Are We In A Recession Already?

[DamianTV]

https://www.zerohedge.com/news/2018-...ession-already

Recessions are typically only visible to statisticians long after the fact, but they are often visible in real time on the ground: business volume drops, people stop buying houses and vehicles, restaurants that were jammed are suddenly sepulchral and so on.

There are well-known canaries in the coal mine in terms of indicators. These include building permits, architectural bookings, air travel, and auto and home sales.

Home sales are already dropping in most areas, and vehicle sales are softening. Airlines and tourism may continue on for awhile as people have already booked their travel, but the slowdown in other spending can be remarkably abrupt.

All nations are mosaics of local economies, and large nations like the U.S. are mosaics of local and regional economies, some of which (California, Texas, New York) are the equivalent of entire nations in and of themselves.

As a result, there can be areas where the Great Recession of 2008-09 never really ended, and other areas that have experienced unprecedented building booms (for example, the San Francisco Bay Area where I live part-time.)

Changes in sentiment are reflected in different sectors of the economy: people become hesitant about big purchases first (autos, houses) and then start deciding to save more by spending less (Christmas shopping, eating out, vacations, etc.)

Given the structural asymmetries of our economy (a few winners, most people lucky to be losing ground slowly), each economic class also responds differently. The lower 60% of households don't have the disposable income of the top 10%, so "cutting back" for them might be buying fewer fast-food meals per week.

The top 10% have the majority of the nation's disposable income, just as they own two-thirds of the wealth. If the sources of their income tanks (tech bubble pops, etc.), then signs of recession in this class will be a decline in high-cost consumption: luxury store sales, fancy restaurants, etc.

In other words, different classes, sectors and regions of the economy can be recession while others are still doing fine.

As a result, the value of declaring the entire nation in or out of recession is limited. While national conditions such as mortgage rates and Treasury yields are consequential, the recessionary effects will likely be as asymmetric as the economy: the effects will vary considerably depending on how each sector, class and region are doing.

To summarize: the top 10% may never experience a recession that guts the bottom 90%, who depend on wages rather than earnings from capital.



As this chart illustrates, wages (employee compensation) has been in structural decline.

...

Full article at link. And a pre-emptive "shut up, Zippy".

[Swordsmyth]

Did we ever really leave one?

[oyarde]

My guess is not yet .

[Zippyjuan]

Zerohedge believes we are always in a recession. What is a recession? By definition, two consecutive quarters of declining GDP. Is GDP declining?

[Pauls' Revere]

Zerohedge believes we are always in a recession. What is a recession? By definition, two consecutive quarters of declining GDP. Is GDP declining?

and, unemployment is low. My take is more harm is being done by tariffs, oil prices and trade disputes.

[Zippyjuan]

and, unemployment is low. My take is more harm is being done by tariffs, oil prices and trade disputes.

Oil prices have pretty much been hanging around $50 since early 2015 after spending the previous four years about $100 so that isn't that bad but the effects of the trade wars and tariffs are only starting to show up. Job creation has been slowing since Trump took office (but it is harder to add jobs when you are basically at full employment without adding more workers).

[Swordsmyth]

and, unemployment is low. My take is more harm is being done by tariffs, oil prices and trade disputes.

Oil prices are down so that is wrong and the tariffs and trade disputes may cause some temporary pain but they will save us from the certain death that not fighting back in the trade war was ensuring.

[Swordsmyth]

Oil prices have pretty much been hanging around $50 since early 2015 after spending the previous four years about $100 so that isn't that bad but the effects of the trade wars and tariffs are only starting to show up. Job creation has been slowing since Trump took office (but it is harder to add jobs when you are basically at full employment without adding more workers).

We are not at full employment, there are far too many people who have only part time work or who have dropped out of the workforce entirely.

[Zippyjuan]

Oil prices are down so that is wrong and the tariffs and trade disputes may cause some temporary pain but they will save us from the certain death that not fighting back in the trade war was ensuring.

