Falling Economic Indicators Signaling 2023 Recession

[Frodo]

The high inflation we have been experiencing over the past 18 months doesn't seem like it is going to stick around for that much longer:

Economic Indicators Fall Sharply in November, Signaling a 2023 Recession
The drop was broad based and reflects the effects of the Federal Reserve’s interest rate hikes.

The indicators offer a mixed view of an economy that is showing resilience in the face of aggressive monetary tightening by the Federal Reserve, designed to curb inflation. But Ozyildirim said the outlook is consistent with a recession in 2023.

“Despite the current resilience of the labor market – as revealed by the US CEI in November – and consumer confidence improving in December, the US LEI suggests the Federal Reserve’s monetary tightening cycle is curtailing aspects of economic activity, especially housing,” he said. “As a result, we project a US recession is likely to start around the beginning of 2023 and last through mid-year.”

That is pretty much the mainstream view of the economy, although some analysts have pointed to the speed with which inflation has fallen – down about 2 percentage points from mid-summer – as evidence the economy could skate by.

[emailking]

Well that sucks.

[○∙◄☻¥tπ[╪AV┼cVê└]

Yeah, not looking good here.

https://fred.stlouisfed.org/series/T10Y2Y

[Benjamin Frank]

If there is a recession, what matters is the length and the severity of the recession, not so much whether there is one or not. Especially if it's primarily a technical matter. If, based on the colloquial definition, if the economy skates by with 0.1% growth for two quarters, it's not significantly different than 0.1% decline for two quarters.

[politicallefty]

If we see another sizable drop in the inflation numbers in January like we did this month, the Fed definitely needs to stop the interest rate hikes. It takes time for the medicine to work and it does seem to be working. Inflation is easing (I wonder how much that is due to gas prices, though the high spikes in the summer were certainly related to the high price of oil), but we don't need a recession to end it like we did in the early 1980s.

[Matty]

A recession is inevitable following these rate hikes

In fact, these rate hikes are *designed* to cool the economy

It will be the healthiest recession in us history though.

[Benjamin Frank]

If we see another sizable drop in the inflation numbers in January like we did this month, the Fed definitely needs to stop the interest rate hikes. It takes time for the medicine to work and it does seem to be working. Inflation is easing (I wonder how much that is due to gas prices, though the high spikes in the summer were certainly related to the high price of oil), but we don't need a recession to end it like we did in the early 1980s.

Not directly related, but the real work and presumably the longer term drag on the economy is when the Fed does the necessary work of quantitative tightening in order to reduce its balance sheet.

[○∙◄☻¥tπ[╪AV┼cVê└]

It will be the healthiest recession in us history though.

I'm sure Paul Volcker would say that 1980 was.

[LostInOhio]

I’m not being facetious here but… didn’t we technically enter a recession in Q2 of 2022 or did I imagine that whole thing?

[Pericles]

A housing crash would be good news but I hope the US and other countries can do a soft landing so the economy keeps growing and full employment continues but inflation goes down anyway. At least Biden is lucky that he isn't going to the polls until November 2024, I'm worried for our government whose term ends a year earlier.

[Landslide Lyndon]

That would be great timing for Biden if a recession indeed happens.

[emailking]

I’m not being facetious here but… didn’t we technically enter a recession in Q2 of 2022 or did I imagine that whole thing?

It wasn't declared so it was not technically a recession. There were 2 consecutive quarters of contraction, yes.

[Agonized-Statism]

Wish it would cool the housing market back to more reasonable prices, but that's probably wishful thinking.

Good read for broader implications of the 2023 recession: https://encyclopediageopolitica.com/2022/12/21/a-winter-of-discontent-impacts-the-years-beyond/

[Vosem]

Biden's term seems very similar to GHWB's in broad strokes, right? Very establishmentarian elder statesman Vice President for a popular two-term President gets elected (with an inexperienced gaffe-prone Senator as VP); under him, the economy is sluggish but foreign policy is perceived as a success due to enemies abroad collapsing, and lots of fairly consequential legislation gets passed. An opposition in disarray underperforms in the midterm. (Possible mild recession during third year in office).

This kind of thing is basically searching for patterns where none exist (there's no reason a President's term should track that of a former President, and the Biden/Obama to Bush/Reagan analogy has no Trump component), but at the same time it's amusing that it fits so well.

(Hopefully there will not be a recession; you should never wish for people to lose their jobs just because you think it will help your party).

