Recession coming?

fordwheelinman said:
Anybody that says there isn't a recession coming, is an outright fool with their head up someone's @$$. I know people are gonna hate on me for saying this, but this is my uneducated take on things:

Everything in history that things have tracked this way, there has been a recession. Big or small, it has happened. Eventually people will stop buying houses, because they are impossible to afford. Then there will be houses for sale, that aren't selling. People won't be able to pay 125,000 for a new F150, so they won't sell. Eventually, there will be more supply than demand, which drives prices down, which cuts into profits, which drives cuts, which raises unemoyment, which cuts spending, drives up foreclosures, which exacerbates the housing issue, and it eventually hits a bottom somewhere. But when state laws have now mandated $15/hr minimum wages, will it stop short of past drops because some folks make more, will it be regional because only those places will have money to spend, or will it be widespread, and go much further because companies will simply pull out of those states to cut costs, as opposed to cutting wages or simply laying folks off? Bubbles don't continue to grow, without becoming weak, and eventually busting.

But I mean the government goobers can always just print more money, keep raising wages, and everything will work out fine right?

Rant off.
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Folks dont look at the final price they just see that the monthly payment can be stretched out for long enuf that they can afford the payment.Seven year financing on a truck is insane but it happens all the time and will continue.I have a nephew that RIGHT NOW is finding out the hard way about the monthly payments.His wife is sick and has been for about a month,she has been out of work the whole time w no return date in sight. He traded in a two year old 5.0 Mustang for a year old Silverado and the second day put $2K worth of wheels and tires on it,plus his wife has a new-ish beemer and they owe for all of it.Plus their rent is 12 hundo a month.People like him never learn.
 
1-tonmudder said:
it,plus his wife has a new-ish beemer and they owe for all of it.Plus their rent is 12 hundo a month.People like him never learn.
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There's a lot to unpack here. First off, it's a bit early to say what lessons he may or may not learn from this experience. He may emerge unscathed. He may accept the charity of family or friends, be ashamed and chastened by it and vow never to get into that situation again. He may learn nothing at all. It seems a bit premature and possibly unfair to judge someone who's going through a tough patch, especially at this point.

There's also the question of what people can (or should) afford and how they pay for those things. Millions of Americans learned from 08/09 that they shouldn't get overextended, shouldn't take on too much debt, and should stockpile cash. They're currently learning a very different lesson - those stockpiles of cash can be devalued very, very quickly. In an inflationary environment, borrowing money to purchase things is a perfectly reasonable (in fact, probably preferable) strategy. Buy things priced in yesterday's dollars, repay them with tomorrow's dollars. Again, keep in mind that your dollars are only worth 60pct of what they were two years ago. You need to recalibrate your expectations.

The car loan duration question is a peculiar one - will rising interest rates encourage shorter terms or will dollar depreciation encourage longer ones? I haven't really thought through it, but I'm inclined to think the latter will dominate. It'll be fascinating to see.
 
shawn said:
There's a lot to unpack here. First off, it's a bit early to say what lessons he may or may not learn from this experience. He may emerge unscathed. He may accept the charity of family or friends, be ashamed and chastened by it and vow never to get into that situation again. He may learn nothing at all. It seems a bit premature and possibly unfair to judge someone who's going through a tough patch, especially at this point.

There's also the question of what people can (or should) afford and how they pay for those things. Millions of Americans learned from 08/09 that they shouldn't get overextended, shouldn't take on too much debt, and should stockpile cash. They're currently learning a very different lesson - those stockpiles of cash can be devalued very, very quickly. In an inflationary environment, borrowing money to purchase things is a perfectly reasonable (in fact, probably preferable) strategy. Buy things priced in yesterday's dollars, repay them with tomorrow's dollars. Again, keep in mind that your dollars are only worth 60pct of what they were two years ago. You need to recalibrate your expectations.

The car loan duration question is a peculiar one - will rising interest rates encourage shorter terms or will dollar depreciation encourage longer ones? I haven't really thought through it, but I'm inclined to think the latter will dominate. It'll be fascinating to see.
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I don't disagree with anything you posted, but I think @1-tonmudder is simply looking at his Nephew being like so many other Americans who spend every dollar they make, every dollar the bank will loan them, and don't have any kind of rainy day fund. One person loses their job/gets sick and can't work, a car payment can't be made, and then the repo man is coming the next month.
 
shawn said:
There's a lot to unpack here. First off, it's a bit early to say what lessons he may or may not learn from this experience. He may emerge unscathed. He may accept the charity of family or friends, be ashamed and chastened by it and vow never to get into that situation again. He may learn nothing at all. It seems a bit premature and possibly unfair to judge someone who's going through a tough patch, especially at this point.

There's also the question of what people can (or should) afford and how they pay for those things. Millions of Americans learned from 08/09 that they shouldn't get overextended, shouldn't take on too much debt, and should stockpile cash. They're currently learning a very different lesson - those stockpiles of cash can be devalued very, very quickly. In an inflationary environment, borrowing money to purchase things is a perfectly reasonable (in fact, probably preferable) strategy. Buy things priced in yesterday's dollars, repay them with tomorrow's dollars. Again, keep in mind that your dollars are only worth 60pct of what they were two years ago. You need to recalibrate your expectations.

