Posted on May 25, 2024
Why Were Economists Wrong About a 2023 Recession?
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$34 Trillion of US Debt - Is It A Problem?
Our National Debt moves at an upward trend so fast that if I write the number seconds later it’s outdated. The current debt is $34 Trillion and climbing.[1]
Why are there so many Dooms Sayers forecasting financial disaster? [6][7][8]
Three major problems leap off the pages of media and government officials.
1. Unveiling the Secrets: What Has Kept the US Economy Recession-Free?
2. Navigating Uncertainty: Risks Facing the US Economy and Bond Market
3. The Debate: Are S Treasuries and Equities Worth the Investment?
WHAT COULD GO WRONG? - HOW COULD THE US ECONOMY STUMBLE?
Currently, the US Economy stands above the European Union, China, Japan, and India in the order mentioned above. The US will account for 26.3% of the world's gross domestic product (GDP) in 2024.
So why mixed messages? The Wall Street Journal wrote that America’s Economy is #1 and That means trouble.[2]
Why are there Dooms Day reports popping up in the media?
The scary statistics from the Congressional Budget Office (CBP) The projections for 2024 are as follows:
Budget deficit = $1.6 Trillion
Debt held by the public = 99% of GDP.
Outlays = $6.5 Trillion (spending)
Revenues = $4.9 Trillion
Meaning every 4th dollar, the federal government spends has to be borrowed. The forecast does not show much improvement.
By 2034 the US will spend 116% of the revenue collected. This will require higher interest rates causing inflation and a probable Financial Crisis as history has shown us.[3]
This will place a severe strain on the federal budget and will create volatility in the bond and equity markets. The doom is that the debt pile is a risk we will have to live within the foreseeable future.
Dysfunctional Government – Doom Sayer 2
Instead of a functioning appropriations process, Congress has resorted to massive omnibus appropriations bills and continuing resolutions that carry overspending from the previous year.[4][5] This results in facing government shutdowns and the jitters from businesses and the population.
Disruption of the US-Led World Order – Doom Sayer 3
(wars and/or economic globalization)
We have recovered from the pandemic and the International Monetary Fund (IMF) is forecasting a 3% increase in goods and services for 2024, and 2025. This comes as a pleasant surprise as we look at the problems and potential problems of Ukraine, Russia, Iran, North Korea, Taiwan, and China. This will be a test of success in the foreseeable future.
Are the Doom Sayers, right?
Although the accuracy of the information is not in dispute the United States of America is currently in a favorable position. One of two events can take place, let the current trend take place or take a leadership role to maintain stability and help the world be a better place.
To be clear, the Doom events do not have to get worse if the US will take a leadership role in making the necessary changes.
What should we do as individuals to mitigate the Dooms Sayers risk? From the micro perspective perform your civic duties.
Be mindful of your financial portfolios. Your financial portfolio includes your home so interest rates are part of that equation. Equities are still on an upward trend, but the market is still trying to take a broad approach. Until it does it’s a stock pickers market based on fundamentals. Think about including T-bills. If we fail to fix the current situation at the macro level, interest rates will rise, making T-bills a good choice as part of your cash portfolio.
Citations
1. https://www.usdebtclock.org/
2. https://www.wsj.com/economy/global/us-economy-strongest-world-imf-projections-8e707514
3. https://crsreports.congress.gov/product/pdf/R/R47479
4. https://www.budget.senate.gov/chairman/newsroom/press/enzi-healthy-budget-process-strengthens-democracy
5. https://www.washingtontimes.com/news/2016/jul/12/mike-enzi-bipartisan-overhaul-of-senate-budget-pro/
6. https://www.usbank.com/investing/financial-perspectives/market-news/economic-recovery-status.html
7. https://www.amgnational.com/why-were-economists-wrong-about-a-2023-recession/
8. https://www.theatlantic.com/ideas/archive/2023/03/us-economy-recession-interest-rates-inflation/673238/
Our National Debt moves at an upward trend so fast that if I write the number seconds later it’s outdated. The current debt is $34 Trillion and climbing.[1]
Why are there so many Dooms Sayers forecasting financial disaster? [6][7][8]
Three major problems leap off the pages of media and government officials.
