patrick.net

Does this mean he will absolutely forswear asking for any type of bailout?

I mean even pinky swear?

This time around I don't expect there to be bank bailouts. Instead I foresee a lot of Nationalizing.

The inverted yield curve indicator, which occurs when the yield on three-month Treasury bills exceeds the yield on 10-year notes, is a perfect 8-for-8 in preceding every recession since World War II.

Its inventor, Duke professor and Canadian economist Campbell Harvey, still sees a recession on the horizon even if the economic narrative has skewed optimistic in recent weeks. "It's way too early to say this is a false signal," Harvey told Yahoo Finance. "Way too early."

Because of Harvey's work, investors have long focused on an inverted yield curve as a sign of a pending economic downturn.

Some track the spread between two-year and 10-year Treasury notes for signs of an inverted yield curve. But Harvey's definition uses the difference between three-month bills and 10-year notes, a spread which turned negative nine months ago in November 2022.

Ahead of the last eight US recessions, the average time between an inversion of the yield curve and the start of a recession has been 11 months, per Harvey's research. Over the past four recessions, the average lead time has been longer at 13 months. This time, Harvey sees a recession likely starting in early 2024.

"The longer we go [without a recession] after the inversion, people start to doubt the indicator, which is fine." Harvey said. "I characterize it as a lull before the storm."

https://finance.yahoo.com/news/professor-behind-recession-indicator-with-a-perfect-track-record-says-it-remains-way-too-early-to-call-off-a-us-economic-downturn-093049502.html

People in the trenches say the unemployment situation is much worse than reported. Tons of resumes apply for each white collar position. Maybe there are more blue collar jobs? I really don’t know what to make of it.

Interestingly, my friend just shared this article. It’s called richcession.

“….the bulk of high-profile job losses that began last year have been concentrated in higher-paying professions. That pattern is different from what typically happens in recessions: Lower-paying jobs, in areas like restaurants and retail, are usually the first to be lost and often in depressingly large numbers.

That’s because in most downturns, as Americans start to pull back on spending, restaurants, hotels and retailers lay off waves of workers. As fewer people buy homes, many construction workers are thrown out of work. Sales of high-priced manufactured goods, such as cars and appliances, tend to fall, leading to job losses at factories.

This time, so far, it hasn’t happened that way. Restaurants, bars and hotels are still hiring — in fact, they have been a major driver of job gains. And to the surprise of labor market experts, construction companies are also still adding workers despite higher borrowing rates, which often discourage residential and commercial building.”

https://apnews.com/article/recession-economy-inflation-jobs-unemployment-2ad91e65f4c0c79ebd2518e351934605

Eman says

This time, so far, it hasn’t happened that way. Restaurants, bars and hotels are still hiring

Yes, for now but look at the employment participation rate: https://fred.stlouisfed.org/series/CIVPART

It has returned close to pre pandemic levels (2015-2020).

Eventually there will be a lot less tight labor market, and the working class will start to feel some economic pain.

I think also less people want to work shit jobs (i.e., working class jobs in fast food, car wash, oil and tire change shop, etc.) as there has been somewhat of a culture change with the younger generation. That has helped to tighten the labor market for the working class.

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Eman says

People in the trenches say the unemployment situation is much worse than reported. Tons of resumes apply for each white collar position. Maybe there are more blue collar jobs? I really don’t know what to make of it.

No one wants a blue collar job. They've been told for 30-40-50 years now...
go to school so you can get a real job.

Any blue collar job an immigrant can do simply won't pay shit. This could be a very interesting time in American history job wise. I think it's all been done on purpose.

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Unemployment would have to rise to 5.5% for their to be a start of recession conditions. Its at 3.5% now and at the same level it was in early 2020.

I'm not sure if it will drop that much by end of this year.

So that puts 2024 at risk, which is problematic since Birdbrain Biden and the Dems do not want a recession going into the election cycle starting August 2024.

So we may just see the status quo maintained with Fed Funds rate at 5.5% going into 2024, and the yield curve not changing as well.

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GNL says

Any blue collar job an immigrant can do simply won't pay shit. This could be a very interesting time in American history job wise. I think it's all been done on purpose.

Will need to see changes to the way working class jobs are performed. We already have self check out kiosks from Walmart to Publix.

Maybe pay working class more, but cut down on number of workers, which means they may require greater productivity requirements to earn $22 an hour (versus normally getting $14 an hour).

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GNL says

Eman says

People in the trenches say the unemployment situation is much worse than reported. Tons of resumes apply for each white collar position. Maybe there are more blue collar jobs? I really don’t know what to make of it.

No one wants a blue collar job. They've been told for 30-40-50 years now...
go to school so you can get a real job.

Any blue collar job an immigrant can do simply won't pay shit. This could be a very interesting time in American history job wise. I think it's all been done on purpose.

I guess I’m the exception then. I just had this chat with my besties about this subject. 😅

"make money consistently from the stock market so I don't have to go back to work." That sounds like a late-night TV ad.

Eman says

People in the trenches say the unemployment situation is much worse than reported. Tons of resumes apply for each white collar position. Maybe there are more blue collar jobs? I really don’t know what to make of it.

Too many college graduates and too few tradespeople. The few remote jobs being posted get swamped with applications.

Will the yield curve be denied for the first time since World War 2? Still negative... waiting for the recession...

Interesting time. My biz partner has 3 friends, who have been looking for the last 6-8 months. Two have had multiple interviews but haven’t been able to land a job. These are all hitech folks.

Looking at 1989-1991 and 2007-2009 time frame, maybe the recession will happen a little latter say 2025 rather than 2024? 🤷‍♂️

It’s also interesting that Powell, who tends to be conservative and hawkish in his speech, came out and projected 3 rate cuts in 2024. Maybe he’s seeing something in the data that we don’t see….yet?

Another interesting thing is that Powell hiked rates to not only combat inflation, but also to cool down the housing market and make it more affordable for the average folks. The opposite happened. Higher rates made housing more unaffordable and more people had to rent instead, which caused inflation to spike even more as housing accounts for 42% of the CPI.

Taking a step back. The stock market tends to do well during an incumbent president election year from a historical standpoint. Rate cuts tend to happen when the economy is not doing well. Is it possible 2024 is the year to run everything up, and a rug-pull happens in 2025? 🤔