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RECESSION IS NOT A WORST-CASE SCENARIO

By jazz_music following x   2018 Dec 22, 6:44pm 577 views   6 comments   watch   nsfw   quote     share    


There are so many worse outcomes in the near term horizon than recession. Combine the loss of Colorado River irrigation water and hydro power with more frequent and intense wildfires, hurricanes, crop failure due to that plus increasing temperature, lack of pollination with the bee population failing. Rising interest rates due to no more quantitative easing, continued loss of American consumer dollars due to continued loss of stable employment and continued loss of retirement. Add to that a housing market implosion due to the loss of all the phony supports, loss of foreign investors, institutional investors, and next greater fools.

No eruptions necessary, no earthquakes, mega-tsunamis or WMDs necessary. We live under far worse challenges than "a recession" that are both systemic and existential in nature, and we are constantly directed away from exchanging relevant thoughts on the subject.

Government shutdowns could become more than a game, they could be the prologue to collapse due to massive loss of tax revenues and war spending again to benefit all the idle rich who manage to get the benefits of taxes paid by having the taxpayers vanquish themselves from immersion in corporatist propaganda.

Our society is held from revolution by access to cheap, fast food like McDonalds, cheap slave-born commodities from stores like WalMart and the debt obligations to force taxpayers to work as many hours as humanly possible under an ever-growing integrated futuristic network of surveillance and enforcement.

Here is a typical news item, like so many other distractions, that exist to keep us from talking about solutions to the more serious problems.

Stock market woes raise a nagging fear: Is a recession near?
Some analysts believe next one coming in 2019

BALTIMORE – Fears of a recession have been mounting with the U.S. stock market appearing to be headed for its worst December since 1931 – during the Great Depression.

Wall Street’s sustained slump has been fueled by investor concerns about lower corporate profits, higher corporate debt, a festering trade war between the United States and China and a broader global slowdown.

So is a U.S. recession imminent? Not necessarily.

Plenty of economic gauges suggest that far from being derailed by a stock market that’s set to suffer its first annual loss in a decade, the $20 trillion U.S. economy is barreling forward. Employers are hiring, consumers are spending ahead of the holidays and economic growth has been brisk, thanks in part to President Donald Trump’s deficit-financed tax cuts.

But the economy has been growing since mid-2009 and nothing – not even what’s become the second-longest U.S. expansion on record – lasts forever. As the expansion has aged, economists and business leaders are increasingly predicting that it will end within the next two years.

The fact is that recessions are a regular part of the economic cycle. A downturn won’t necessarily happen in 2019. But the free-fall in stock prices could hasten the day.

“While we aren’t explicitly forecasting a recession next year, we wouldn’t rule out a mild one,” said John Higgins, chief markets economist of Capital Economics. “At the least, we expect a significant economic slowdown.”

Nearly half the chief financial officers surveyed by Duke University’s Fuqua School of Business foresee a recession by the end of next year. And by the end of 2020, 82 percent do so. Here’s a look at how the movements of the stock market and the barometers of the economy might determine the risks of a recession:

Does a sustained fall in stock prices herald a recession?Sometimes. Not always.

Both the previous two U.S. recessions overlapped with stock market sell-offs. The Dow plunged nearly 34 percent in 2008 after the housing bubble burst. And it shed about 7 percent in 2001 when the tech stock bubble burst. But stocks also declined in 2002 – a year when the U.S. economy expanded.

The fact is that the stock market captures just a piece of the broader U.S. economy. Less than half of U.S. households even own any stock, according to New York University economist Edward Wolff. And more than 80 percent of the stock market’s value is controlled by the richest 10 percent of households, according to his calculations.

The bulk of most Americans’ net worth is derived from a different asset: Their homes.

How bad is the stock market decline?It’s painful. But Wall Street has endured far worse sell-offs.

Year-to-date, the Dow has lost about 5 percent – just a small fraction of its 2008 plunge. And the recent losses follow an extraordinary winning streak: From its bottom in March 2009, the Dow has rocketed 250 percent. This means that investors who have held on have earned a rich profit – even including the losses since October. That said, the sell-off of the past two months has been severe – about 12 percent. This means the market has entered “correction” territory, commonly defined as a decline of at least 10 percent.

