So the venerable CITI Bank thinks we are headed for a recession.

[Ebsy]

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Opinions?

[DC Al Fine]

Economists have predicted eight of the last three recessions.

As a general rule, treat these speculations with a grain of salt. And certainly don't base your investments on them.

[King]

I totally disagree. I'm no finance expert, so maybe I'll look foolish in the end, but I still see so much potential left for growth in the economy. As I've said before, our GDP is no where close to where it should be:



Also, if there was a recession, what we would we name it? That's actually really important. Recessions usually are tied to some big real market collapse that has a name. 2008 had the housing bubble. 2001 was the tech bubble. 1981 was to solve the inflation crisis.  Is Citi saying we're going to have a "flattening of the bond yield curve" recession? What?

One industry you can point as due to contract is oil. However, I also think the idea of "low oil prices = recession" is bunk. It's easy to point out simply by looking at the graph of oil prices.  When did oil prices peak historically? July 2008, right before the crash, Sep 2000 right before the downturn, Jun 1990 right before recession, 1980 right before the recession.  You could look at that and say the downturn after the peak started the recession, but I think it's more likely the peak is what influenced the recession.

Our greatest economic periods--the 1950s, the mid 1980s, the late 1990s--were periods of great oil glut and low prices. If we are entering a year of very low prices, I say we are entering a great period for economic growth in a lot of areas.

[DINGO Joe]

Things are getting awfully intense across all the energy and industrial commodities.  Diesel, Natural Gas and Coal all headed into winter with very high stockpiles and the warm start to winter is a ball buster. Things could get really ugly on both the jobs and financial sides. 

Of course, the flip side is that consumers are paying much less to heat and power their homes, frequently saving more than they do at the pump.

[Maxwell]

The only way the economy would slow down again is if we tighten monetary policy as we plan to do soon enough.

[muon2]

I totally disagree. I'm no finance expert, so maybe I'll look foolish in the end, but I still see so much potential left for growth in the economy. As I've said before, our GDP is no where close to where it should be:



Also, if there was a recession, what we would we name it? That's actually really important. Recessions usually are tied to some big real market collapse that has a name. 2008 had the housing bubble. 2001 was the tech bubble. 1981 was to solve the inflation crisis.  Is Citi saying we're going to have a "flattening of the bond yield curve" recession? What?

One industry you can point as due to contract is oil. However, I also think the idea of "low oil prices = recession" is bunk. It's easy to point out simply by looking at the graph of oil prices.  When did oil prices peak historically? July 2008, right before the crash, Sep 2000 right before the downturn, Jun 1990 right before recession, 1980 right before the recession.  You could look at that and say the downturn after the peak started the recession, but I think it's more likely the peak is what influenced the recession.

Our greatest economic periods--the 1950s, the mid 1980s, the late 1990s--were periods of great oil glut and low prices. If we are entering a year of very low prices, I say we are entering a great period for economic growth in a lot of areas.

In July 2008 the economy was already 8 months into the Great Depression, and the securities crisis traces before that to Aug 2007. Oil was still rising since the financial sector problems hadn't worked their way into the industrial parts of the economy and the consumer job situation. Oil was not a good forecasting tool last time.

In Sep 2000 the economy was already 6 months into the recession triggered by the collapse of the tech sector. Oil was a lagging not a leading indicator then, too.

Sometime the peak has led and sometimes it has lagged the start of the recession. I don't see a reason to look at the oil price peak as a unique indicator. However, energy sector debt defaults are on the rise and that's a big enough sector to cause shocks to the rest of the economy.

[Ebsy]

I will remind everyone that the technical definition of a recession is two consecutive quarters with negative economic growth.

[muon2]

I will remind everyone that the technical definition of a recession is two consecutive quarters with negative economic growth.

It's not the technical definition in the US, but it is a useful guide. The official definition for the US is based on a basket of economic indicators, including real GDP. The National Bureau of Economic Research is the official source and uses this definition:

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