OFFS: The Forsakening

[Warren]

I spent the evening with some relatives whom I really like, but God help us all, they honestly believe that there was hardly any recovery from the 2008-2009 recession until Trump took office.

They're educated. They read the business section of the paper. And they believe this.

It depends on what you consider meaningful recovery. If you look at labor force participation rates, then your friends are wrong because Trump taking office still hasn't resulted in a recovery from 2008.

It is when you control for age. Most of the difference is a combination of teenagers not working anymore and older people retiring sooner. The 2006 and 2016 numbers for 25-54 year olds are almost unchanged (actually 3/10ths of a precent higher).

Any newer data to support a Trump recovery?

[Shem]

I spent the evening with some relatives whom I really like, but God help us all, they honestly believe that there was hardly any recovery from the 2008-2009 recession until Trump took office.

They're educated. They read the business section of the paper. And they believe this.

It depends on what you consider meaningful recovery. If you look at labor force participation rates, then your friends are wrong because Trump taking office still hasn't resulted in a recovery from 2008.

It is when you control for age. Most of the difference is a combination of teenagers not working anymore and older people retiring sooner. The 2006 and 2016 numbers for 25-54 year olds are almost unchanged (actually 3/10ths of a precent higher).

Any newer data to support a Trump recovery?

Not in the participation rates. They've been more or less flat since 2016.

[JasonL]

I don’t know what you want a recovery to look like if this isn’t one. It started well before trump yes, but he didn’t yet break it.

[Aresen]

I don’t know what you want a recovery to look like if this isn’t one. It started well before trump yes, but he didn’t yet break it.

The up cycle has gone on longer than most. I am not going to try to explain why, but it will eventually turn sour for at least a couple of quarters. This is a 'nothing goes on forever' prediction, not a 'these fundamentals are out of whack and will cause the economy to dive' prediction.

As I have said elsewhere, I think the market has a 'bubble' feel to it. The only questions are 'when' and 'how bad?'

For the record, I bailed on most of my equities in January 2017, so I have missed all of the market rise since then.

[thoreau]

I don’t know what you want a recovery to look like if this isn’t one. It started well before trump yes, but he didn’t yet break it.

The up cycle has gone on longer than most. I am not going to try to explain why, but it will eventually turn sour for at least a couple of quarters. This is a 'nothing goes on forever' prediction, not a 'these fundamentals are out of whack and will cause the economy to dive' prediction.

I agree with both of you.

[Warren]

I don’t know what you want a recovery to look like if this isn’t one. It started well before trump yes, but he didn’t yet break it.

OFFS I'll tell you what an actual recovery looks like. First of all the prime lending rate is something north of 5%. Second of all the labor force participation rate is north of 64%. I'd also sleep better at night if the Debt/GDP was south of... well that's never going to happen, so lets just say if it was declining for three consecutive years. This so called "recovery" is just giving a junky all the heroin he wants. There's no wealth creation behind it, it's all free money.

[JasonL]

Demographics drive participation. It’s not smart to say that has to be some magic number. There are a lot of forces driving rates. Not least of which is tallest midget type stuff. I don’t know that you can tag a rate that’s a magic number and low to lowing may be a persistent normal for a long time. Find me some inflation.

[JasonL]

I will give you debt, but if you mean that rigidly there is no recovery ever.

[Warren]

Demographics drive participation. It’s not smart to say that has to be some magic number. There are a lot of forces driving rates. Not least of which is tallest midget type stuff. I don’t know that you can tag a rate that’s a magic number and low to lowing may be a persistent normal for a long time. Find me some inflation.

Fine fine. But as long as we're printing money like a herd of wildebeests with diarrhea, don't try to pretend it's a recovery.

[JasonL]

I agree about spending but see boom bust as a different thing. We were wildebeests before 2008. Recovery implies correction to baseline cyclical performance not rainbow scented unicorn poop.

[Shem]

Second of all the labor force participation rate is north of 64%.

You're not going to see that again in your lifetime, and I've already told you why. Labor participation is down because people are retiring. Until senior citizens make up a smaller percentage of the population, that won't change.

[Aresen]

Second of all the labor force participation rate is north of 64%.

You're not going to see that again in your lifetime, and I've already told you why. Labor participation is down because people are retiring. Until senior citizens make up a smaller percentage of the population, that won't change.

"Are there no workhouses?"

Seriously, though. Shem is right. I can define whatever conditions I choose for a 'recovery' but that doesn't change the way economists view one. The participation rate is not meaningful unless it incorporates some measure of what portion of the population no longer wishes to be a part of the labor force: I am retired. Between my pensions and my savings, I no longer need to work. Returning to work would actually be a worsening of my personal situation, no matter how much I earned.

[thoreau]

We can recognize that certain things are not where we wish they were, while also acknowledging that a whole lot of things have improved since 2009.

[Andrew]

Until senior citizens make up a smaller percentage of the population, that won't change.

Soylent Silver.

[thoreau]

Until senior citizens make up a smaller percentage of the population, that won't change.

Soylent Silver.

I am intrigued by your ideas and would like to subscribe to your newsletter.

