Click to enlarge.
Perhaps an optimist can find something good in that chart, but I certainly can't (at least over the long-term and/or full business cycle anyway).
May 18, 2012
Recession Prediction
They say that predicting the next recession is a fool's game. Well, sign me up. Why not!
I'm going to predict the next recession will hit on or before October 2014.
For what it is worth, the odds of me turning optimistic any time soon are somewhere between slim and none. Just so you know, slim left town. Put another way, I see little reason to change my long-standing prediction.
This is not investment advice. Predicting the future is a fool's game. That said, it might be even more foolish to ignore the risks entirely. It's certainly easy and popular these days though. I'll give you that.
January 6, 2014
Hussman Funds: Confidence Abounds
Confidence abounds. Last week, Investor’s Intelligence reported a surge in advisory sentiment to the highest bullish percentage since October 19, 2007. The National Association of Active Investment Managers (NAAIM) reported that the 3-week average equity exposure among its members increased to the highest level on record.
Hey, what do you know? No sarcasm this time, unless sheer unadulterated long-term employment chart terror counts. I don't think it does but it is certainly open for debate.
See Also:
The Overleveraged Cone of Shame
Source Data:
St. Louis Fed: Custom Chart
I started talking about median duration of unemployment a couple months ago. It bottomed in last July. Mean duration of unemployment bottomed last June. The trend remained the same after the Friday NFP report. Rising median duration has been a very reliable predictor of recession.
ReplyDeleteIt possible we will see a big surge in hiring of people to sort out the administrative mess of Obamacare this year, or not.
Go SeaHawks!
Mr Slippery,
ReplyDeleteIt possible we will see a big surge in hiring of people to sort out the administrative mess of Obamacare this year, or not.
Yes! Big surge! You didn't hear it here but I have it on good authority that 1 to 6 people were hired part-time. A die roll was involved. I just don't know the result, lol. Sigh.
Gallows humor.
Go Seahawks indeed! I haven't watched that many games this year but I have sure been glued to the TV recently. :)
Goddamn Krugman today:
ReplyDeleteThink, for example, about the Great Recession and its aftermath. Regular economics says that economies should normally get richer each year, as their work force and capital stock grow, and technology advances. But after 2007 the United States and other advanced countries suddenly went into reverse, becoming poorer instead of richer, and for an extended period too . . .
So did plagues kill off part of the work force? Did termites eat part of the capital stock? Did technology retrogress? No, no. no. . . .
So what did happen? Keynes offered an answer: it is, in fact, possible for economies to suffer from an overall lack of demand. Other people had said things along these lines, but Keynesian economics put it front and center.
AAARGH
http://research.stlouisfed.org/fred2/graph/?g=qTg
blue is real GDP % YOY +
red is consumer YOY debt take-on / total wages
borrow 20% of our incomes each year and things are going to be happy happy!
Wow, the bottom channel of that cone is steeply downward. If we touch that again the next recession is going to be a monster.
ReplyDeleteI'd be worried, but since we clearly don't need wages we probably don't need jobs either.
The world loves our dollars.
Troy,
ReplyDeleteAAARGH!!!
But after 2007 the United States and other advanced countries suddenly went into reverse, becoming poorer instead of richer, and for an extended period too...
Fake prosperity unwound! Bubbles do not make us permanently richer, nor does taking on excessive debt to generate them!
mab,
ReplyDeleteWow, the bottom channel of that cone is steeply downward. If we touch that again the next recession is going to be a monster.
Have no fear! Everyone just needs to participate in America's new growth industry!
Restaurants! Those things never fail!
If I start a restaurant and you promise to eat only at mine, then I promise to only eat at yours when you start one.
We'll both have guaranteed income streams! Can't lose!
It gets even better though. You can raise your prices to generate more profits off of me and I'll do the same to generate more profits off of you! Restaurant profit perpetual profit machines for the win!
And at any point we spot any unintended consequences from my sure thing plan, let's agree to loan each other money if either of us struggles. We know we're good for it because we both have guaranteed income streams!!
Can't lose!
ReplyDeleteSome people get first prize without even trying:
http://www.youtube.com/watch?v=MZ35SOU9HTM
mab,
ReplyDeleteCatchy *and* hilarious! Hahaha!
In my book, the quickest way for anyone to identify themselves as an economic idiot is to mention "aggregate demand".
ReplyDeleteTJandTheBear,
ReplyDeleteI'd just like to know why "pent-up demand" is an economic term but "pent-down demand" isn't.
Hey, why aren't you buyin' a new set of wheels?
I got some pent-down demand after maxin' out all my credit cards!
...since we clearly don't need wages we probably don't need jobs either.
ReplyDeleteWho needs wages...or jobs...
We have a Fed that has eliminated recessions.
The top 5% will pass down 2.62% wage increases to the bottom 52% and we'll all be happy.
And the bottom 52% will continue to out-vote the top 5% in the false hope of voting their way out of the mess this country is in.
Fritz_O,
ReplyDeleteWe have a Fed that has eliminated recessions.
I know! It's amazing when you stop to think about it.
The earth is 4.5 billion years old and well less than a thousand of those years were recessionary. The Fed is just doing the final mop up work now! We should be very pleased that they are returning us back to the prehistoric trend!
We don't yet have proof of course, but their solution is so simple and elegant that it's got to work long term! Just set interest rates at prehistoric levels (zero) and keep them there forever! What could possibly go wrong?
Fedociraptor!
Keynesaurus!
Moneteratops!
Behold the dinosaurs of the 21st century! ;)