
Parts of America may already be facing recession - joshuafkon
https://www.economist.com/united-states/2019/08/29/parts-of-america-may-already-be-facing-recession
======
zaroth
A few comments saying we never really recovered, or, we snapped back and now
we’re slowing down back to average growth levels.

I recommend taking a look at this jobs chart:

[https://fred.stlouisfed.org/series/USPRIV](https://fred.stlouisfed.org/series/USPRIV)

Then set the time range to be 1997 to present.

What’s remarkable is that the slope of the curve is essentially bimodal.
Either the economy is hiring at 200k/month, or it is firing at 200k/month.

The 2008 recession was remarkably bad. We set back jobs growth more than a
decade, which had never happened before. Since then we’ve had the longest
stretch of time where the economy is in “hiring mode” in history. But there
was also no “snap back”, the curve has been going up, but it’s still shifted
10 years to the left.

It’s not clear this stretch of up time has ended yet, but the market is
flashing signals that it is more likely to end in the next 6 months than it
was a year ago.

With inflation so low, this to me implies there is still slack capacity and we
have room to keep the “hiring” mode turned on for a while longer, but the Fed
would have to lower rates for that to happen.

Former Fed President Dudley’s comments in his op-ed last week were a
shockingly bad look for the Fed. [1] Advocating for intentionally tanking the
economy to make the current President look bad undermines the entire Fed
governance model.

[1] - [https://www.cnbc.com/2019/08/28/the-feds-efforts-to-stay-
out...](https://www.cnbc.com/2019/08/28/the-feds-efforts-to-stay-out-of-
politics-just-got-a-lot-tougher.html)

~~~
roenxi
You've picked one statistic; that is cheating. If nothing else, you need to
account for population change.

But more importantly, the people who care about unemployment at any given time
are the marginal people being sacked or hired. For a one-stat picture I'd
guess that real income quintiles across the entire population would be the
best for a general economic health check. The data you picked leaves open the
question of "are those jobs overpaid software engineers or fruit pickers?"

> With inflation so low

The price of gold currently implies inflation of ~8% p.a. since 2005
(14,000/kg to 38,500/kg over 13 years) vs CPI inflation in the range of 2%
p.a. and I promise you that in real terms gold isn't any more useful today
than it was then. Inflation isn't low, _consumer_ price inflation is low.
Inflation is contained in the asset markets and at a guess consumer inflation
can't rise because it is linked to wages rather than asset prices.

~~~
Redoubts
> The price of gold currently implies inflation of ~8% p.a. since 2005

Looking at the chart. have we been experiencing deflation since 2011?

~~~
roenxi
No. And I don't think that inflation ever reached ~30% which is how the gold
price performed 2006-2011. It isn't a perfect proxy. I'm happy to say it isn't
a proxy at all.

But I don't believe the long-term real price of gold is rising and it
certainly does not offer a financial yield in real terms. Explaining today's
prices vs the ~$500 base after the 1980s bubble is much easier if we assume
that inflation is about equal to the amount of money in the system (aka the
M2) instead of the CPI.

I'd bet (as in, I'm basing my financial planning decisions) that the next time
gold spikes up in price it will imply inflation from 2011 has been higher than
2% too. My money is on the price of gold tracking closer to the M2 monetary
supply than CPI inflation over the long term.

------
proverbialbunny
The economy was horrible for a handful of years, and when that was over, like
a rubber band, the economy bounced up. This created a bubble / mini-bubble,
but now that the bounce has possible finished what we're seeing is possibly
more normal growth than anything.

The mentality of a market slowing down being a depression or a recession is
odd to me. The market slowing down leading to a depression, isn't as odd,
because it can be at times a precursor. While that may be the case here, it is
also entirely possible the market is simply normalizing from previous volatile
times.

~~~
maxerickson
The "recession" that economists use is just a technical term for a decline in
activity.

~~~
proverbialbunny
Any decline in activity might be what news reporters are sensationalizing the
word recession into, but that's not the proper economic definition of the word
recession.

>A recession is a macroeconomic term that refers to a significant decline in
general economic activity in a designated region. It is typically recognized
after two consecutive quarters of economic decline, as reflected by GDP in
conjunction with monthly indicators like employment. Recessions are officially
declared in the U.S. by a committee of experts at the National Bureau of
Economic Research (NBER), who determines the peak and subsequent trough of the
business cycle which demonstrates the recession.

[https://www.investopedia.com/terms/r/recession.asp](https://www.investopedia.com/terms/r/recession.asp)

To dive in deeper: I don't have a proper definition of "economic decline" but
as far as I am aware it means, not a slowing economy, but a dropping economy.
eg, the market going down, or unemployment rising.

------
gerbilly
When the news media starts saying "recession" it increases the chances of
there being a recession.

