JPMorgan says the U.S. is probably headed for a recession(fortune.com)
fortune.com
JPMorgan says the U.S. is probably headed for a recession
https://fortune.com/2023/03/21/recession-banking-crisis-federal-reserve-minsky-moment-jpmorgan-us-economy/
52 comments
Multiple states have a similar law but it gets worked around. They usually work around this by providing a “severance” that covers the legal period of time before they have to notify their employees; and they only have to do any of this above a certain threshold of how many employees are getting laid off.
So if the law says you have to notify 2 months in advance, they’ll instead give you at least 2 months severance, lay people off first, then announce through here.
I felt I had extra information when I found out about WARN of NYC, but shortly after learned about the work around above. I think the same workaround is used in other states but not 100% certain.
So if the law says you have to notify 2 months in advance, they’ll instead give you at least 2 months severance, lay people off first, then announce through here.
I felt I had extra information when I found out about WARN of NYC, but shortly after learned about the work around above. I think the same workaround is used in other states but not 100% certain.
I think that's the idea though, to allow folks time to transition easier. Whether you get notified 2 months early and then start interviewing or you get laid off with 2 months of severance and start interviewing, isn't the outcome relatively similar?
And, would you want someone working for you that knows they’re getting canned and might be vindictive to have access to your bits?
I think the layoff w/severance is a better setup. When it happens I don’t need to pretend to work, I can focus on finding the new gig instead.
I think the layoff w/severance is a better setup. When it happens I don’t need to pretend to work, I can focus on finding the new gig instead.
> Multiple states have a similar law
There is also a federal WARN Act.
> They usually work around this by providing a “severance” that covers the legal period of time before they have to notify their employees;
This is, IIRC, possible in some state systems and under the federal WARN Act, its technically not possible under the California WARN, though the somewhat similar practice of fully-paid no-duties “employment” for the notice period is. This is worse in some respects (a during-employment non-compete can remain in place) and better in others (you are employed for health benefits purposes, so the COBRA clock of 18 or 36 months doesn’t start until the end, not the beginning, of the notice period, etc.)
There is also a federal WARN Act.
> They usually work around this by providing a “severance” that covers the legal period of time before they have to notify their employees;
This is, IIRC, possible in some state systems and under the federal WARN Act, its technically not possible under the California WARN, though the somewhat similar practice of fully-paid no-duties “employment” for the notice period is. This is worse in some respects (a during-employment non-compete can remain in place) and better in others (you are employed for health benefits purposes, so the COBRA clock of 18 or 36 months doesn’t start until the end, not the beginning, of the notice period, etc.)
Has anyone parsed this pdf data into a trend so we can see # of companies issuing WARN notices each month?
And this is news? Hasn’t that been completely obvious since the fed was forced to hike interest rates?
Nothing in life is free, and the easy money we had, especially post COVID craziness, at some point has to have a cost.
Nothing in life is free, and the easy money we had, especially post COVID craziness, at some point has to have a cost.
Since a recession is the period after an economic peak, the US is always in one of three stages:
(1) In a growth period that will last until the US ends, or
(2) In a recession, or
(3) Heading for a recession (equivalently, “in an economic expansion”, if you are more a “glass currently full” than a “glass will sometime in the future be empty” type).
There are literally no other options.
OTOH, I hope that the Fed thinks that a recession is imminent, because if it does and acts like it, then it is, ipso facto, less likely to actually occur, and more likely to be shallow and short if it nevertheless does, and moderate monetary stimulus without concurrent fiscal stimulus (and politically fiscal stimulus just isn’t probable with this Congress) might slow the decline of inflation, but isn’t going to turn restoke inflation.
(1) In a growth period that will last until the US ends, or
(2) In a recession, or
(3) Heading for a recession (equivalently, “in an economic expansion”, if you are more a “glass currently full” than a “glass will sometime in the future be empty” type).
There are literally no other options.
OTOH, I hope that the Fed thinks that a recession is imminent, because if it does and acts like it, then it is, ipso facto, less likely to actually occur, and more likely to be shallow and short if it nevertheless does, and moderate monetary stimulus without concurrent fiscal stimulus (and politically fiscal stimulus just isn’t probable with this Congress) might slow the decline of inflation, but isn’t going to turn restoke inflation.
