Has the economy tanked?

amother

OP ↓

Sun, Aug 04 2024, 5:15 pm

It seems like almost overnight the posts on Imamother shifted from safe haven for $12,000 handbags to numerous posts from Imamothers who went from riches to rags or at least severely curtailed income streams. Has the economy really turned that fast?

Cheiny ↓

Sun, Aug 04 2024, 5:19 pm

amother OP wrote:

You’re basing that on 2 imas?
As far as the economy it’s in very bad shape. Economists are talking about a recession this weekend. Bad jobs numbers, high inflation, etc.

amother

↑ OP ↓

Sun, Aug 04 2024, 5:30 pm

Cheiny wrote:

You’re basing that on 2 imas?
As far as the economy it’s in very bad shape. Economists are talking about a recession this weekend. Bad jobs numbers, high inflation, etc.

I seem to recall several similar threads, not just these two, as well as some from imas who were let go from their jobs, all recent.

Bethany85

Sun, Aug 04 2024, 5:31 pm

I think the immediate post COVID economy was a mirage, which led to inflation. We’re not in a recession, but people are definitely tightening their belts, which is good as far as inflation is concerned. Also, the Frum economy itself is kind of unique compared to the general economy, sometimes for good and sometimes for bad.

amother

Topaz

Sun, Aug 04 2024, 5:52 pm

There are still many rich people buying ridiculously overpriced items but some have lost their ability to do so. Middle class people that used to have extra room in their budgets to splurge have been underwater financially for the past 2-3 years.

amother

Crimson ↓

Sun, Aug 04 2024, 5:55 pm

amother Topaz wrote:

A recession doesn't affect the very rich. It's the lower 80% that it's a problem for.

And yes, by almost every metric the US is in a recession.

amother

↑ OP ↓

Sun, Aug 04 2024, 9:41 pm

I went to two very high end restaurants in the Lakewood are over the last few weeks to celebrate special occasions the kind where you could drop $450 on a dinner if you don’t have a budget, and they were booked solid. We could barely get a reservation. I guess not all is bad.

amother

Chartreuse

Sun, Aug 04 2024, 9:43 pm

amother OP wrote:

You're assuming everyone there can actually afford what they are spending.

amother

↑ Crimson ↓

Mon, Aug 05 2024, 8:35 am

amother Brass wrote:

Yes stocks are tanking. But hopefully now the fed will finally cut interest rates and things can start improving.

We are in an inflationary environment. The fed will have to cut a little but it's dangerous. Normally the fed would cut when inflation is low. Inflation is very high now. Cutting rates will cause more inflation which is the exact reason they raised rates in the first place.

So should they cut, have inflation go higher and then raise? They are somewhat stuck here.

The truth is the economy was supposed to tank a few years ago during covid. But trillions of dollars in stimulus pushed it down the road. And here we are today.

We are in dangerous times.

amother

↑ Brass

Mon, Aug 05 2024, 8:38 am

A small cut will be enough to reassure investors and perhaps increase hiring but won’t really cause more spending by consumers. I’m actually confused because the last time a jobs report was strong the market also flipped out because inflation was still up. Now that the job market is cooling shouldn’t that mean inflation is cooling?

amother

↑ Crimson

Mon, Aug 05 2024, 8:46 am

amother Brass wrote:

For the last 2 years the market and economy was anticipating a "soft landing". Growth will slow slightly. Unemployment will rise slightly. Overall economic conditions will deteriorate slightly.

With this in mind the market was in a good is bad and bad is good scenario because it wanted the fed to lower rates. And in order to do that the economy had to show signs it was slowing a little. So when there would be a strong jobs number, the market would interpret that as the fed is less likely to cut and would tank. Weak data meant the fed is more likely to cut and cause a rally.

This all ended (for now) with the terrible manufacturing data released Thursday followed by the bad unemployment Friday. Now the market is far more concerned with a recession than it is happy about the fed cutting rates.

So going forward it is likely that bad data will be bad for the market and good will be good.

amother

Ballota

Mon, Aug 05 2024, 8:47 am

amother Crimson wrote:

By definition, a recession is no longer inflationary. If the economy shows signs of being in a recession, they will probably cut interest rates, very slowly.

To explain this better, hyperinflation is the first sign of a coming depression/recession because what comes up must come down. The faster inflation jumps the worse the recession will be.

What the people in charge are trying to do is called a soft landing. They want a slight recession but not enough to really hurt. So the slowed job growth is actually a good sign, and if they manage it well the economy can come out of this more easily. Unfortunately I don't have high hopes of them managing this so well... IMO if they wait for the numbers to be digested they are waiting too long to react. But we'll wait and see what happens.

ETA: Lol crimson we cross posted!