates, declining stock prices. 2 negative down quarters, only 10k jobs added vs 1M estimated.
Why do you think the odds of recession are low? What signs besides, economists being in agreement, do you see?
Inflation is dropping like a rock, but it takes a while to fully show itself in the official numbers because it's measured year-over-year. The supply chain crunch is over. We've gotten through huge interest rate increases and only have one more half-point hike to get through before the Fed levels off. All those shocks should have put us in a recession in 2022 but didn't. Stocks and home prices dropped, but the real economy chugged along. So, why, now that we're through the worst of it, would we get a recession in mid 2023?
I'm not sure that we won't have a recession. But I'm not as convinced as everyone that it's a certainty.
The global trend is that the world consumes too much according to Greta-type of people, and those people are leading the world in EU and in the Biden admin. In parallel we have eased too much money with Covid and we’ll take it back. Third, GPT shows awesome advances. Fourth, China has production issues due to Covid so scarcity will reappear.
All this together: The VC money will get redirected from blockchain-type of startups to climate startups first, which doesn’t create as many jobs for devs, and then to AI startups if they show some results, but again this employs very different profiles from simple programmers. The rest of the economy will keep inflating a little, despite anything the Fed can do, because scarcity causes inflation.
I see almost as much speculation that "we've already seen the worst" for this recession as I do that "it's going to get much worse". Even among the crowd that thinks it's going to get worse in 2023 before recovering in 2024, they can be right and also wrong (it could continue to get worse until 2025)