Next recession?

[Jims5543]

Originally Posted by LWJ

When? How bad? What caused it?

I hear lots of folks say 2020. I have a supplier with a huge international reach. They say q2 2019.

Question is what is coming and how to prepare?

Thanks!

I alluded to what I think may be the beginning of a slowdown in my previous post.

Since I am tied directly into home sales and home sales seems to be a great indicator as to how healthy or unhealthy the economy is. People buy houses when they feel like things are going good.

I saw a big drop off in closings in October and November is starting off pretty slow too. My builders are all balls to the wall but they never seem to read the market and tend to overbuild until there is huge inventory just sitting. Then many go bankrupt.

I think a big factor this time around will be student loans and car loans along with Credit cards. Cars are now the same price houses were 20 years ago and there is no regulation on who can or cannot get a car loan like the mortgage business.

You can now finance a car for 7+ years. Which is insane except it seems like everyone is doing it.

Same goes for student loans and same goes for credit card debt, all unsecured credit and both at all time record highs.

Throw in the Fed increasing interest rates and this turns into a fine mess.

I am not going into Tabs land the our Federal Debt, that is another thread.

I read an article, I do not have time right now to find it, it said we will look back at October 2018 and realize it was the start of the downturn in the economy. I hope they are wrong.

[pavulon]

where is the guy who's predicted 134 of the last 3 recessions?

[Jims5543]

I used to like Peter Schiff but he seems to just be interested in scaring people into using his services, he has been predicting doom and gloom non stop for 5 years now.

[93nav]

I think this describes most of the pundits you see/hear.

Originally Posted by Jims5543

I used to like Peter Schiff but he seems to just be interested in scaring people into using his services, he has been predicting doom and gloom non stop for 5 years now.

[KFC911]

Originally Posted by Jims5543

....

I think a big factor this time around will be student loans and car loans along with Credit cards. Cars are now the same price houses were 20 years ago and there is no regulation on who can or cannot get a car loan like the mortgage business.

You can now finance a car for 7+ years. Which is insane except it seems like everyone is doing it.

Same goes for student loans and same goes for credit card debt, all unsecured credit and both at all time record highs.

Throw in the Fed increasing interest rates and this turns into a fine mess.

....

You've got it ALL wrong imo. The "cheap, easy credit" of ultra-low FED rates are exactly the "cause" of this crap. The FED rate absolutely needs to go back to traditional levels....and we are NOT there yet. What do YOU think the FED prime rate should be? Serious question. Will it have a negative impact on growth? Absolutely....just like it has been since '15...

The recent GDP growth numbers don't come close to growth a couple of qtrs in 2014 btw.

Just saw my R Congressman being interviewed.....he said increasing the national debt was nothing to be concerned about. I think he's an idiot . Is that PARFY ?

[cabmandone]

Originally Posted by KC911

The recent GDP growth numbers don't come close to growth a couple of qtrs in 2014 btw.

Which should tell you how poor the overall performance of 2014 was when you consider it was yet another year that didn't average 3%. Two good quarters doesn't make a good year. Look at the last six quarters, we're averaging a little over 3%. That hasn't happened in over a decade and the fact that a slim 2.5% 4th quarter will make this year our first 3% average growth year in over 12 is pretty telling.

I don't see Q1 being the start of a recession since things would have to go south drastically. If anything I'd say late 2019 early 2020

[sammyg2]

Next recession?

I don't have a crystal ball and I'm not very good at predicting the future.
But recently I sold off seven figures of stocks and sunk em into precious metals and money market.
we'll see what happens after the elections.

BTW the FED is EVIL.
They are the cause, the source, the scourge.
When things go bad it's usually the FED's fault.

[KFC911]

Originally Posted by cabmando

Which should tell you how poor the overall performance of 2014 was when you consider it was yet another year that didn't average 3%. ....

How much "unsustainable juice" (debt) was applied to get the last 2 qtrs GDP bump....verses '14? We might "barely" hit 3% for this year...but not in 2019....just ain't gonna happen imo. Nothing to do with tomorrow either...it's just not gonna. I hope I'm wrong....

[KFC911]

Mebbe a topic for another thread....what do y'all think is the "sweet spot" for the FED prime rate? It absolutely needs to be over a 100 basis points higher than it is now. The FED has it's faults, but it also covered EVERY one of our butt$ ten years ago. Without the FEDs actions (like them or not)....where do you think we'd be now?

I'd like to see the FED prime rate return to around 3.5%...give or take.

[Porsche-O-Phile]

I think there may be one looming. There is a humongous bubble in the stock market today and there’s also a bubble that’s formed in the RE market and worse still we still aren’t “really” recovered from how bad 2008-09 was.