Or may accelerate that death.

[Swordsmyth]

Or may accelerate that death.

[Zippyjuan]

We are not at full employment, there are far too many people who have only part time work or who have dropped out of the workforce entirely.

Why are they not in the labor force? Are they retired? Are they students? Are they disabled or taking care of somebody who is? Are they stay at home parents? Do they actually want jobs? Is full employment when every person in the country is working?

According to the BLS, in November 2018 there were 96 million not in the labor force.

56 million were 55 or older.

Of those, only five million said they wanted a job (5.2%). But three million of those hadn't even bothered to look for work in the past year. Do they really want a job?

https://www.bls.gov/web/empsit/cpseea38.htm

[Swordsmyth]

Why are they not in the labor force? Are they retired? Are they students? Are they disabled or taking care of somebody who is? Are they stay at home parents? Do they actually want jobs? Is full employment when every person in the country is working?

Those may account for some of them but the percentage of working age people not in the workforce is far too high to be explained away by them.

There is no way to precisely define "full employment" which is why YOU shouldn't be tossing around nonsense like "full employment" but since you brought it up I pointed out that we aren't anywhere near what might be guessed to be be "full employment".

[Zippyjuan]

Those may account for some of them but the percentage of working age people not in the workforce is far too high to be explained away by them.

There is no way to precisely define "full employment" which is why YOU shouldn't be tossing around nonsense like "full employment" but since you brought it up I pointed out that we aren't anywhere near what might be guessed to be be "full employment".

So you have no idea. Thanks for sharing.

Actually there is an economic definition of full employment. You will have people like the ones listed above who don't even want a job. You will have people who are between jobs because they quit but haven't started a new one yet. That means you will never have everybody employed. Full employment means that there are jobs for everybody else. As a rough figure, three percent is considered "full employment".

https://www.economicshelp.org/blog/4...ll-employment/

The first definition of full employment would be the situation where everyone willing to work at the going wage rate is able to get a job.

This would imply that unemployment is zero because if you are not willing to work then you should not be counted as unemployed. To be classified as unemployed you would need to be actively seeking work. This does not mean everyone of working age is in employment. Some adults may leave the labour force, for example, women looking after children.

But, in practice, we never see 0% unemployment, and this can make full employment hard to define. Generally, an unemployment rate of 3% or less would be considered to be full employment.

[Swordsmyth]

So you have no idea. Thanks for sharing.

Actually there is an economic definition of full employment. You will have people like the ones listed above who don't even want a job. You will have people who are between jobs because they quit but haven't started a new one yet. That means you will never have everybody employed. Full employment means that there are jobs for everybody else. As a rough figure, three percent is considered "full employment".

https://www.economicshelp.org/blog/4...ll-employment/

Lies, D@#^ Lies and Statistics.

[Zippyjuan]

Lies, D@#^ Lies and Statistics.

You had to think a long time to come up with that cliche. Is that the best response you can come up with?

[Swordsmyth]

You had to think a long time to come up with that cliche. Is that the best response you can come up with?

It's all the better your propaganda deserves.

[Pauls' Revere]

Somebody build a refinery.

[Zippyjuan]

https://www.bls.gov/opub/btn/volume-...ey-working.htm

[Swordsmyth]

Things have been bad for a long time.

[Zippyjuan]

Things have been bad for a long time.

It is terrible that people can afford to retire. They should work until they die. You should also be working while in school and while you try to take care of your kids too, eh Komrade? In the Soviet Union you had 100% employment.

[Swordsmyth]

It is terrible that people can afford to retire. They should work until they die. You should also be working while in school and while you try to take care of your kids too. In the Soviet Union we had 100% employment.

Retirees aren't the problem.

[Zippyjuan]

Retirees aren't the problem.

What is the problem?

[Zippyjuan]

https://money.cnn.com/2017/05/17/new...ork/index.html

Here's the break down of the "working" American population for the first three months of 2017.

