It Didn’t Last
It didn't last because it couldn't. The bid for risk catalyzed by the Bank of England's emergency intervention in the UK bond market fizzled Thursday, as US yields resumed their upward march and the curve bear flattened. It was just as well. Wednesday's rally was counterproductive for a Fed bent on engineering tighter financial conditions. In all likelihood, US policymakers were displeased with the sugar high from the BoE's pension rescue operation. The S&P gave back all of the prior day'
3 thoughts on “It Didn’t Last”
Revised U.S. government figures confirm the U.S. shrank in the first six months of the year. GDP, the official scorecard of the economy, fell at a 0.6% annual clip in the second quarter, the BEA said, revising the figures. Some economists had speculated the revised numbers could show growth instead of contraction. Instead there was very little change.
Political partisans are arguing over whether the U.S. has slipped into recession. The old rule-of-thumb defines a recession as two consecutive quarters of negative GDP, and yet, the strongest labor market in decades signals the economy is still in expansion mode. Businesses are hiring, layoffs are at a record low and the unemployment rate is near the lowest level since the 1960s.
Public sentiment is everything. Is it GDP, or jobs?
From my observations – it appears that for some, recessions can be defined by the old but informal rule-of-thumb (GDP) or the labor market. And for others, recessions begin on the day their preferred political candidate for the presidency loses an election – and the recession continues for years, until the day their preferred political candidate for the presidency wins an election.
It’s pretty clear that the business world believes the US has entered a recession and they’re trimming investment/spending which, just like the Fed hiking and QT (and not even at neutral yet), will take months to show up on Main Street, but can have only one outcome.
I’d say the job market looks like the Boomers demographic change being pulled forward by the pandemic (also affected immigration) which is obscuring the traditional signals, but ironically without a huge increase in productivity per worker I can’t see how GDP will grow with less people working.
Anon – I’d say your assessment of the Boomer demographic changes in the job market is right on. Good point to make right now. Thanks for adding to my perspective.
I suspect the US is on the outside edge of a global recession that has already begun, and the US will not be able to avoid being impacted by it through most of 2023. I’m hoping we start to see signs of its ebbing 12 months from now.