1. Unveiling the Secrets: What Has Kept the US Economy Recession-Free?
2. Navigating Uncertainty: Risks Facing the US Economy and Bond Market
3. The Debate: Are S Treasuries and Equities Worth the Investment?
WHAT COULD GO WRONG? - HOW COULD THE US ECONOMY STUMBLE?
Currently, the US Economy stands above the European Union, China, Japan, and India in the order mentioned above. The US will account for 26.3% of the world's gross domestic product (GDP) in 2024.
So why mixed messages? The Wall Street Journal wrote that America’s Economy is #1 and That means trouble.[2]
Why are there Dooms Day reports popping up in the media?
The scary statistics from the Congressional Budget Office (CBP) The projections for 2024 are as follows:
Budget deficit = $1.6 Trillion
Debt held by the public = 99% of GDP.
Outlays = $6.5 Trillion (spending)
Revenues = $4.9 Trillion
Meaning every 4th dollar, the federal government spends has to be borrowed. The forecast does not show much improvement.
By 2034 the US will spend 116% of the revenue collected. This will require higher interest rates causing inflation and a probable Financial Crisis as history has shown us.[3]
This will place a severe strain on the federal budget and will create volatility in the bond and equity markets. The doom is that the debt pile is a risk we will have to live within the foreseeable future.
Dysfunctional Government – Doom Sayer 2
Instead of a functioning appropriations process, Congress has resorted to massive omnibus appropriations bills and continuing resolutions that carry overspending from the previous year.[4][5] This results in facing government shutdowns and the jitters from businesses and the population.
Disruption of the US-Led World Order – Doom Sayer 3
(wars and/or economic globalization)
We have recovered from the pandemic and the International Monetary Fund (IMF) is forecasting a 3% increase in goods and services for 2024, and 2025. This comes as a pleasant surprise as we look at the problems and potential problems of Ukraine, Russia, Iran, North Korea, Taiwan, and China. This will be a test of success in the foreseeable future.
Are the Doom Sayers, right?
Although the accuracy of the information is not in dispute the United States of America is currently in a favorable position. One of two events can take place, let the current trend take place or take a leadership role to maintain stability and help the world be a better place.
To be clear, the Doom events do not have to get worse if the US will take a leadership role in making the necessary changes.
What should we do as individuals to mitigate the Dooms Sayers risk? From the micro perspective perform your civic duties.
Be mindful of your financial portfolios. Your financial portfolio includes your home so interest rates are part of that equation. Equities are still on an upward trend, but the market is still trying to take a broad approach. Until it does it’s a stock pickers market based on fundamentals. Think about including T-bills. If we fail to fix the current situation at the macro level, interest rates will rise, making T-bills a good choice as part of your cash portfolio.
Citations
1. https://www.usdebtclock.org/
2. https://www.wsj.com/economy/global/us-economy-strongest-world-imf-projections-8e707514
3. https://crsreports.congress.gov/product/pdf/R/R47479
4. https://www.budget.senate.gov/chairman/newsroom/press/enzi-healthy-budget-process-strengthens-democracy
5. https://www.washingtontimes.com/news/2016/jul/12/mike-enzi-bipartisan-overhaul-of-senate-budget-pro/
6. https://www.usbank.com/investing/financial-perspectives/market-news/economic-recovery-status.html
7. https://www.amgnational.com/why-were-economists-wrong-about-a-2023-recession/
8. https://www.theatlantic.com/ideas/archive/2023/03/us-economy-recession-interest-rates-inflation/673238/
Why Were Economists Wrong About a 2023 Recession?
Posted from amgnational.com
Economy
Budget
Congress
Personal Finance
Posted 4 mo ago
Responses: 5
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Let me point out the fallacy of all this economic forecasting.