> (3) Heading for a recession (equivalently, “in an economic expansion”, if you are more a “glass currently full” than a “glass will sometime in the future be empty” type).
> There are literally no other options.
When growth is increasing or steady you're heading away from a recession; it's only when growth is declining that you're heading for a recession.
> There are literally no other options.
When growth is increasing or steady you're heading away from a recession; it's only when growth is declining that you're heading for a recession.
There might be a sense where that would necessarily be true, if potentially only evident at finer resolution than economic statistics are normally gathered, if the “aggregate economy” curve whose peak marks the beginning of a recession (GDP to a first approximation, but recession is not assessed on a single indicator or simple function) were constrained to being a function that is differentiable (and whose derivative also is) everywhere, but…it’s not. There’s no reason it has to, from expansion, smoothly turn around through a level point to start going down, so that you could assess “heading toward a recession” as where the second derivative as where the second derivative is negative.
(In fact, there isn’t even an actual function, just declared peaks and troughs; between peak and trough is “recession”, between trough and peak is “expansion”, and if you are in one – unless it goes on forever – you are heading for the other. The only nontrivial prediction regarding “heading for” is how soon, not are we.)
(In fact, there isn’t even an actual function, just declared peaks and troughs; between peak and trough is “recession”, between trough and peak is “expansion”, and if you are in one – unless it goes on forever – you are heading for the other. The only nontrivial prediction regarding “heading for” is how soon, not are we.)
Take a running average and it will easily be differentiable. And you can set up a test for how aggressively and consistently it's turning toward the negative to say we're "heading for" a recession.
But also I don't like your definition of "heading for" at all. When I leave my house to go to work, I am not "heading for" my house, despite the fact that I will inevitably return.
But also I don't like your definition of "heading for" at all. When I leave my house to go to work, I am not "heading for" my house, despite the fact that I will inevitably return.
>steady you're heading away from a recession
Not quite, but there is certainly only 3 scenarios, just as shown by a graph. It can go up (growth), it can go down (recession), or it can be flat (stagnation).
Not quite, but there is certainly only 3 scenarios, just as shown by a graph. It can go up (growth), it can go down (recession), or it can be flat (stagnation).
What really sucks though is how much those who happened to acquire assets at the right time will do ok, and those who didn’t are SOL.
Replace "happened to" with "had literally any ability to". This'll be yet another slap in the face for millennials after several previous rounds of being slapped before the ladder was pulled up each time.
Already has been, just the stock market is catching up to the real economy. This is the logical conclusion to the K-type recovery from helicopter money.
By what metric do you say this? GDP has continued to climb, the unemployment rate is basically as low as it ever has been?
Cost of living is up, wages are not. i.e., real-terms wages are down.
GDP and unemployment are blunt instruments.
GDP and unemployment are blunt instruments.
They game and change the metrics to suit the narrative they want to sell
this means people are working more but have less money, can buy less things, and have to work more / multiple jobs
Latest Atlanta Fed GDP now forecast -with a good history of accuracy- was above 3% annualized growth for this quarter.
This is gonna be a bumpy ride. Glad I have saved up a nest egg.
Though if the US dies it is not gonna save me either way.
Though if the US dies it is not gonna save me either way.
The US has a recessions about twice a decade; its also had several depressions, though not for quite a while.
They do not mean “the US dies”.
They do not mean “the US dies”.
There's a little over $200 billion dollars left in the US treasury right now, we have higher debt-to-GDP than Greece did at the beginning of their sovereign debt crisis, AND we have persistent high inflation. Something has to give. You can't fight inflation and pursue monetary easing at the same time.
Fed can just print another 20 trillions. Treasury can mint a special 10T USD coin to payback FED. Nothing needs to give. As long as people have "faith" in USD, the music will continue...but those damn Yuan and Rubbles. Taht we need ro launch another Iraq war with China and Russia. They have WMD that we can blame on and get our boys there with poker cards - a version for the Russian and a version for the Chinese. Surely we can beat them as easily as Iraqis? Ignore Afghan - we always intended to replace Talebans with Talebans while we wash 10T USD for congress money laundry.
i lost brain cells reading this
The us debt is denominated in usd. Countries in the EU don’t have the same luxury.
You're proposing to print away the debt during a period of already high inflation. While you're technically correct that we can avoid default by printing more money, the practical consequences of monetizing the national debt right now, would be catastrophic hyperinflation.