[jojoju1998]

Biden's term seems very similar to GHWB's in broad strokes, right? Very establishmentarian elder statesman Vice President for a popular two-term President gets elected (with an inexperienced gaffe-prone Senator as VP); under him, the economy is sluggish but foreign policy is perceived as a success due to enemies abroad collapsing, and lots of fairly consequential legislation gets passed. An opposition in disarray underperforms in the midterm. (Possible mild recession during third year in office).

This kind of thing is basically searching for patterns where none exist (there's no reason a President's term should track that of a former President, and the Biden/Obama to Bush/Reagan analogy has no Trump component), but at the same time it's amusing that it fits so well.

(Hopefully there will not be a recession; you should never wish for people to lose their jobs just because you think it will help your party).

So is Trump an aberration ?


Was Hillary Clinton a Trojan horse that gave us Trump ?

[Benjamin Frank]

The GDP price deflator, which the Federal Reserve uses as a measure of inflation that they take more seriously than the CPI increased 5.5% in November year over year compared to 6.1% in October.  

https://www.sharecast.com/news/international-economic/us-personal-spending-and-price-pressures-slow-in-december--11797176.html

The CPI numbers are still to come out as is the jobs report, but I wouldn't be surprised if the Fed only increased its rate by 0.25% at the next meeting..  

Depending on external factors like the war in Ukraine and how this cold spell effects supply and other unknowns, it does appear that the U.S economy could be in for the favored 'soft landing.'

It would actually be fairly extraordinary to successfully 'normalize' interest rates (have the Fed Funds rate higher than the inflation rate) without causing a recession, even without taking into account the rise in inflation. Remember when the Fed tried to raise its interest rate under Trump, and despite the seemingly very strong economy at the time, they nearly triggered a recession and had to lower its rate again.

Many people know GDP as C+G+I+X-M, which is the consumption calculation of GDP. The GDP price deflator is used to measure GDP from the supply side. It's much more complicated and gives me a headache.

[President Johnson]

Didn't they claim this before for 2021 and 2022? So far, it looks good.

https://twitter.com/POTUS/status/1606050699044966410

[MR DARK BRANDON]

Didn't they claim this before for 2021 and 2022? So far, it looks good.

https://twitter.com/POTUS/status/1606050699044966410

They have. And they do this all the time, They even claimed one in 2018-2019. Point is there was supposed to be a recession last summer, that didn’t happen, then it was supposed to happen RN, that didn’t happen. Now it’s supposed to happen in 2023, with some economists saying late into 2023.

https://www.washingtonexaminer.com/news/white-house/biden-recession-2023

Surprisingly good read from the Washington examiner(!!!) read what Friedman has to say. If there is a recession around the corner, the average person hasn’t felt it, neither have businesses.

[It’s so Joever]

Biden's term seems very similar to GHWB's in broad strokes, right? Very establishmentarian elder statesman Vice President for a popular two-term President gets elected (with an inexperienced gaffe-prone Senator as VP); under him, the economy is sluggish but foreign policy is perceived as a success due to enemies abroad collapsing, and lots of fairly consequential legislation gets passed. An opposition in disarray underperforms in the midterm. (Possible mild recession during third year in office).

This kind of thing is basically searching for patterns where none exist (there's no reason a President's term should track that of a former President, and the Biden/Obama to Bush/Reagan analogy has no Trump component), but at the same time it's amusing that it fits so well.

(Hopefully there will not be a recession; you should never wish for people to lose their jobs just because you think it will help your party).

Also the fact that 1990 was a blue ripple but nothing more.

[Pres Mike]

Maybe I'm wrong, but I'm very skeptical of a "recession". The labor market is strong and consumer spending is strong.

Yeah, borrowing has become more expensive. But aren't most Americans hoping for a housing crash?

Remember how everyone was prediciting a recession between 2018-2020?

[Pres Mike]

I’m not being facetious here but… didn’t we technically enter a recession in Q2 of 2022 or did I imagine that whole thing?

We did have two quarters of negative growth. But that doesn't mean a recession. A recession is when millions of people are losing their jobs. In theory negative growth means that. But in 2022, it was just Americans buying more imports.

[MR DARK BRANDON]

Lol

[emailking]

Bidenomics kept us above water and out of recession, and also stifled inflation, in 2023.

[Vosem]

I’m not being facetious here but… didn’t we technically enter a recession in Q2 of 2022 or did I imagine that whole thing?

Under some definitions there was indeed a very mild recession in early 2022, but it was not formally designated that way by American policymakers.

[Meclazine for Israel]

You need the US dollar to cool off. That will drive up exports.