What’s behind the economy’s strength?Look to the job market. The 3.7 percent unemployment rate is near a half-century low. Average hourly wages have climbed 3.1 percent in the past 12 months, the strongest such increase since 2009. The solid employment picture has helped fuel consumer spending. Retail sales have grown 5.3 percent so far this year as more Americans have eaten out and shopped online, according to the Census Bureau.

Does the housing market point to a recession?This is tricky. By some measures, like the Census Bureau’s report on home construction, the housing market never really recovered from the meltdown of a decade ago. As a result, housing has contributed relatively little to the economic recovery, which makes it less likely to be a major force that tips it into a recession.

What has generally recovered are average home prices. Home sales prices have been steadily rising faster than Americans’ average wages for the past few years, according to the National Association of Realtors. This made some homeowners wealthier. But it also reduced affordability of homes for many would-be buyers.

Until this past year, home buyers had been helped by historically low mortgage rates. But mortgage rates began to creep up last year as it became clear that Trump’s tax cuts would swell the federal budget deficit.

Mortgage rates generally move in sync with 10-year Treasury notes. As the average 30-year mortgage rate has risen 4.63 percent from 3.93 percent a year ago, sales of homes have fallen.

Are the Fed’s rate hikes a risk for recession?The Federal Reserve has become a punching bag for Trump as the stock market has tumbled. The Fed raised its key short-term rate for the fourth time this year on Wednesday, which will further raise borrowing costs for consumers and businesses over time.

The Fed is raising rates to try to keep inflation at its 2 percent annual target while maximizing employment. But if it miscalculates and raises rates too high or too fast, history suggests it could trigger a recession.

Compounding the risk is that the Fed is also paring the huge bond purchases on its books, which resulted from the trillions in Treasury and mortgage bonds it bought to help the financial system recover from the 2008 financial crisis. Doing so magnifies the upward pressure on borrowing rates for consumers and businesses.

Could resolving a trade war with China stop a recession?Trump caused stocks to buckle when he ratcheted up taxes on Chinese imports in hopes of forcing Beijing to strike a deal that would protect U.S. technology from theft and reduce the trade deficit with China. Stocks recovered somewhat when further tariff increases were suspended after Trump met with President Xi Jinping earlier this month at an international gathering in Argentina.

A prolonged trade war could surely depress growth. But it’s unclear whether any new deal would speed growth to the point where a recession could be avoided.

The fact is that economic growth around the world is slowing, including in the United States as the benefits from the tax cuts wane. Britain is struggling to leave the European Union. France faces economic unrest. Italy appears to be in recession. China is trying to engineer slower growth after a multi-decade boom that would be destabilizing if it had maintained its once-sizzling pace.

And as the Fed has raised rates, the resulting higher yields available in the United States have drawn investment money out of the developing world, thereby tightening pressure on those economies.


https://durangoherald.com/articles/255851-stock-market-woes-raise-a-nagging-fear-is-a-recession-near
1   APOCALYPSEFUCKisShostikovitch   ignore (37)   2018 Dec 22, 7:17pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

CANNIBAL! ANARCHY! IS! NIGH!
2   HEYYOU   ignore (25)   2018 Dec 22, 10:46pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

I'll be skipping the hot dogs but would have no problem with steaming some clams,when C.A.begins.
3   APOCALYPSEFUCKisShostikovitch   ignore (37)   2018 Dec 23, 2:29am   ↑ like (0)   ↓ dislike (0)   quote   flag        

In the end, FACE!, yes, FACE! is what will be left for dinner.

EAT! HEARTY!, AMERICA!
4   willywonka   ignore (1)   2018 Dec 23, 3:45am   ↑ like (0)   ↓ dislike (0)   quote   flag        

The Fed is causing this recession.
5   Hugolas_Madurez   ignore (4)   2018 Dec 23, 11:16am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Dems caused stock market to take a dive and now are pining for a full-blown recession? Nice. Such champions for the average Americans they are.