All Americans 16 years old and up: 254 million
Americans in the labor force with a job: 151.6 million
Americans in the labor force without a job: 7.8 million

That leaves about 94.6 million Americans not in the labor force. But a lot of them are not working for understandable reasons.

44.1 million are retired.
15.3 million are disabled.
14.7 million are in college or job training.
12.9 million are taking care of a family member.

So, of the 94.6 million Americans not working, 86.8 million are retired, disabled, taking care of a loved one, or in school.

That leaves 7.6 million people - what about them?

5.7 million Americans have looked for a job in the past year OR want a job but have given up searching for over a year.

1.9 million Americans are in the shadows. We don't know why they are not in the work force.

[Swordsmyth]

What is the problem?

Lies, D@#^ Lies and Statistics.

[Zippyjuan]

Lies, D@#^ Lies and Statistics.

I see. You are just babbling.

[Swordsmyth]

I see. You are just babbling.

And you are just posting propaganda.

[Pauls' Revere]

So you have no idea. Thanks for sharing.

Actually there is an economic definition of full employment. You will have people like the ones listed above who don't even want a job. You will have people who are between jobs because they quit but haven't started a new one yet. That means you will never have everybody employed. Full employment means that there are jobs for everybody else. As a rough figure, three percent is considered "full employment".

https://www.economicshelp.org/blog/4...ll-employment/

This would imply that unemployment is zero because if you are not willing to work then you should not be counted as unemployed. To be classified as unemployed you would need to be actively seeking work. This does not mean everyone of working age is in employment. Some adults may leave the labour force, for example, women looking after children.

Sorry, they're wrong. If your not willing to work, your unemployed.

[Zippyjuan]

This would imply that unemployment is zero because if you are not willing to work then you should not be counted as unemployed. To be classified as unemployed you would need to be actively seeking work. This does not mean everyone of working age is in employment. Some adults may leave the labour force, for example, women looking after children.

Sorry, they're wrong. If your not willing to work, your unemployed.

The reason people who don't want a job are not counted as unemployed is that this figure does not give you any useful information. Government and economists care if there are enough jobs or not for the people who actually want one. That tells you how good or poorly your economy is performing- do you have enough jobs for the people who want one? To be considered unemployed, you must be not working but looking for a job. That is who they are interested in.

But if you do want to count everybody without a job as unemployed- wanting one or not- then the unemployment rate is 37.1% (62.9% labor force participation rate). But again, that is not a useful number. Some people consider the post-war boom of the 1950's and 1960's as a great economic time- yet the comparable unemployment figure would be 41% (59% labor force participation rate https://fred.stlouisfed.org/series/CIVPART )- even worse than today- because fewer women were in the work force. Instead they stayed home and took care of families.

Even at the worst point in the Great Recession, the Labor Force Participation Rate went down to 62.3%- which was still higher than any point prior to 1978. Was the worst part of the Great Recession a better economic time than any year prior to 1978? Is the Labor Force Participation Rate a useful number to compare them with? Highest ever noted was 67.3% (February, 2000).

How much has the Labor Force Participation Rate changed? Even during recession (grey bars), not much.

Men:



Women:



https://www.calculatedriskblog.com/2...icipation.html

[Pauls' Revere]

I've always thought it a ridiculous analysis of if your searching but not working, or working AND searching but don't have the actual job you want but the one your brother-in=law set you with than were going to count you as disgruntled unemployed. I hated the economic definitions of "unemployed". For me its simple, if your of working age and not in some category like newborn babies, dead people, retired, students than your either working or not. Why does it matter if you want one or not? Even if there was a job available it may be in Maine while your unemployed in Nevada. The definition is painted with a very broad brush, which leaves room for all kinds of ambiguity.

For me: If your looking for work but do not have a job, your still unemployed. I wish they would track and report real numbers.

[Zippyjuan]

So looking at everybody who isn't working doesn't help at all as far as seeing how the economy is doing. If we cut that down to those who say they want a job and don't have one, things change.



Which is the more useful figure?