As Wall Street grapples with increasing signs of an economic downturn, concerns about a looming recession are becoming harder to ignore. Recent economic data presents a troubling scenario: declining stock prices, weak job growth, and falling commodity prices. The Federal Reserve's potential interest rate cut in September may arrive too late to prevent the U.S. economy from slipping into recession.
July's employment report was underwhelming, showing only 114,000 new jobs and an unemployment rate climbing to 4.3%. Federal Reserve Chair Jerome Powell has highlighted a new priority, balancing inflation control with an urgent need to address a weakening labor market. This shift in focus reflects broader global concerns, as weak earnings in the tech sector and escalating tensions in the Middle East add to market volatility.
The global picture is equally concerning. Europe's economies are showing cracks, with Germany's economy contracting by 0.1% in the second quarter. Meanwhile, China faces its own challenges, with the government committing to stronger support for economic growth in response to a series of disappointing indicators.
The Federal Reserve's path forward is fraught with uncertainty. Should Middle East tensions further escalate, oil prices could spike, complicating the Fed's plans for rate cuts. Markets are now caught between the hope for lower rates and the fear of a more pronounced recession. The coming months may necessitate a significant reassessment of monetary policy.
Headed? We are already knee deep in one. Look at inflation the last few years!
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Bob Murphy has a joke from the previous financial crisis:
"Not only are macroeconomists unable to predict recessions, they can't even post-dict them."
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For all the economists working the system, they dont really seem to help during the recessions. And they are happening more frequently.
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There were so many times in our macro theory courses when we would ask each other "Is this really what they're doing?"
It's such a vacuous field of study, just dressed up in fancy mathematics to keep people from seeing through it.
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Micro stuff was nearly banned in my times. Keynes was (still is) the god of these central planners
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Nowaday's they pretend their Keynesian nonsense is based in micro theory (micro-founded macro). Of course, they don't acknowledge any of the Social Choice Theory that proves the impossibility of aggregating preferences in any meaningful way.
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They dont want to open their eyes to their own failures.
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People seldom question their beliefs, when their paychecks depend on those beliefs.
I had micro and macro economics in college. I thought it was pretty useless. Just a bunch of fancy words people dont even need to learn.
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Its a lot of circles they run in. They keep making the same mistakes over and over again.
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"Are we heading for a recession?" ask professional macroeconomists, as we're several months into it.
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The private sector in Europe... for years
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European "economists":
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Looks similar to a dumpster fire!
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Not just EU, US, too.
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Months? In some areas, we have been there for years.
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It's our right as Americans to have no idea what's going on in the rest of the world.
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True.
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Even if the USA is in recession right now, they can kick the proverbial can down the road for some more time before everything visibly breaks, IMHO. It's hard to see this happen in the election year but 2025 can be rough... either a new conflict breaks out or they'll try to lock us inside once again...
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We are not heading for a recession; we're in it already.
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But not the global economy
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Looking forward what will happen next
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