We’re fully ten years out from that recession and the federal reserve still has VERY low interest rates and billions of dollars of junk / bad / “subprime” debt on its books (and will for decades) created during the stupidity of the housing bubble of the mid-2000s. While I don’t see what’s coming as catastrophic, I think it will last longer than it “should” and be slower to recover than has been the case historically simply because the federal reserve doesn’t have the tools to juice the economy when needed - they used every tool in the toolbox to keep the ship afloat during the time from 2008-2012 or so and has STILL (ten years later!) been reluctant to raise rates. We also STILL are seeing anemic wage growth. Only very recently has there been an uptick in salaries... It has taken a very, very long time to haplen and won’t have much time to “marinate” before there is downward pressure on salaries again. That can’t help matters... There’s a lot of money out there but most of it is consolidated with the very, very wealthy. None of that helps. I suspect in the next 2-3 years there will be a downturn for a year or so, followed by sloooooooow, lackluster growth (think 2013-2016).

[cabmandone]

Originally Posted by KC911

How much "unsustainable juice" (debt) was applied to get the last 2 qtrs GDP bump....verses '14? We might "barely" hit 3% for this year...but not in 2019....just ain't gonna happen imo. Nothing to do with tomorrow either...it's just not gonna. I hope I'm wrong....

I still say things are going to have to make a drastic turn in 2019 for it to not perform like 18 has or really since the second quarter of 2017 forward has. When we get things sorted out with China, and we will, I think 2019 will be better than 18. I hope I'm right! but mostly for selfish reasons, I'm having a GREAT 2018 and activity for Q4 is MUCH stronger than Q3 and close to Q2 for me. There's a lot of money out there and I'm going to enjoy it and make the most of it while it lasts.

[93nav]

p-o-p

I agree. I think we are still in uncharted waters and the Fed and government would not have all the options/tools normally available to them when the slowdown occurs. And look at the rates in Europe.

Everytime I think about all the debt out there, cars, college, state, governments (pension obligations), I get real nervous.

[Shaun @ Tru6]

Cheap money cum corporate debt bubble
No wage growth
Trade and tariff uncertainty ultimately netting out to inflation
Protectionism
Banking deregulation
More buyers than sellers in the stock market
Tax cuts
National debt at $22 trillion

What could go wrong?

[Jims5543]

Originally Posted by KC911

You've got it ALL wrong imo. The "cheap, easy credit" of ultra-low FED rates are exactly the "cause" of this crap. The FED rate absolutely needs to go back to traditional levels....and we are NOT there yet. What do YOU think the FED prime rate should be? Serious question. Will it have a negative impact on growth? Absolutely....just like it has been since '15...

The recent GDP growth numbers don't come close to growth a couple of qtrs in 2014 btw.

Just saw my R Congressman being interviewed.....he said increasing the national debt was nothing to be concerned about. I think he's an idiot . Is that PARFY ?

For 8 years it was just about at Zero, how much has it gone up in the last 18 months?

We cannot go back to traditional levels, if our Federal Debt was not 21 Trillion we could, but not at 21 Trillion in Debt, if we go back to 80's level interest rates, our Debt will skyrocket.

We have driven off a cliff and cannot turn around, this is honestly fodder for another thread.

Right now, we have an economy that is on a rebound, we need to ease back into the interest rates slowly.

It was said back in 2016 if the interest rates rise, the United States will be in big trouble with unsustainable national debt. Interest rates are rising, how much more? Good question, I am not sure. I do know big damage is being done, we need, more than anything, to get the national debt heading backwards, I do not think that will ever happen, instead I think our national credit rating is going to take a huge hit.

Then forget recession think Venezuela.

Here!! Have a Kachi style graph.

[cstreit]

Originally Posted by pavulon

where is the guy who's predicted 134 of the last 3 recessions?

You win the internet today sir.

[KFC911]

Originally Posted by Jims5543

For 8 years it was just about at Zero, how much has it gone up in the last 18 months?

We cannot go back to traditional levels, if our Federal Debt was not 21 Trillion we could, but not at 21 Trillion in Debt, if we go back to 80's level interest rates, our Debt will skyrocket.

We have driven off a cliff and cannot turn around, this is honestly fodder for another thread.

Right now, we have an economy that is on a rebound, we need to ease back into the interest rates slowly.

It was said back in 2016 if the interest rates rise, the United States will be in big trouble with unsustainable national debt. Interest rates are rising, how much more? Good question, I am not sure. I do know big damage is being done, we need, more than anything, to get the national debt heading backwards, I do not think that will ever happen, instead I think our national credit rating is going to take a huge hit.

Then forget recession think Venezuela.

Here!! Have a Kachi style graph.

