US economy may be entering a recession

[FireDragon76]

The US economy is expected to have contracted in the first quarter of the year:

and from the AP, consumer confidence is falling:

https://apnews.com/article/consumer-confidence-conference-board-economy-spending-4ec3430138e6d872a6dae273e212edd1

That doesn't really surprise me. I notice less traffic on the roads in Orlando. My parents commented that when they went to the local IKEA, it was nearly empty. Usually it's full of tourists.

 

[Bradskii]

That doesn't really surprise me. I notice less traffic on the roads in Orlando. My parents commented that when they went to the local IKEA, it was nearly empty. Usually it's full of tourists.

From the link:

'U.S. consumer confidence plummeted in February, the biggest monthly decline in more than four years, a business research group said Tuesday, with inflation seemingly stuck and a trade war under President Donald Trump seen by a growing number of Americans as inevitable.'

 

[FireDragon76]

From the link:

'U.S. consumer confidence plummeted in February, the biggest monthly decline in more than four years, a business research group said Tuesday, with inflation seemingly stuck and a trade war under President Donald Trump seen by a growing number of Americans as inevitable.'

For most Americans, stagflation was already here. I don't see how things have anywhere to go but down, considering the Fed is still trying to fight inflation with rate hikes.

 

[RileyG]

Oh no! I cannot say I’m surprised.

Sincere question only:

Weren’t we in a recession when Obama was in office? I graduated high school in 2014, and Obama was president. I remember people complaining back then…

 

[Reluctant Theologian]

The US economy is expected to have contracted in the first quarter of the year:

and from the AP, consumer confidence is falling:

https://apnews.com/article/consumer-confidence-conference-board-economy-spending-4ec3430138e6d872a6dae273e212edd1

That doesn't really surprise me. I notice less traffic on the roads in Orlando. My parents commented that when they went to the local IKEA, it was nearly empty. Usually it's full of tourists.

If DOGE is successful (weeding out unproductive or fraudulent Federal spending) - I would expect the GDP to show a recessionary pattern in the short term: reducing this kind spending directly reduces the GDP (as wages are removed from the total figure). Over time, the people losing their (relatively unproductive) job will find new, hopefully more meaningful jobs and GDP will pick-up again.

Looking at only GDP growth makes no sense if growth in total Federal Debt is not taken into account. Statistically it's easy to inflate GDP numbers with borrowed money that's pumped into 'b*llsh*t jobs' (that's a real word in Economics, but the CF forum software won't allow me to spell it out). When those jobs are culled - the reverse will happen: lower (short term) GDP but also less budget deficit/debt, and over time .. more people available for actual productive positions.

In Australia a similar thing has happened under the current Labour Government - virtually ALL recent job growth was for Government funded operations.

 

[FireDragon76]

Oh no! I cannot say I’m surprised.

Sincere question only:

Weren’t we in a recession when Obama was in office? I graduated high school in 2014, and Obama was president. I remember people complaining back then…

In the early part of Obama's first term. And the recovery was slow. It took years for employment to recover.

If Obama hadn't bailed out the Wall Street banks, it probably would have been a deep depression, not a recession. What he did was politically unpopular, but probably the only realistic way to avoid catastrophe.

 

[ozso]

"Maybe" as in this is basically a rumor.

 

[Gregory Thompson]

The global economy has still been recovering from the real estate crisis in 2008. Covid didn't help.

people could go out there and "spend, spend, spend" but at the end of that road, they alone need to pay off their credit card debt.

 

[Bradskii]

...reducing this kind spending directly reduces the GDP (as wages are removed from the total figure).

So what do you think the impact will be? What percentage of the wages are going to be saved versus the overall cost of the wages. Let's see the figures with which you are wworking.

 

[Nithavela]

I didn't think the Trump recession would happen this quickly, but I also didn't think Trump would do this much damage in his first month and change of his second term.

 

[ozso]

I didn't think the Trump recession would happen this quickly, but I also didn't think Trump would do this much damage in his first month and change of his second term.

It hasn't happened though. Despite what the gal dressed like a lumberjack in what looks like a garage says. And what specific factual (as in non-speculative) damage has Trump actually done to the economy?

 

[Reluctant Theologian]

So what do you think the impact will be? What percentage of the wages are going to be saved versus the overall cost of the wages. Let's see the figures with which you are working.

If you feel called to do the math for this case in the USA .. feel free, I don't but we know the general pattern is there. One might calculate how much of the reduced Government spending is related directly to wages, but of course contractors/outsourced expenses indirectly also cause reduced demand for employment.

