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I have added a trend line in red that coincides with my belief that the economy will get worse over time.
Let's zoom in for a closer look.
Click to enlarge.
I made a prediction in May 2012 that the next recession would hit by October 2014. In order for that prediction to be accurate, the data pretty much has to bounce off that red trend line in a meaningful way soon. It's certainly attempting to bounce but will it actually do it?
Terri Nunn - Moment of Truth
My confidence is leaving me
And I don't have a parachute
And I don't have a parachute
For the record, I hope that we do not bounce.
1. As I stated earlier, the slope of the red trend line coincides with my belief that the economy will get worse over time. I hope that I'm wrong to think this way. As Lee Child once said, "Hope for the best, plan for the worst."
2. My girlfriend has worked a grand total of 2 hours part-time in 2014 so far. That's just one of many reasons I would not complain if my recession prediction timing was in error.
This is not investment advice.
Source Data:
St. Louis Fed: Initial Claims
8 comments:
Initial claims are kinda deceiving maybe, since after the wholesale slaughter of 2008-2010 it's taken time for people to build up work credits for a claim.
http://research.stlouisfed.org/fred2/graph/?g=sLS
blue is initial claims, red is continuing.
looks like the recovery's over and we're at the new normal.
http://research.stlouisfed.org/fred2/graph/?g=sLT
shows the timings of when the Fed decided the party was over and the ensuing rise in initial claims.
http://research.stlouisfed.org/fred2/graph/?g=sLX
blue is consumer debt take-on, red is QE, green is deficit spending.
You talk of consumers taking in their horns, but another side to a fake sugar-high economy is happiness that things are humming again.
A stimulated economy like what we had during the 2000s bubble actually has the GDP turnover to reduce the deficit, which gives .gov more spending power, and lord knows they need that now.
There's another trend shift we can see in this graph too, the uptick in consumer credit take-on.
Dunno if we're going to have another housing bubble, or if current prices are unsustainable, but I think since lending standards are in no way as insane as they got 2003-2008 (quite the opposite, they've eliminated just about all the suicide options available to people).
If I were running the Fed I'd hold off the taper until we got actual full employment and bona-fide wage inflation. Going by the charts I posted last night, that's about 12 million or more new jobs out in the future, 4 years out.
2018 is a long, long way away. We'll be in the next president/congressional spending regime, which quite possibly could be a return to the good ol' 80s and 00s.
http://research.stlouisfed.org/fred2/series/FGEXPND
At any rate, 'entitlements' are going to skyrocket regardless, and that's stimulatory.
Federal government current transfer payments: Government social benefits
Troy,
Going by the charts I posted last night, that's about 12 million or more new jobs out in the future, 4 years out.
As seen in this post and for what it is worth, I'm clearly not a believer in your theory. 3 million per year would be roughly 250k per month (far more impressive than what we've been getting).
At least one of us is very wrong. Time will tell.
I should add that I am not a believer in the effectiveness of QE in the first place, at least over the long-term. As I've said before, I think it is mostly just a trick to entice people into buying riskier assets. I am very skeptical that it actually creates many jobs.
Your opinion clearly can and does vary.
I should add that I am not a believer in the effectiveness of QE in the first place
Shun the non-believer!
What's next, you'll tell me that you don't believe in bond vigilantes either?
mab,
I believe in long-term bond vigilance!
The longer Jeremy Siegel stares at long-term bond yields in hopes of justifying his long-term "Great American Bond Bubble" theory, the lower the long-term yields seem to go.
Yes, sir. Plenty of staring! Plenty of vigilance!
Thanks to extended ZIRP, we may even reach bond hypervigilance someday! Oh the humanity! ;)
I for one completely believe in all the official stories. Even when they're not true!
How's that for patriotism!
http://research.stlouisfed.org/fred2/graph/?g=sNm
speaking of bond vigilantes . . .
(YOY federal debt increase ex. Fed buying)
basically the only bond vigilantes left is the Fed itself.
http://research.stlouisfed.org/fred2/graph/?g=sNo
Debt (ex. Fed) to GDP, down is deeper.
The Fed caught our fall! Thanks Bennie!
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