~~~
turtlecloud
So are we trusting the media now? Or is it all fake news? Not sure what you
guys are doing but I will still be buying.

When everyone says recession it’s most likely baloney. Events like 2008 and
1929 and 1987 come out of nowhere as a surprise, not as a warning news
announcement on MSNBC (seriously just inverse everything they say )

~~~
paul7986
That's what I'm thinking and wondered are all red and blue news outlets
reporting this the same? Is it just the ones with the opposite political
agenda? Because the boon economy we been experiencing is a huge positive for
the person in office now and their possible re-election.

~~~
jerf
The economy bleeding is the economy leading.

Even if it isn't, it's still a more exciting story than "everything's probably
fine for now".

I believe there are plenty of people who would in a heartbeat spark a
recession for millions of people as long as it let them get rid of Trump. In
the spirit of "A single death is a tragedy, a million is a statistic", the
cognitively-available benefit of getting rid of Trump would dominate the vague
and diffuse "some people somewhere might get hurt" that would entail. (And
that is granting them the benefit of the doubt that they'd even care about it
if they could managed to grapple with it, a theory I don't particularly have a
lot of evidence for.)

However, it's too early for that. If a recession hits now, there's time for
the economy to recover before the election and the recession to just be a
memory in our ever-increasingly news cycle driver news economy. "What
recession? Oh, you mean the one from 150 news cycles ago? Who cares?" "They"
would want it in full swing somewhere around the election, and would settle
for the worst bits being a month or two before the election. I tend to think
this is just the media echo chamber picking up an idea.

~~~
gerbilly
> I believe there are plenty of people who would in a heartbeat spark a
> recession for millions of people as long as it let them get rid of Trump.

Geez, I don't think anyone was implying that was the reason the media was
talking recession.

Do you know _any_ reporters, and are you familiar with how they work?

I do, and none of them just make up stories the way you are implying.

I suggest that when people imply 'fake news', that the burden of proof be
placed on them.

~~~
jerf
I didn't say it would be reporters. They pretty much just relay things from
people in the financial business, who have a whole range of interests of their
own. Reporters would have very limited ability to independently decide there's
a recession coming, just as they have a limited ability to come to their own
conclusions in any other domain.

Bear in mind we live in a world where this happened:
[https://slate.com/business/2019/08/william-dudley-fed-
trump-...](https://slate.com/business/2019/08/william-dudley-fed-trump-
interest-rates-economy.amp) (Note: generally liberal site, not a foxnews or
brietbart pick.) It's not exactly a crazy conspiracy theory when the former
head of the Fed is openly talking about this sort of thing. I mean, quite the
contrary; you've got to pay attention to that sort of source! If that's out in
the open, what do you think is going on behind closed doors?

~~~
gerbilly
The reporters I know won't publish a claim without two or more independent
sources.

~~~
jerf
It would probably be a challenge to find a time when reporters _couldn 't_
find two people who think bad times are just around the corner. Predicting
recession is the economic equivalent of the first post on HN being
disagreement with the posted article, and just as popular.

And that's _long_ before accounting for the possibility of agendas skewing
what people say, since I hardly believe our financial system is run by
disinterested angels, or by people who inexplicably have failed to notice how
much power they have when they open their mouth.

You don't stand a chance of convincing me that all of the participants in this
process are just upstanding folks who wouldn't dream of doing anything
untoward and that there's nobody would even spare a single thought for how
they might manipulate the system for their own goals. The pile of evidence
you'd have to present to overcome the pile of evidence that we all have (not
just me) to the contrary is too large to fit on planet Earth.

~~~
gerbilly
> It would probably be a challenge to find a time when reporters couldn't find
> two people who think bad times are just around the corner.

Sure, and you don't think journalists have developed a culture around this
fact?

They're not dumber than people on HN because they don't use machine learning
models. They've developed practises to avoid being manipulated.

And yes, those practises do fail or break down sometimes, or PR flaks find new
ways to sneak their agendas in, sure, and this is why you should read news
from multiple independent sources.

------
torgian
I feel like we never recovered from the 2008 depression. And I feel like we
are due for another big one.

That said, these are cycles as always.

