With the unemployment rate up, concerns about a recession are up, too. The Sahm rule, my recession indicator, is getting attention and giving me opportunities to discuss recession risks.
Thanks for your occasional take regarding, you know, how fraught explaining possible consequences in the future can be. If we knew the future, as beloved labor economist Kenneth Boulding would say, it would be here now.
It might also be difficult for the US economy to tip into a recession when the US Federal government is running historically high "peacetime" (Congress hasn't declared war, so this is "peacetime" despite the massive support the US has made to Ukraine both in for its military and to keep its economy afloat; now plus Israel for Gaza) deficits it is running -- almost 6% of GDP this year and projected to be even higher next year. That's a lot of stimulus, so perhaps the low unemployment and relatively robust economic growth shouldn't be so surprising after all? Certainly that's what Warren Mosler would tell you, and has been banging on about for over a year now on his Twitter/X account.
Thanks for sharing the unlocked Bloomberg piece, I wish others like FT could do the same.
I am curious which unemployment rate is used for the three month average. Is it the headline or revised numbers? Or maybe because of the feedback loop nature of it they both get there eventually.
Much as I respect your efforts to develop an empirical signal of immi ent recession I have a gut feeling that "this time is different".
What the Fed has done is make it difficult for cheap money to buttress the M&A activities of private equity. As a result private equity is chasing after higher yield speculation with the hot money it is drawing in. Losing capital on a speculative investment is a lot easier to do when borrowing was cheap. Now it isn't cheap and those bad loans may cause significant unexpected problems in the financial markets.
In other words unemployment will not be the trigger for a recession, a debt system collapse will bring on a financial crisis and that will lead to a recession.
Lately the financial press has been highlighting how private equity is racing to rescue zombie corporations by mobilizing private capital at junk bond rates. When this cannot continue you get the financial crisis.
Your rule may be consistent with real economy recessions but it is unlikely to warn of financial driven recessions.
Nice interview on NPR Sunday Edition this morning—especially your point about not really “needing” a recession but may get one anyway.
Rule #1 Of unnecessary stresses (The "What me worry rule."): Avoid defunding the federal government.
Certainty, let's see, when was that again?
Thanks for your occasional take regarding, you know, how fraught explaining possible consequences in the future can be. If we knew the future, as beloved labor economist Kenneth Boulding would say, it would be here now.
It might also be difficult for the US economy to tip into a recession when the US Federal government is running historically high "peacetime" (Congress hasn't declared war, so this is "peacetime" despite the massive support the US has made to Ukraine both in for its military and to keep its economy afloat; now plus Israel for Gaza) deficits it is running -- almost 6% of GDP this year and projected to be even higher next year. That's a lot of stimulus, so perhaps the low unemployment and relatively robust economic growth shouldn't be so surprising after all? Certainly that's what Warren Mosler would tell you, and has been banging on about for over a year now on his Twitter/X account.
Thanks for sharing the unlocked Bloomberg piece, I wish others like FT could do the same.
I am curious which unemployment rate is used for the three month average. Is it the headline or revised numbers? Or maybe because of the feedback loop nature of it they both get there eventually.
Much as I respect your efforts to develop an empirical signal of immi ent recession I have a gut feeling that "this time is different".
What the Fed has done is make it difficult for cheap money to buttress the M&A activities of private equity. As a result private equity is chasing after higher yield speculation with the hot money it is drawing in. Losing capital on a speculative investment is a lot easier to do when borrowing was cheap. Now it isn't cheap and those bad loans may cause significant unexpected problems in the financial markets.
In other words unemployment will not be the trigger for a recession, a debt system collapse will bring on a financial crisis and that will lead to a recession.
Lately the financial press has been highlighting how private equity is racing to rescue zombie corporations by mobilizing private capital at junk bond rates. When this cannot continue you get the financial crisis.
Your rule may be consistent with real economy recessions but it is unlikely to warn of financial driven recessions.