Also there are additional effects - e.g. in the Washington DC area, the number of houses recently listed for sale is substantial with prices dropping, which in-turn reduces the wealth effect of house-owners and their spending habits. (but this is not bad news structurally as it has a deflationary effect on the cost of living).

You're Australian I remember - similarly without increased Federal spending, AU would be in recession.

One doesn't have to be a fan of Musk - but he has proven it was possible to fire 80% of the Twitter workforce and make it a better platform. The same pattern (albeit to a lesser extent) may hold for many Government departments and large corporations.

 

[Nithavela]

One doesn't have to be a fan of Musk - but he has proven it was possible to fire 80% of the Twitter workforce and make it a better platform.

His actions greatly reduced twitter's/x's worth.

X Is Worth 72% Less Than the $44 Billion Elon Musk Paid for It, Despite 32% Rebound in Share Valuation

The platform is worth $12.32 billion after Fidelity recently marked up X's valuation The post X Is Worth 72% Less Than the $44 Billion Elon Musk Paid for It, Despite 32% Rebound in Share Valuation appeared first on TheWrap.

finance.yahoo.com

 

[Reluctant Theologian]

His actions greatly reduced twitter's/x's worth.

X Is Worth 72% Less Than the $44 Billion Elon Musk Paid for It, Despite 32% Rebound in Share Valuation

The platform is worth $12.32 billion after Fidelity recently marked up X's valuation The post X Is Worth 72% Less Than the $44 Billion Elon Musk Paid for It, Despite 32% Rebound in Share Valuation appeared first on TheWrap.

finance.yahoo.com

That was irrelevant to him - he didn't buy Twitter to make money; he bought it to improve it as a platform for free speech. And he has been very successful in doing so. X is now the nr 1 downloaded app for news in several countries. The fact that more than one country (Australia included) have tried to censor X shows the importance of it as carrier of free speech. For countries with Governments that were used to be able to control the news narrative X makes them uncomfortable.

And after Trump's win e.g. the tech giant Facebook followed .. and abandoned 'fact-checking' (aka censorship).

Btw X is not yet cash-flow positive (incl. debt servicing) .. in hindsight I think Musk paid too much for it.

But before Musk bought it .. the cash flow was negative $370.4 million USD. The cash-flow situation has since improved quite a bit.

 

[Reluctant Theologian]

So what do you think the impact will be? What percentage of the wages are going to be saved versus the overall cost of the wages. Let's see the figures with which you are wworking.

Still, let me guess ... if the deficit is reduced by 50% that equals about 3% of the USA GDP. Not the full 3% will be wages, yet reduced demand would also cause some contraction. So 3% GDP reduction might not be a wild guess.

I'm not a fan of the Trump admin approach to wildly apply tariffs to nearly the whole world, I think a smarter approach based on reciprocity and fairness would be better. E.g. the USA claim the EU unfairly blocks imports of its beef, but the EU blocks USA beef because it doesn't meet the EU's health requirements. I support the EU's viewpoint in this.

Not all reduced consumption is bad. When everyone stops buying/smoking cigarettes the GDP will drop - but in the end that's a good thing.

 

[ozso]

His actions greatly reduced twitter's/x's worth.

X Is Worth 72% Less Than the $44 Billion Elon Musk Paid for It, Despite 32% Rebound in Share Valuation

The platform is worth $12.32 billion after Fidelity recently marked up X's valuation The post X Is Worth 72% Less Than the $44 Billion Elon Musk Paid for It, Despite 32% Rebound in Share Valuation appeared first on TheWrap.

finance.yahoo.com

Elon Musk net worth: 359.4 billion USD. That's up about 100 billion from the last time I checked just a few months ago. So anything implying he's a failure at business is really absurd.

 

[Bradskii]

If you feel called to do the math for this case in the USA .. feel free, I don't...

I don't feel the need. I just wanted to see if you could verify your position. Apparently not...

 

[Nithavela]

Elon Musk net worth: 359.4 billion USD. That's up about 100 billion from the last time I checked just a few months ago. So anything implying he's a failure at business is really absurd.

Yes, it helps when you got the US government by the throat.

 

[Bradskii]

Still, let me guess ...

I'd rather you didn't. What percentage of the wages are going to be saved versus the overall cost of the wages. Show me what you are basing your opinion on.

 

[ozso]

Yes, it helps when you got the US government by the throat.

LOL. Unbelievable. First he gets falsely criticized for doing poorly, then he gets falsely vilified for doing well. Like with Trump if he cured cancer, he'd be vilified for it.