Recession on the way?

[kapkomet]

Well, I was looking at some of the financial data last night - the yield curve on bonds was inverted.

 

You will get more for your investment if you invest short term vs. long term in bonds - which often signals a recession.

 

Yes, there's things that can be done - like the Fed can stop raising rates...

 

It will be interesting to see how this plays out down the road. I see today's market it's "corrected" itself. But they are still very close together (the 2 year yield vs. the 10 year yield).

 

Comments, southsider, aka Mr. Bowtie?

 

[southsider2k5]

Well, I was looking at some of the financial data last night - the yield curve on bonds was inverted.

 

You will get more for your investment if you invest short term vs. long term in bonds - which often signals a recession.

 

Yes, there's things that can be done - like the Fed can stop raising rates...

 

It will be interesting to see how this plays out down the road.  I see today's market it's "corrected" itself.  But they are still very close together (the 2 year yield vs. the 10 year yield).

 

Comments, southsider, aka Mr. Bowtie?

 

 

You kinda took my technical analysis out of my mouth. The Yield curve corrected itself today, so things have relaxed, but I am not too confident in at least the stock market for the short term. We have made about a triple top bouncing down off of 10950 each time. There seems to be a lot of resistance to going through those levels, and we might well see something like 10500 tested in January/February before we rebound.

 

One thing that bodes well for us is that the rest of the worlds economic data over the last couple days seems solid, along with the US's. It seems to be just the one indicator that was out of whack for whatever reason, and that is just an interest rate function. From where the shortterm rates are priced, they are looking at Bernanke giving us two more 25 basis point adjustments with us ending up at a prime rate of 5%. If the inversion shows up again, I think you will see the Fed just not raise rates and see what happens.

 

It will be interesting to see how this plays out in the shortterm though.

[Rex Kickass]

Sometimes I wonder if we're reaching a point in this country where recessions and growth are kind of ceasing to matter for most Americans.

 

It's why I just don't get economics. Inflation is low, yet the price of milk, meat, gas is much higher than it was last year. And the year before.

 

Unemployment is low, yet the percentage of eligible workers in the workforce has stayed static or has decreased for the last five years.

[WCSox]

Sometimes I wonder if we're reaching a point in this country where recessions and growth are kind of ceasing to matter for most Americans.

 

It's why I just don't get economics. Inflation is low, yet the price of milk, meat, gas is much higher than it was last year. And the year before.

 

Unemployment is low, yet the percentage of eligible workers in the workforce has stayed static or has decreased for the last five years.

 

I'm far from an economics expert, but it seems to me that high energy prices are responsible for most of this. Energy is required to produce items and provide services. Higher energy costs stifle sales revenue because people who pay $250/month to heat their homes have less disposable income. Higher costs also mean that companies have to cut back on hiring. And, of course, people who don't have jobs aren't really in much of a position to drive the economy.

[Rex Kickass]

Sorta my point, fewer people are working, yet the economy is doing "great." I don't know that I would see it that way.

[Balta1701]

Sorta my point, fewer people are working, yet the economy is doing "great." I don't know that I would see it that way.

Actually, I would disagree slightly...thanks to a year of job growth, albiet sluggish growth, there are actually more people working now than there were before the recession. Whether or not there's a higher percentage of the workforce employed...well, that's a matter to discuss with those heavily distorted unemployment percentages I've ripped on before.

 

The reason why there are surprisingly few people who would say that the economy is doing "Great" is that over each of the past several years, the median income in this country has decreased (started in like 99-00 I believe). What that means is that if you take the person who has 50% of the U.S. population earning less than him, and 50% earning greater than him, each of the last few years, that exactly average person has made less money than the year before, even without adjusting for inflation.

 

This basically means that percentage wise, there are more people making lower amounts of money every year of the last 6 than there were the year before. So on average, the lower income people are winding up slightly worse off every year...and when you throw in inflation into that mix, it looks even worse.