The Risk of a US Recession In The Next Year and the Obstruction of the First Pre-Mean-Field Equilibrium

Goldman Sachs told clients on Monday that there is a chance of a US recession in the next year. While that is double the normal risk of a recession, it is far below the 63% average in a recent forecaster survey by The Wall Street Journal.

“Inflation has probably peaked but it may not come down as quickly as people want it to,” said Kathy Jones, chief fixed income strategist for the Schwab Center for Financial Research.

“But you know, having said that, I think we have a fighting chance of getting through the next year without an economic downturn.” He cites inflation “coming in here pretty quickly, consumers still have cash and middle- and high-income consumers are spending and businesses are reluctant to lay off workers because their number one problem is finding and retaining workers.”

The US economy has been showing warning signs for a while. The stock market and bonds are both in bear territory, which may cause the market to remain volatile. The economy shrank by 0.6% in the second quarter of this year, according to an estimate from the Bureau of Economic Analysis.

However, even Powell concedes that path has gotten narrower as the Fed has been forced to resort to drastic interest rate hikes to knock down inflation.

Summers on Thursday specifically cited the OPEC+ decision to dramatically cut its oil output targets as a risk to the US economy. “This is not good news that we’ve gotten from OPEC. It increases the risks when it comes to inflation. It increases the risk of a recession.

The group of major oil producers, which includes Saudi Arabia and Russia, said Wednesday that it will slash oil production by 2 million barrels per day, the biggest cut since the start of the pandemic, in a move that threatens to push gasoline prices higher just weeks before US midterm elections.

The Biden administration criticized the decision as shortsighted and said it will hurt low and middle-income countries the most.

The Great Flare of Hurricane Ian: Inflation, Employment Growth, and the Growth of the US Economy in the Five-Year Post Pandemic

Global warming has created new problems for forecasters according to meteoriteologists. Not only are hurricanes getting stronger, they’re also intensifying more rapidly than they used to, making it difficult to issue early warnings for communities in their path. Notably, officials in Florida’s Lee County waited for definitive evidence that they would be hit hard by Hurricane Ian before ordering evacuations — and by then it was too late for many people.

We are, I’d now argue, just starting to see the effects of the interest rate hikes the Fed has been making since early this year. There is a lot to be said about the current inflation and jobs data, but there are already a lot of reductions in inflationary pressures in the works. The economy, as some business analysts like to say, may well be “rolling over.”

Editor’s Note: Gad Levanon is the chief economist at the Burning Glass Institute. He’s the former head of The Conference Board’s Labor Market Institute. The opinions expressed in this commentary are his own.

While GDP declined at an annualized rate of 1.1% in the first half of 2022, the US economy added 2.3 million jobs in the last six months, far more than in any other six-month period in the 20 years prior to the pandemic.

Why has the growth in employment been so strong? The US economy is holding its own better than anticipated. The Atlanta Fed’s GDPNow estimate for real GDP growth in the third quarter of 2022 is 2.3%, suggesting that while the economy is now growing much more slowly than it did last year, we are still not in a recession. When demand for goods and services increases, so does the demand for workers to produce them.

Although the economy is slowing, there are still historically low layoffs. Initial claims for unemployment insurance, an indicator highly correlated with layoffs, were 219,000 for the week ended October 1 – higher than the week prior, but still one of the lowest readings in recent decades. After years of increasingly traumatic labor shortages, many employers are reluctant to significantly reduce the number of workers even as their businesses are slowing. That’s because companies are worried that they will have trouble recruiting new workers when they start expanding again.

Third, many industries are growing faster than normal because they are still recovering from the pandemic. A growing number of companies are growing fast because they are still below pre-pandemic employment levels.

Positive momentum will not be wiped out by these factors. Employment growth might slow down from its historically high rates, but this will not stop it from remaining solid in the coming months. ManpowerGroup’s Employment Outlook Survey shows that the hiring intentions for the fourth quarter are still very high, despite dropping from the previous quarter.

Reducing the number of workers888-607-888-607-888-607-3166 is one of the two ways to rein in the labor market. But it’s hard to engineer a boost in labor supply. It requires legislative action to increase immigration, drive people into the labor force or invest in workforce training. It will be hard to find in a political environment that is politically divided.

From the executive suite to the grocery aisles to the halls of the Federal Reserve, the big question is: Can red-hot inflation be vanquished without tipping the economy into a recession?

It seems almost impossible to find one who doesn’t foresee a global downturn, with 98% of chief executives in the survey gearing up for a recession in the United States, and 99% prepping for one in Europe.

Before he became The Conference Board’s CEO, Steve Odland ran Office Depot, and he said companies want to do everything they can to cut back on overhead before a recession hits.

Mark Zuckerberg is said to have told his staff to expect layoffs in the near future. And FedEx, which is seen as an economic bellwether, is closing stores and cutting back on deliveries as its CEO warns of a global recession.

The co- founder of The Carlyle Group and author of How to Invest: Masters on the Craft, David Rubenstein, doesn’t see a Great Recession.

People are still spending, and many of them aren’t overextended. On top of that, companies have sound balance sheets, and the jobs market is incredibly strong. The unemployment rate was lower in September.

Almost half of the people surveyed said they would hire more people and 85% of them said they’d boost pay by 3% or more.

“That’s unheard of from this group, going into a recession,” says Odland. “Typically, you would hear that they’re cutting back. That they aren’t going to raise wages.