> You’re proposing to print away the debt during a period of already high inflation.
Current inflation isn’t that high (YoY is still high because its trailing), and if there is a recession, it will naturally fall faster, and easy money is the natural policy in those conditions, independent of debt concerns (which monetary policy generally is, that’s kind of the point of an independent central bank.)
Current inflation isn’t that high (YoY is still high because its trailing), and if there is a recession, it will naturally fall faster, and easy money is the natural policy in those conditions, independent of debt concerns (which monetary policy generally is, that’s kind of the point of an independent central bank.)
> we can avoid default by printing more money
do those increase inflation?
The treasury takes on debt when it issues bonds, but the Federal Reserve expands the money supply when it buys those bonds. It's a two-step process.
Greece's debt-to-GDP ratio never stopped climbing; it peaked at over 200% in 2020. The crisis, meanwhile, was short-lived as the ratio per se was not among the most salient factors.
Greece crisis is short-lived? Greece never recovered from the crisis.
Employment in Greece in 2010: 4.6 million.
Employment in Greece now: around 4.0 million.
Sure the unemployment rate has gone "down". That's because the youth gave up and simply moved from Greece. The GDP per capita will improve because of that but their GDP in constant prices never recovered (and is around 2002-2004 levels).
Employment in Greece in 2010: 4.6 million.
Employment in Greece now: around 4.0 million.
Sure the unemployment rate has gone "down". That's because the youth gave up and simply moved from Greece. The GDP per capita will improve because of that but their GDP in constant prices never recovered (and is around 2002-2004 levels).
The crisis itself pertained to bond defaults, and in particular the reverberations through the international financial system. But the extra context you've provided only drives home my point: facial nominal figure comparisons are worthless.
Geece had to massively increase taxes and implement austerity programs, to say nothing of the EU bailout. Since then, they've been able to survive on low interest rates. Low interest rates which are now gone, as the world is busy fighting inflation.
Inflation cuts both ways, eviscerating older debt. That's the whole reason for the present banking crisis. In any event, the debt-to-GDP ratio being higher than Greece's at the time of its debt crisis says absolutely nothing by itself about the U.S. situation. Pointing it out is a baseless, cheap insinuation.
Except it's not, because our interest rates are also in the same range as when their debt crisis began. Greece was fine at those debt levels until their bond yields hit 5%, at which point they entered into a self-reinforcing spiral of insolvency. The Federal Reserve is currently targeting interest rates above 5% to fight inflation.
This is the first time the US gets challenged on multiple fronts from multiple actors. China, Russia and non-alignment members are all challenging the status quo. The US dollar is being challenged from multiple fronts and one of them is Crypto. (though also the fact it's being mismanaged by its own creators is not helping either).
We are definitively in an interesting time. More interesting than the cold war era? I don't know but we shall see.
We are definitively in an interesting time. More interesting than the cold war era? I don't know but we shall see.
> This is the first time the US gets challenged on multiple fronts from multiple actors. China, Russia and non-alignment members are all challenging the status quo.
Two blocs are emerging. One is largely unified around shared cultural interests in resilient democracy and defence of human rights. The other is a hodge-podge of malcontents, allies-of-convenience and one strong but largely regional power (i.e. China).
If we look at this as a political struggle then we have to look at the problem-solution ledger to see who holds the advantage.
The US (and the West) have issues with an imbalance of power and wealth, and growing numbers of disillusioned, young voters - this is the problem statement. What is the solution that the non-aligned movement can offer? Worse inequality? Fewer rights? What?
The non-aligned countries have fractuous political bases and are shoring up their systems by cracking down on dissedents, attacking neighbours and attempting to corrupt other nation's foreign policies. No one is lining up to migrate to these countries, no one is holding them up as a beacon of rightousness (outside of the wingnut extremes, of course).
Contrast this to the Cold War. The Soviets held a significant sway over the "International Left". They had answers to the problems of the West. Not good answers, but good enough to sway a lot of students and intelligentsia.
China has no allies of note. Russia is a basket case. The rest of the non-aligned bloc are essentially local dictators trying to keep the pin in their respective grenades. All of them are experiencing the same struggle of either a rapidly aging population with no migration, or a rapidly growing youth who want a better life. For example, China's median age is rising 6 months for every year that passes, and they are a long way from being a sustainable, powerful economy.