6   Kakistocracy   ignore (6)   2019 Mar 10, 6:05pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

Can American Consumers Survive Another Economic Downturn? - Customers worry about economy but are saving less in an on-demand world.

PurePoint Financial’s second “State of Savings in America” survey points to financial trends impacting American consumers in 2019. Among key findings, one-fourth of American consumers are choosing convenience over savings with on-demand applications expected to increase this trend.

Freedom from the stress of money is top of mind for American consumers when dreaming about their future (59%), but many don’t have ongoing savings habits that will prepare them for long-term financial success or protect against a potential financial crisis in the future, according to new research from PurePoint Financial, a hybrid digital bank and division of MUFG Union Bank, N.A.

According to the “State of Savings in America” survey, savings balances are down 35% and 88% of Americans are concerned about another economic downturn, and for good reason; 83% of those impacted by the Great Recession are still recovering.

Economists around the world are predicting another market slump, but the research found that 80% of Americans are not very confident they could survive another recession or market downturn in the near future. The reason: six in 10 of those who are not confident are still living paycheck to paycheck.

While nearly half (44%) of respondents impacted by the Great Recession have cited keeping a closer eye on their finances since the recession, one in seven have admitted they haven’t changed their savings behaviors since being impacted.

Confidence Up, Habits Down

Respondents report feeling less anxious about the job market, political environment and other external factors than in 2017. However, consumers are saving less, have worse savings habits and nearly half don’t feel proud of how much they’ve saved. In fact, fewer Americans are disciplined, habitual savers. Forty-one percent of respondents are saving via direct deposit, down 6% points from 2017. Even more so, crash diet saving is a popular tactic, with half of Millennials categorizing themselves as aggressive short-term savers.

Surprisingly, more consumers are taking savings into their own hands, with 16% of respondents reporting hiding cash around their homes, compared to 12% in 2017. Some 73% of respondents are not actively looking for the best rates or places to save the money they are putting aside, possibly leaving money on the table. As a result, respondents reported a decline in median savings balances, down to $1,500 in 2018 compared to $2,300 in 2017.

According to the Federal Reserve, there is more than $9 trillion sitting in accounts earning less than .09 basis points. PurePoint experts recommend saving at least 10% of your annual income in a high-yield savings account with at least 2% interest rate.

“Our survey found that one in three people in the U.S. don’t feel in control of their finances and half are too embarrassed to talk about their savings with their friends,” continued Habis. “We understand how important financial security is to all of us and that saving may seem daunting, but it just takes minor adjustments, such as creating financial goals, setting aside whatever you can manage from each paycheck or searching for a better interest rate for your savings account.”

Creating Habits in Fitness and Finances

When ranking the top three most important factors in their future, respondents reported having good health (76%), financial savings (73%) and a relationship/family (68%) as the top three responses. That said, respondents noted that saving is their most rewarding activity, even more than losing weight (79% vs. 47%). But there’s more work to be done with crash-diet savers; two in five respondents consider themselves as aggressive short-term savers, for things like weddings and trips, but they’re not consistently saving in between.

Consumers Are Living for Today

Despite concern about their future financial health, at least one quarter of consumers admit to prioritizing convenience over saving. The quick rise of on-demand applications indicates this number will quickly increase over time. The research found that two in five respondents would spend four times as much on transportation to save 20 minutes and one in three would choose to take $1,000 now rather than waiting a year for $3,000; this number was significantly higher with Millennials at 43%.

The 2018 PurePoint State of Savings in America survey is an online survey among 6,000 adults in the U.S. (aged 18+), commissioned by PurePoint Financial and conducted by independent research firm Edelman Intelligence. The survey examined current behaviors, drivers, and barriers to saving among adults in the U.S. Data was collected Dec. 15, 2018 – Jan. 2, 2019, with a margin of error of +/- 1.27%. 2018 was the second wave of the survey, building off of the benchmark wave that was conducted in July/August 2017.

https://cstoredecisions.com/2019/02/25/can-american-consumers-survive-another-economic-downturn/

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