04-06-2005 20:21									#1
	The coming recession in the US? Remove this text

Yield curves are flat or slightly inverted. Short rates also point to a recession. Will it happen? How soon?

	04-06-2005 20:41									#2
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Probably when the government scales back, ever so slightly, on pumping money into our economy.

	04-06-2005 23:10									#3
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There are things which are fundamentally wrong with the US economy right now. You took a much worse dive in 2001-2003 than anybody else did, and the recovery only seems to have lasted 6 months or so. Now inflation is beginning to be a very large downside risk, but your current growth rate is not really all that high (especially when you look at the aforementioned inflationary pressure on real growth rates), so Alan needs to look like a bad guy by raising rates even though the slowdown is on its way.

Meanwhile, you have very large deficits (like on the order of 5% of GDP) in goverment spending, current accounts and trade.

The money is disappearing faster than it's being created. It's not sustainable.

Normally I would suggest that the Fed keep rates low to drive down the value of the dollar (so as to rectify some of the problems caused by China), but it's not really an option right now.

	05-06-2005 02:12									#4
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I saw this yesterday and it's looking a little scary.

Job growth was the worst in 2 years.

	05-06-2005 03:10									#5
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Can I get a job first?

	05-06-2005 03:10									#6
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I thought you had gotten a job Commie?

Or was that just temporary?

	05-06-2005 03:37									#7
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The Fed might pull back after this month's tightening.

I doubt we're heading toward a recession, but slower growth is probably on tap. 3% - 3.5%.

The government deficit is on pace for a much lower reading than last year. Q1 was the lowest since 2002Q1. We'll have to see if the trade deficit has finally turned the corner as well.

	05-06-2005 03:55									#8
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Uh oh

DanS called it.

Time to take money out of equities.

	05-06-2005 04:03									#9
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Equities have been too expensive for a long time.

	05-06-2005 06:12									#10
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I've been expecting another big recession, like Carter's, for 20 years now. It just doesn't happen. It seems that the US can go on exporting dollars forever and not pay the price. I can't understand it but economics wise people like DanS say things are fine, soo...

Sten used to be a bit concerned iirc.

	05-06-2005 07:00									#11
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Bush is bringing our politics back into the 19th century, and now he's gonna do it to our economy as well.

	05-06-2005 09:17									#12
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quote: Originally posted by Smiley Bush is bringing our politics back into the 19th century, and now he's gonna do it to our economy as well.

	05-06-2005 09:18									#13
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I particularly liked the tax cuts that were calculated based on 10 years of consecutive surpluses.

	05-06-2005 09:49									#14
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we, as a country, need to save more, and the budget + trade deficit is hurting us.

	05-06-2005 09:50									#15
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word

*cough*

Iraq war *cough*

	05-06-2005 09:57									#16
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quote: Originally posted by DanS The government deficit is on pace for a much lower reading than last year. Q1 was the lowest since 2002Q1. We'll have to see if the trade deficit has finally turned the corner as well.

Haven't you been announcing that we'd "turned the corner" for four or five years now? That's a lot of false corners.

	05-06-2005 10:02									#17
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On the government deficit, we turned the quarter at the beginning of 2004.

On the trade deficit, it has persisted longer than I thought it would, but I don't remember having thought the trade deficit was turning the corner until about 2 years ago. Normally, there is a delay of about half year to a year between when your currency declines and when the trade deficit declines. This time has been a lot longer.

	05-06-2005 13:27									#18
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Since we've turned the corner four times, that would mean we came back to where we started.

	05-06-2005 22:38									#19
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quote: Originally posted by Lancer I've been expecting another big recession, like Carter's, for 20 years now. It just doesn't happen. It seems that the US can go on exporting dollars forever and not pay the price. I can't understand it but economics wise people like DanS say things are fine, soo... Sten used to be a bit concerned iirc.

	05-06-2005 22:46									#20
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quote: Originally posted by Ted Striker I thought you had gotten a job Commie? Or was that just temporary?

It was just a two-week contract. Unfortunately, I'm so damn good, I completed it in three days.

	05-06-2005 23:46									#21
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KH, so what's the big deal? Foriegners buy our busineses and I work for them instead of for Americans. Does this make one bit of difference to me? Also, that's money coming back, right?

Otherwise, what happens to all these billions going overseas? They invest it right back in the US, yes? This cycle seems endless, is it?

If the world economy does go south for good, what will replace it?

	06-06-2005 00:59									#22
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A despotic Amazon dictatorship run by TED STRIKER

	06-06-2005 01:01									#23
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"A despotic Amazon dictatorship run by TED STRIKER"

Why not a pilot? I ask you...

	06-06-2005 01:49									#24
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quote: Originally posted by Lancer KH, so what's the big deal? Foriegners buy our busineses and I work for them instead of for Americans. Does this make one bit of difference to me?

It makes a difference in that their income goes to other people.

Earned income is only one piece of the puzzle.

Right now the US as a whole is spending more money than it is earning. It's similar to a man who makes 100 000 dollars a year and who spends 105 000 dollars a year.

He started out owning his home, car etc. outright. Eventually he doesn't own anything. His house is mortgaged, there's a lien on his car and he has credit card bills.

American residents used to earn more money from foreign investments than foreigners earned from American companies. That has reversed itself now. The surplus, which used to put more money in the pockets of Americans than would be suggested by simple GDP is now a deficit. Americans do not see 100% of the money that is generated by their own economy.

If you want to talk about sustainable current account deficits, the limit is around the same as the average growth rate. Average growth rates are around 3% or so. Current account deficits are 5% and increasing. That's a level never before seen.

Americans are financing their lifestyles on credit. They're selling off the companies which used to bring them income above what they earned.

	06-06-2005 01:54									#25
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quote: Originally posted by Lancer Otherwise, what happens to all these billions going overseas? They invest it right back in the US, yes? This cycle seems endless, is it?

No, because the US only has so many assets to sell. Eventually the indebtedness of the US grows to so high a point that continued capitalisation of the US economy becomes unattractive. The value of American currency falls as demand for $US decreases and Americans can no longer afford to buy so many pretty baubles from overseas. The current account deficit drops. And Americans have to earn back all the money that they spent on credit.

It's a self-correcting system. The problem is that right now the US is headed towards a rather stiff correction instead of a soft landing.

	06-06-2005 02:15									#26
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This could effect my planned retirement in the Philippines. How long before the **** hits the fan?

	06-06-2005 02:18									#27
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quote: Eventually the indebtedness of the US grows to so high a point that continued capitalisation of the US economy becomes unattractive.

	06-06-2005 02:18									#28
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If I was an economist I'd give you an answer. Since I'm not, I'll tell you the truth and say that nobody knows. You'll probably see a further general weakening of the US dollar some time in the next 5 years.

The longer we go without the US dollar dropping further the worse it's going to be when it happens.

The timeframe is dependent both on government action (US, EU, Japan and China most importantly) and public perception worldwide

	06-06-2005 02:19									#29
	Avatar Enlargement: We've got the solution

quote: Originally posted by Lancer This could effect my planned retirement in the Philippines. How long before the **** hits the fan?

Well that's the million dollar question, isn't it? You might want to consider buying Euros, however.

	06-06-2005 02:20									#30
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quote: Originally posted by DanS

Duh. I put the word in there on purpose. If tomorrow morning Americans woke up and started saving more and spending less, then the trend would be reversed. They will not do that without some sort of economic stimulus, though. The perception that living on credit is fine is rampant in this country. I see people around me buying **** they can't afford and feeling that it's perfectly fine.