When the economy is in a recession, there has been two quarters of negative growth in the United States. But it is actually up to a non-profit group not tied to the government, the National Bureau of Economic Research, to officially determine that the economy is, in fact, in a recession. And that determination could take months.

Wall Street’s most powerful investment bank is cautiously optimistic, even though investors and business leaders keep warning of a recession.

Goldman Sachs said the transition to more sustainable economic growth has already occurred and it looks durable. The bank thinks the domestic economy will grow 1% over the next year.

Goldman admits that there has been less progress on the price side. Inflation metrics have mostly stopped getting worse but they also haven’t really got any better either.

Jeff Bezos’s Warning on the Future of the Economy and the Theoretical Status of Space Travel in the Context of the American Dream

Amazon founder Jeff Bezos recently warned consumers and businesses they should consider postponing large purchases in the coming months as the global economy contends with a downturn and faces a possible recession.

The business leader offered his starkest advice yet on a faltering economy in an exclusive sit-down interview with CNN’s Chloe Melas at his Washington, DC, home.

According to the New York Times, Amazon will lay off a record 10,000 workers, the largest reduction in the company’s history. There was also a hiring freeze in its corporate workforce. The company has more employees in the United States than Walmart.

Last month, Bezos tweeted a warning to his followers on Twitter, recommending that they “batten down the hatches.” In an interview, Bezos said the advice was meant for both business owners and consumers.

Many may be feeling the pinch now, he added, but argued that as an optimist he believes the American Dream “is and will be even more attainable in the future” — projecting that within his own lifetime, space travel could become broadly accessible to the public.

Business leaders have been talking about the economy recently. Tesla

            (TSLA) and Twitter CEO Elon Musk last month admitted demand for Tesla

            (TSLA)s was “a little harder” to come by, and noted that Europe and China are experiencing a “recession of sorts.” Musk also warned that Tesla

            (TSLA) would fall short of its sales growth target.

The Fed Doesn’t Make It Up: The Manufacturing and Consumer Price Index Rises Year-Over-Year in the U.S.

Jones still thinks the Fed will raise rates by only half a point this week and may look to hike them just a quarter point in early 2023. But she conceded that the Fed is now sort of “making it up as they go along.”

Some traders think it’s a half-point increase. Federal funds futures on the Chicago Mercantile Exchange show an 80% probability of a half-point hike.

But it may not be that simple. The government reported Friday that a key measure of wholesale prices, the Producer Price Index, rose 7.4% over the past 12 months through November. That was a bit higher than the expected rate of 7.2% but a marked slowdown from the 8% increase through October.

The more widely watched Consumer Price Index data for November comes out Tuesday, just a day before the Fed announcement. Through October, the average price was up 7.7% year-over-year.

The other problem: The Fed’s rate hikes this year have had limited impact on the economy so far. Mortgage rates have spiked, but there is a strong job market, and this has hurt the housing market. Wages are growing, and consumers are still spending. That can only last a short time.

In September, the Fed projected that GDP would grow at a rate of 1.2%, an unemployment rate of 4.4% and an increase in personal consumption expenditures, the Fed’s preferred measure. It seems likely that the Fed will cut its GDP target and raise its expectations for the jobless rate and consumer prices.

A pivot or pause isn’t a cure-all for this market, according to a Truist Advisory Services co-chief investment officer. It is questionable whether rate cuts are too late. Recession risks are not as high.

The US economy isn’t in a recession yet. Is the American shopper tapped out? We’ll get a better sense of that Thursday after the government reports retail sales figures for November.

Consumers may have just gotten a head start on holiday shopping. Retail sales have been impacted by inflation because people have to spend more money on stuff.

Everybody has been discussing inflation this year. Going forward, it will be more about disinflation in 2023 or 2024,” said Arnaud Cosserat, CEO of Comgest Global Investors.

Source: https://www.cnn.com/2022/12/11/investing/stocks-week-ahead/index.html

What are the risks of avoiding a recession? A response to Wall Street’s frustration on the economy’s problems and the fears of JPM Morgan Chase

What is it about that that will affect investors? Quality consumer companies that have pricing power and can maintain their profit margins should be searched for by people. He said that the two stocks that were owned by his firm were L’Oréal and Hermes.

Friday’s agenda includes Eurozone purchasing mangers, retail sales in the UK, and earnings from a number of companies.

Mark Zandi, chief economist at Moody’s Analytics, said that a recession is a loss of faith. Consumers worry about losing a job and so pull back on spending, and business leaders worry their sales will decline and start laying off workers.

“You get into this kind of self-reinforcing negative cycle,” he told CNN’s Early Start. When sentiment is bad and starts to feed on itself, we are at risk of talking ourselves into one.

The word recession won’t be in my vocabulary because I don’t watch business shows or read the Wall Street Journal.

If everyone is so fearful about the recession, it might just mean that things will work out. They do not take huge risks. They don’t take on a lot of debt. They don’t go out and make big expansion moves (and) that may cool things off sufficiently to bring inflation down so that (the Fed) doesn’t have to raise rates as much and we actually — weirdly enough — avoid a recession.”

Jamie Dimon of JP Morgan Chase has been concerned for months about an impending recession, citing higher interest rates and overspending by consumers.

With inflation still at the highest level in a generation and central banks around the world continuing to raise interest rates, the risks for 2023 are undoubtedly high.

The next few years: What do we expect from the labor market and economic activity in the United States? How do we hoped to survive the recession?

He forecasts “just a moderate, steady slowing (in the job market) and economic activity as we move into next year. Hopefully we don’t lose faith and run for the bunker and go into recession.”