These are interesting times in the political sense but unless the West starts kicking a lot of "own goals" - which is very possible but not exactly probable - then the US (and to a lesser extent the EU) will own this century as well.
Two blocs are emerging. One is largely unified around shared cultural interests in resilient democracy and defence of human rights. The other is a hodge-podge of malcontents, allies-of-convenience and one strong but largely regional power (i.e. China).
If we look at this as a political struggle then we have to look at the problem-solution ledger to see who holds the advantage.
The US (and the West) have issues with an imbalance of power and wealth, and growing numbers of disillusioned, young voters - this is the problem statement. What is the solution that the non-aligned movement can offer? Worse inequality? Fewer rights? What?
The non-aligned countries have fractuous political bases and are shoring up their systems by cracking down on dissedents, attacking neighbours and attempting to corrupt other nation's foreign policies. No one is lining up to migrate to these countries, no one is holding them up as a beacon of rightousness (outside of the wingnut extremes, of course).
Contrast this to the Cold War. The Soviets held a significant sway over the "International Left". They had answers to the problems of the West. Not good answers, but good enough to sway a lot of students and intelligentsia.
China has no allies of note. Russia is a basket case. The rest of the non-aligned bloc are essentially local dictators trying to keep the pin in their respective grenades. All of them are experiencing the same struggle of either a rapidly aging population with no migration, or a rapidly growing youth who want a better life. For example, China's median age is rising 6 months for every year that passes, and they are a long way from being a sustainable, powerful economy.
These are interesting times in the political sense but unless the West starts kicking a lot of "own goals" - which is very possible but not exactly probable - then the US (and to a lesser extent the EU) will own this century as well.
> The US (and the West) have issues with an imbalance of power and wealth, and growing numbers of disillusioned, young voters - this is the problem statement. What is the solution that the non-aligned movement can offer? Worse inequality? Fewer rights? What?
The problem is that with modern politics and all its tools, logical (proposed) solutions aren't needed. Éric Zemmour, multiple times found guilty of stoking racism on TV, got 2.5 million votes/7% of the presidential vote in France on a platform that basically consisted of "France is no longer France, let's ship everyone of foreign descent to where they come from, ban Muslims, rename every person with a foreign name, screw the EU". If you think about it for more than a few seconds, that's just terrible on multiple levels and would ruin the country alongside millions of lives. Yet 2.5 million agreed with him? Yeah, he was heavily sponsored by a shithead billionaire, but still. Similarly with Le Pen, who got 8 million for 23%, had a vague populist "foreigner's fault, EU's fault, we'll give money to the poor to subsidise fuel consumption, etc." platform, while literally being bankrolled by Russia (multiple favourable loans from banks close to Putin and friends which saved her party).
Brexit was merely the first major "Western" own goal. We'll see also how climate change changes the field.
The problem is that with modern politics and all its tools, logical (proposed) solutions aren't needed. Éric Zemmour, multiple times found guilty of stoking racism on TV, got 2.5 million votes/7% of the presidential vote in France on a platform that basically consisted of "France is no longer France, let's ship everyone of foreign descent to where they come from, ban Muslims, rename every person with a foreign name, screw the EU". If you think about it for more than a few seconds, that's just terrible on multiple levels and would ruin the country alongside millions of lives. Yet 2.5 million agreed with him? Yeah, he was heavily sponsored by a shithead billionaire, but still. Similarly with Le Pen, who got 8 million for 23%, had a vague populist "foreigner's fault, EU's fault, we'll give money to the poor to subsidise fuel consumption, etc." platform, while literally being bankrolled by Russia (multiple favourable loans from banks close to Putin and friends which saved her party).
Brexit was merely the first major "Western" own goal. We'll see also how climate change changes the field.
> The problem is that with modern politics and all its tools, logical (proposed) solutions aren't needed. Éric Zemmour, multiple times found guilty of stoking racism on TV, got 2.5 million votes/7% of the presidential vote in France on a platform that basically consisted of "France is no longer France, let's ship everyone of foreign descent to where they come from, ban Muslims, rename every person with a foreign name, screw the EU".
In other Western countries it is not uncommon for 7-10+% of the vote to go toward extreme right-wing parties. This is not the death knell of Democracy. 10% of the vote is a long way from winning government.