~~~
mieseratte
The economy recovered, people less so.

~~~
lotsofpulp
People’s sense of security has dropped. They are aware of automation reducing
their competitiveness, aware that most of the gains are going to a few select
regions of the country, and more and more business is in the hands of fewer
and fewer larger entities.

The numbers look good in an aggregate sense, but most individuals have less
power than before.

~~~
ezzzzz
Absolutely. I've been trying to help my SO (with no College degree or trade)
try to find work in the Midwest. There is definitely a surplus of jobs in our
mid-tier city, but nothing with any growth potential, autonomy, dignity,
benefits, etc. I find it so odd that the salary for something labor-intensive
like a warehouse is on-par with a cashier. The US is becoming very dystopian.

~~~
lotsofpulp
The output of the US middle class can be accomplished for cheaper by others
around the world (and thereby raising their wages). And with the scaling
advantages that come with technology mean far fewer people can drive massive
growth.

I don’t need a person at a hotel front desk to check me in, I don’t need a
taxi dispatcher to call me a car, and I don’t need secretaries to handle my
scheduling. Automated reports remove the need for many middle management
positions, and it all manifests itself as stagnant wages for warehouse type
work which isn’t yet automated.

~~~
mkane848
Yeah, except most of those automated systems still suck, and people need to
assist those systems with edge cases.

Imagine Google's customer service, but everywhere. No thanks.

~~~
lotsofpulp
The point is those systems reduce the number of employees needed, which means
a reduction in the demand of labor, which means the price of labor goes down
assuming the supply remains constant or goes up.

~~~
mkane848
But we're decreasing the quality of the service, so do they, really? We then
need the aforementioned people to fill in the gaps for the systems.

Automation shouldn't be replacing people in the workforce, it should be
allowing us to do our jobs more efficiently and tackle the more pressing,
human issues that require nuance.

~~~
lotsofpulp
The fact that wages have stagnated while productivity has skyrocketed is proof
that there is insufficient and possibly decreasing demand for labor.

Personally, I like all the new automated services, and I would say the
benefits have outweighed the issues. The gaps in the system don’t require as
many people as before to fill, or perhaps the ones that are required don’t
need to be as highly trained so they offer lower pay.

For example, Home Depot and Lowe’s websites now show you exactly where an item
is in the store, which is very helpful to a shopper. But that may also cause
some employees to be made redundant as they theoretically have more time to
assist with other things assuming they are helping fewer customers find
things. This one change might not affect the numbers, but combined with online
ordering, in store pickup, self checkout machines, it might all add up to a
few less positions at the store.

~~~
mkane848
I disagree with your analysis in the first sentence on a fundamental level, so
I think we may just not see eye to eye on this. I think it's more reflective
of the issues of crony capitalism and exploitation of the working class than
as a litmus test of whether automation has "made it" yet.

Self checkout at the grocery store is still a mess that requires frequent
intervention from on-hand employees, and even the most advanced system still
usually requires someone there for insurance. Hell, the best minds in the
country still can't get cars to drive themselves without someone on deck to
pull the plug if it all goes tits up.

~~~
torgian
Yeah, this is a true statement. I live in east Asia and travel to Japan a few
times a year. They have self-checkout, but there is always someone there to
help. I have seen these people help everyone at the self-checkout every time I
went to the stores that have them.

Automation is nice, but it's not smart enough. Not yet at least.

------
eschulz
Isn't this generally the case? Even in good times certain "parts" can fall
victim to poor leadership or bad luck, and therefore experience and
contracting economy.

~~~
brilliantmind
So you think that this is an article that could be written at any point in
time but they choose the preelection opportunity to manipulate public opinion?

------
SamuelAdams
I'm not sure why this article targets US Steel in particular. Plenty of
companies in Michigan have been issuing WARN notices [1]. There's a handful
related to manufacturing [US Steel, Venchurs Inc (which was completely shut
down), Lear Corporation]. But there's plenty of other industries in this list:
from white collar jobs to retail jobs.

I'm curious to see if the number of WARN notices being issued by state, and
the number of positions impacted in each notice, is different / higher than it
has been in previous years. That's what is missing from this article: how do
these layoffs compare against prior years?

[1]:
[https://www.michigan.gov/wda/0,5303,7-304-64178_64179---,00....](https://www.michigan.gov/wda/0,5303,7-304-64178_64179---,00.html)

------
known
[https://archive.is/rEuML](https://archive.is/rEuML)