I'm gonna bow out of this thread now....

Appreciate the exchanges with you all, but just have a different perspective. This is gonna play out...and we'll see.

I have ZERO interest in making a case with graphs and statistical bs however....and I'm pretty good at that too...

At the end of '19, the FED prime rate WILL be in the range I refer too, and GDP will be under 3% for the year too...jmho.

....and I ain't even got one of them crystal ball thingys like Samny does...I gots TWO !

[cabmandone]

Originally Posted by Jims5543

I alluded to what I think may be the beginning of a slowdown in my previous post.

Since I am tied directly into home sales and home sales seems to be a great indicator as to how healthy or unhealthy the economy is. People buy houses when they feel like things are going good.

I saw a big drop off in closings in October and November is starting off pretty slow too. My builders are all balls to the wall but they never seem to read the market and tend to overbuild until there is huge inventory just sitting. Then many go bankrupt.

I think a big factor this time around will be student loans and car loans along with Credit cards. Cars are now the same price houses were 20 years ago and there is no regulation on who can or cannot get a car loan like the mortgage business.

You can now finance a car for 7+ years. Which is insane except it seems like everyone is doing it.

Same goes for student loans and same goes for credit card debt, all unsecured credit and both at all time record highs.

Throw in the Fed increasing interest rates and this turns into a fine mess.

I am not going into Tabs land the our Federal Debt, that is another thread.

I read an article, I do not have time right now to find it, it said we will look back at October 2018 and realize it was the start of the downturn in the economy. I hope they are wrong.

How much of the reduction in closings do you think is due to normal cycle? What I mean is, when I was in real estate home sales slowed once school started, the same the closer we got to the holidays. If what I experienced is happening now along with a reduction due to higher rates, it would seem this is normal rather than an indicator of a slowing economy. From what I have read the market is switching back to a buyers market in that home prices are coming down due to the rate hikes slowing the pace. It's a good thing IMO that the housing market is slowing down because prices were going up way too fast.

[Jims5543]

Originally Posted by cabmando

How much of the reduction in closings do you think is due to normal cycle? What I mean is, when I was in real estate home sales slowed once school started, the same the closer we got to the holidays. If what I experienced is happening now along with a reduction due to higher rates, it would seem this is normal rather than an indicator of a slowing economy. From what I have read the market is switching back to a buyers market in that home prices are coming down due to the rate hikes slowing the pace. It's a good thing IMO that the housing market is slowing down because prices were going up way too fast.

School started in August here, August was busy, Sept, was busy, then the Fed bumped it again and it was like everyone stopped and paused.

House prices are now falling, I think a good thing, except no one is buying.

So now there is a lot of inventory, the builders are too dumb to realize what is going on and are frantically building as many houses at they can as fast as they can.

I see 2006 all over again right now and I hope I am wrong.

I usually receive 6 orders a day for closings, I am averaging 1 a day to 1 every 2 days.

The only thing keeping me busy right now is my tract home builder and my 3 custom home builders. The tract home builder is starting up 50+ houses a month.

As I mentioned earlier, I am shell shocked from the 2008 crash, I was lucky and saw it coming in 2007, sold off RE, sold off toys, and got ready for 2 bad years, I never expected 6 bad years. In 2011 I was about to close my doors and go find a job somewhere doing something else.

Also as mention I read an article that said we will look back at Oct 2018 as the beginning of another housing crash, I really hope they are wrong.

I am heading out on several jobs today for closings, I let them build up over the last week. Then I am counting on the builders to keep me busy again.

I hooked up with the biggest pool company in town, they used to order a new pool job every day sometimes 2-3 a day. We are down to 1-3 a week if that.

I hope I am seeing this wrong. I think I am grabbing more gold this week.


Interesting article on National Debt. I typed out a long response to KC but he tapped out of this thread so I deleted it.

https://www.thebalance.com/interest-on-the-national-debt-4119024

[KFC911]

I wish you had posted it Jim...sometimes I lie like a politician ....and I appreciate your posts and perspective....I just have a TOTALLY different perspective on "easy credit". The FED is nothing more than the "bankers' bank".... giving these large entities free, or low interest loans to make their billions ? You're a "go getter" and I admire that.....

I've also worked for two of the megabanks (one defunct) though my expertise is in IT and quantitative analysis.

You don't give a drunk a shot of "juice" when the DTs hit....painful as it is imo.. You get them off the "sauce".... or pay dearly....on down the road. This "road" began in '80...with hills and valleys....

This "might" be my last post....but I'll continue to read everyone's perspective....even Sammy's .

I'm outta the door....just don't hang a "chad" today

[flatbutt]

Whenever it occurs and however bad it gets remember it will be followed by a recovery.