The problem for would-be dictators who are trying to usurp the West's governments is that, once things get tough under their leadership, the population turns against them very quickly. Take the Tories in the UK - if an election were to be held today they would likely become only the third largest party in the UK lower house. Similarly the conservative Coalition in Australia; they were trounced in both state and federal elections after their competence and corruption became clear.
The West takes some hits from time to time. It's strength is in its ability to recover.
In other Western countries it is not uncommon for 7-10+% of the vote to go toward extreme right-wing parties. This is not the death knell of Democracy. 10% of the vote is a long way from winning government.
The problem for would-be dictators who are trying to usurp the West's governments is that, once things get tough under their leadership, the population turns against them very quickly. Take the Tories in the UK - if an election were to be held today they would likely become only the third largest party in the UK lower house. Similarly the conservative Coalition in Australia; they were trounced in both state and federal elections after their competence and corruption became clear.
The West takes some hits from time to time. It's strength is in its ability to recover.
Notably, for much of the Cold War, Soviet propaganda was such that many in the West were either unsure whether the Soviet communist experiment was working, or genuinely believed it was—including those on the political right.
The excesses and failures of the system (and the degree to which its "communism" was nothing but authoritarianism draped in a red flag) were not always clear until well after the fact.
Contrast that with today, where we may not have a perfect window into China, but we can certainly see a lot of what's going on there, including reprehensible things like the Uighur genocide, and the degree to which China's "communism" is heavily colored by capitalism on the one hand, and authoritarianism on the other.
The excesses and failures of the system (and the degree to which its "communism" was nothing but authoritarianism draped in a red flag) were not always clear until well after the fact.
Contrast that with today, where we may not have a perfect window into China, but we can certainly see a lot of what's going on there, including reprehensible things like the Uighur genocide, and the degree to which China's "communism" is heavily colored by capitalism on the one hand, and authoritarianism on the other.
>This is the first time the US gets challenged on multiple fronts from multiple actors
Laughs in WWII
Laughs in WWII
> This is the first time the US gets challenged on multiple fronts from multiple actors.
Its not even the first time since the end of the Cold War.
> The US dollar is being challenged from multiple fronts and one of them is Crypto. (though also the fact it’s being mismanaged by its own creators is not helping either).
So, I’m just about a half-century old, and since I became politically aware – which was pretty young – I’ve been hearing that exact line (except with something else, usually “Gold”, in place of crypto until recently) continuously that entire time.
Its not even the first time since the end of the Cold War.
> The US dollar is being challenged from multiple fronts and one of them is Crypto. (though also the fact it’s being mismanaged by its own creators is not helping either).
So, I’m just about a half-century old, and since I became politically aware – which was pretty young – I’ve been hearing that exact line (except with something else, usually “Gold”, in place of crypto until recently) continuously that entire time.
Even in this rapidly changing world it would be unwise to bet against the nation that has the US's habit of reinventing itself.
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If your nest egg is cash, it may be eroded by uncontrollable inflation. If your nest egg is in assets, it may be eroded by imploding asset markets. How do you keep your nest egg healthy?
Inflation is a lagging metric. Inflation of 8%, means prices today are 8% higher than compared to a previous time. Holding onto cash when inflation is at 8% would be the good option, provided prices drop in the future (ie you're not losing 8% on holding your cash currently when inflation reads 8%, rather it's cash compared to last year which has lost 8% if you spend it now). As to whether we'll get inflation or deflation in the future, look to the Fed, they are the biggest market participant. Future is what matters, not the past.
"Divide your fortune into seven, or even into eight, for many are the mischances of the world" - the Bible (Ecclesiastes, if I recall correctly).
In other words, diversify. Hope that the areas that grow make up for the areas that implode, or at least that they don't all implode.
In other words, diversify. Hope that the areas that grow make up for the areas that implode, or at least that they don't all implode.
One option is to put your nest egg in a durable asset that you cherish, enjoy, and get daily use from.
> Though if the US dies it is not gonna save me either way.
yeah this is what i meant by this comment.
yeah this is what i meant by this comment.
Fortune must've been living under a rock or ignored the K-shaped recovery. It's been a recession since at least 2021.
https://edd.ca.gov/en/jobs_and_training/Layoff_Services_WARN
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