[Fin Fang Foom]

My pick for what will fuck up the economy is ETFs full of bad debt. Basically it is like bad mortgage ABSes but instead of mortgages , it is bad corporate debt. The love of "low risk" returns will cause 2008 part 2.

[Aresen]

My pick for what will fuck up the economy is ETFs full of bad debt. Basically it is like bad mortgage ABSes but instead of mortgages , it is bad corporate debt. The love of "low risk" returns will cause 2008 part 2.

I make no predictions about when or why the economy will go south. Only that it inevitably will at some point. I have my opinions, but given my track record, I will hold my peace.

The one prediction I will make is that, when it happens, every economist and pundit in the world will claim that they did predict it. None of their reasons for it will agree.

[Shem]

Tariffs. All the Wall Street jackasses have been looking at each other like "eh, nobody could be *that* stupid, right? Keep up the buying." Now that it's becoming clear that, yes, in fact, someone is that stupid, and he gets to control the economy until his party sacks up and forces him in line, they're going to freak.

[Tuco]

Well, Mexico elected López Obrador, to no one's surprise. I predict nothing much will change.

[Warren]

My pick for what will fuck up the economy is ETFs full of bad debt. Basically it is like bad mortgage ABSes but instead of mortgages , it is bad corporate debt. The love of "low risk" returns will cause 2008 part 2.

Newsletter please.
Srsly, got a link to a deeper dive?

[Warren]

Tariffs. All the Wall Street jackasses have been looking at each other like "eh, nobody could be *that* stupid, right? Keep up the buying." Now that it's becoming clear that, yes, in fact, someone is that stupid, and he gets to control the economy until his party sacks up and forces him in line, they're going to freak.

Market undulations are not the economy. The tariffs have the potential to do serious damage, but Wall Street throwing a hissy fit isn't the same thing, and may even be the lever that lifts those tariffs. If they are lifted before the next congress, I don't even see any damage to international relations, certainly none that won't evaporate with the next administration.

[Aresen]

Tariffs. All the Wall Street jackasses have been looking at each other like "eh, nobody could be *that* stupid, right? Keep up the buying." Now that it's becoming clear that, yes, in fact, someone is that stupid, and he gets to control the economy until his party sacks up and forces him in line, they're going to freak.

Market undulations are not the economy. The tariffs have the potential to do serious damage, but Wall Street throwing a hissy fit isn't the same thing, and may even be the lever that lifts those tariffs. If they are lifted before the next congress, I don't even see any damage to international relations, certainly none that won't evaporate with the next administration.

Speaking from outside the RedWhiteandBlue Zone, the damage has already been done. Yes, the rest of the world may cheer when El Cheeto is gone, but a lot of countries are saying "WTF USA? Are you gonna do this again sometime?"

If I were in Justin Trudeau's place, I'd be reminding myself that Clinton and Obama went pretty heavy on the Anti-NAFTA rhetoric in 2008.

[Warren]

Yes, the rest of the world may cheer when El Cheeto is gone, but a lot of countries are saying "WTF USA? Are you gonna do this again sometime?"

Pffffft As if the USA was especially egregious in this regard.
If the next guy is even half as much Not Trump as Obama was Not W, there'll be no bar, no nightclub, no speakeasy, in all the world where he could pay for his own drinks.

[Jennifer]

Tariffs. All the Wall Street jackasses have been looking at each other like "eh, nobody could be *that* stupid, right? Keep up the buying." Now that it's becoming clear that, yes, in fact, someone is that stupid, and he gets to control the economy until his party sacks up and forces him in line, they're going to freak.

Market undulations are not the economy. The tariffs have the potential to do serious damage, but Wall Street throwing a hissy fit isn't the same thing, and may even be the lever that lifts those tariffs. If they are lifted before the next congress, I don't even see any damage to international relations, certainly none that won't evaporate with the next administration.

Speaking from outside the RedWhiteandBlue Zone, the damage has already been done. Yes, the rest of the world may cheer when El Cheeto is gone, but a lot of countries are saying "WTF USA? Are you gonna do this again sometime?"

If I were in Justin Trudeau's place, I'd be reminding myself that Clinton and Obama went pretty heavy on the Anti-NAFTA rhetoric in 2008.

I have similar concerns: even if The Next Guy (or even a Democratic majority post-midterms) manages to undo ALL the damage Trump did in regard to tariffs, treaties and the like -- still, the damage to America's international reputation won't be undone until enough time has passed that everyone who might possibly have voted for Trump is dead (and even THAT assumes the country doesn't elect another Trumpish president in the meantime). Who's going to trust us if they know "Any agreements we sign with the USA now might be undone after the next presidential election?"

[Shem]

It'll be like blowing off your mortgage and credit card payments for a few months, then paying the outstanding debts. You can still get what you had before, but it'll be a lot more expensive than it would have been otherwise. International agreements that don't provide benefits until Congress approves them and they're law. More concessions for trade pacts. More expectations when it comes to international organizations. Less autonomy when we decide to fuck someone up in a third world country. That sort of thing.