The car loan duration question is a peculiar one - will rising interest rates encourage shorter terms or will dollar depreciation encourage longer ones? I haven't really thought through it, but I'm inclined to think the latter will dominate. It'll be fascinating to see.
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Don’t have time to go in to detail now but this isn’t his first rough patch and he has been helped multiple times by both sides of the family.
 
justjeepin86 said:
Oh, it's not. It's just bs they are hiking the prices while padding their pockets.
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isn't that how capitalisms works?
Companies don't work for free, and why would people give away money.
 
RatLabGuy said:
and why would people give away money.
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See Democrats and people who refuse to work

See Republicans and corporations that line their pockets
 
justjeepin86 said:
Yes, this will probably get blown apart by king Shawn. But, I can't just leave my comment hanging. I do know it's not that simple as well.

www.cbsnews.com

U.S. companies just had their best year since before most of us were born

Major corporations are largely shrugging off inflation on their way to record profits, government data shows.
www.cbsnews.com www.cbsnews.com
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Honestly it's indicative of several things, especially how poorly based the inflation data is. GovCo dumped a bunch of money into the market via "Stimulus" (keep in mind, these "stimulus" packages all had at least 4x as much going to special interest as there was in the form of actual checks to taxpayers), companies raised prices and collected this money, and wages have not caught up. Plus the "Covid tax" on everything and increased demand (some percieved, some real). Overall, if companies profited 25% more, and consumer habits were basically the same, that means prices went up AT LEAST 25% ((25% plus whatever their cost increases were (labor, raw materials, fuel, transport, etc)), so realisitically inflation is closer to 50%, but most people have not recieved a 50% raise to offset that. If companies profited 25% more, but the value of the dollar is 33% less, then actual profit only went up about 17%, which is still really good, but rather diluted considering the 50% estimated price increase I was using. Keep in mind there is also a lot of hedging bets in the prices of things right now because of $5 diesel and unknown future. If you are manufacturing something that isn't on market for 6months, you can't assume todays prices will be enough to cover you. Heck, you can't even assume that for 1 month.

What comes next is the big question. If prices stay up, but wages stay basically the same, people will have to stop spending, leading to a recession. If prices drop and everything else stays the same, we will be back to a sort of normal. If prices stay up, and wages rise significantly, then we will be settling into an inflationary cycle because the simplest way to offset higher wages is higher prices, and the two will chase each other to an unsustainable point, leading to a collapse eventually anyway.
 
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jeepinmatt said:
Honestly it's indicative of several things, especially how poorly the inflation data basis is. GovCo dumped a bunch of money into the market via "Stimulus" (keep in mind, these "stimulus" packages all had at least 4x as much going to special interest as there was in the form of actual checks to taxpayers), companies raised prices and collected this money, and wages have not caught up. Plus the "Covid tax" on everything and increased demand (some percieved, some real). Overall, if companies profited 25% more, and consumer habits were basically the same, that means prices went up AT LEAST 25% ((25% plus whatever their cost increases were (labor, raw materials, fuel, transport, etc)), so realisitically inflation is closer to 50%, but most people have not recieved a 50% raise to offset that. If companies profited 25% more, but the value of the dollar is 33% less, then actual profit only went up about 17%, which is still really good, but rather diluted considering the 50% estimated price increase I was using. Keep in mind there is also a lot of hedging bets in the prices of things right now because of $5 diesel and unknown future. If you are manufacturing something that isn't on market for 6months, you can't assume todays prices will be enough to cover you. Heck, you can't even assume that for 1 month.

What comes next is the big question. If prices stay up, but wages stay basically the same, people will have to stop spending, leading to a recession. If prices drop and everything else stays the same, we will be back to a sort of normal. If prices stay up, and wages rise significantly, then we will be settling into an inflationary cycle because the simplest way to offset higher wages is higher prices, and the two will chase each other to an unsustainable point, leading to a collapse eventually anyway.
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Short version:

The accounting in this article doesn't account for the massive inflation going on, making that 25% "profit" and the estimation of it being a great year pretty meaningless
 
RatLabGuy said:
Short version:

The accounting in this article doesn't account for the massive inflation going on, making that 25% "profit" and the estimation of it being a great year pretty meaningless
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See also: Evil corporations are evil for making too much profit.
Disregard: Inflation makes those profits quite a bit less, actually.
Side note: Inflation isn't due to poor .gov actions over the last few years.
 
WARRIORWELDING said:
inflation will be the last biggest trigger....the bigger question is will it also trigger a reset. Recession by definition that I understand is a shrinking economy or market growth that is smaller and stagnated. Even if both these categories or any other measure shrinks I do not think is automatically reduces inflation.

So what I'm more concerned with is Recession combined with Dramatic inflation. Thoughts?
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I believe a recession is typically defined as two consecutive quarters of negative GDP.
 
1-tonmudder said:
Don’t have time to go in to detail now but this isn’t his first rough patch and he has been helped multiple times by both sides of the family.
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If he has been helped multiple times by people who know him, who is the one failing to learn?
 
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