Since Bill Clinton, the Economy has slowly been splitting into the financialization side and the side of the economy that either produces a product or provides a need service. What as really happened is that the financial side has just spent several decades swindling the working class, then getting them to foot the bill when it goes bad. That's what happening again.
Even as far back as 2008, the Bailouts did not save the economy, it rewarded those that had profited for the Housing Debacle by handing them free money and that continues today. Quantitative Easing is just that, print free money and then letting the financial side charge you to use it.
Since Bill Clinton, the Economy has slowly been splitting into the financialization side and the side of the economy that either produces a product or provides a need service. What as really happened is that the financial side has just spent several decades swindling the working class, then getting them to foot the bill when it goes bad. That's what happening again.
Even as far back as 2008, the Bailouts did not save the economy, it rewarded those that had profited for the Housing Debacle by handing them free money and that continues today. Quantitative Easing is just that, print free money and then letting the financial side charge you to use it.
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SPC Jeff Daley, PhD
CPT Lawrence Cable - Respectfully, the economic forecasting is not in debate in this article. It's included as facts in the article. The article expresses our economic history, where we are today, and where we could be. No fallacy included, backed by facts and supported with relevant citations.
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CPT Lawrence Cable
SPC Jeff Daley, PhD - Oh, numbers. Decrease om median income adjusted; https://fred.stlouisfed.org/series/MEHOINUSA672N
U6 Unemployment Rate (a more realistic look at unemployment) : https://fred.stlouisfed.org/series/u6rate
Median home prices. https://fred.stlouisfed.org/series/MSPUS
Historic Fuel Prices: https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=emm_epmr_pte_nus_dpg&f=m
More on Income by quintile. https://www.advisorperspectives.com/dshort/updates/2023/09/13/u-s-household-incomes-a-50-year-perspective
Used Car Sales https://fred.stlouisfed.org/graph/?graph_id=970099#:~:text=Domestic%20auto%20production%20is%20defined%20as,all%20autos%20assembled%20in%20the%20U.S.
So a 5%+decrease in the Median income in the bottom three Quintiles, one out of 14 unemployed (I really don't believe this number, too low, but it serves my point), while the cost of fuel is up 33%, home prices up 23% (higher in my area), used car market has tanked, and I didn't even try to calculate grocery prices (Up) or healthcare cost (Way Up).
What is the real rate of inflation, 15%,20% or more?
That is not the signs of a healthy economy.
And they wonder why people vote for Trump.
U6 Unemployment Rate (a more realistic look at unemployment) : https://fred.stlouisfed.org/series/u6rate
Median home prices. https://fred.stlouisfed.org/series/MSPUS
Historic Fuel Prices: https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=emm_epmr_pte_nus_dpg&f=m
More on Income by quintile. https://www.advisorperspectives.com/dshort/updates/2023/09/13/u-s-household-incomes-a-50-year-perspective
Used Car Sales https://fred.stlouisfed.org/graph/?graph_id=970099#:~:text=Domestic%20auto%20production%20is%20defined%20as,all%20autos%20assembled%20in%20the%20U.S.
So a 5%+decrease in the Median income in the bottom three Quintiles, one out of 14 unemployed (I really don't believe this number, too low, but it serves my point), while the cost of fuel is up 33%, home prices up 23% (higher in my area), used car market has tanked, and I didn't even try to calculate grocery prices (Up) or healthcare cost (Way Up).
What is the real rate of inflation, 15%,20% or more?
That is not the signs of a healthy economy.
And they wonder why people vote for Trump.
Real Median Household Income in the United States
View the inflation-adjusted value of the 50th percentile of the U.S. income distribution, as estimated by the Census Bureau.
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CPT Lawrence Cable
SPC Jeff Daley, PhD - And a source even more pessimistic than me. https://internationalman.com/articles/david-stockman-on-the-continual-rise-in-the-cost-of-living-and-why-the-fed-has-no-shame/
David Stockman on the Continual Rise in the Cost of Living… And Why the Fed has No Shame
The US economy needs a lot more relief from its recent inflationary pounding than the Fed’s guesstimated rate of slowdown in the forward year rise of the price level.
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