The State of the Economy Thread - “Falling inflation, rising growth give U.S. the world’s best recovery”

[FanboyOf91]

1 hour ago, sportjunkie07 said:

Why not just bail out the economy again if we run into a recession?

Divided government.

 

 

[PleaseBlitz]

57 minutes ago, Springfield said:

I generally agree with this.  Most, If not all, government spending benefits the economy.  Spending creates jobs, oversight creates jobs, regulations create jobs.

 

My industry, for example:

 

Same, except banking.

[twa]

Springy's gain is a lot of poor peoples loss though.

Regulations are a drain if excessive, just as are building restrictions and zoning.

[tshile]

2 minutes ago, twa said:

Springy's gain is a lot of poor peoples loss though.

Regulations are a drain if excessive, just as are building restrictions and zoning.

Eh

environment impact

long term severe repairs from not making smaller repairs 

 

I’m not saying you’re wrong I don’t know that it’s as open and shut as your post suggests. 

[twa]

9 minutes ago, tshile said:

Eh

environment impact

long term severe repairs from not making smaller repairs 

 

I’m not saying you’re wrong I don’t know that it’s as open and shut as your post suggests. 

 

The impact is minor relative to the costs, the strict emissions inspections are a joke......and generally do not prevent larger repair bills as a result.

 

they do drive people to buy new cars though.

 

 

[FanboyOf91]

 

[Springfield]

19 minutes ago, twa said:

 

The impact is minor relative to the costs, the strict emissions inspections are a joke......and generally do not prevent larger repair bills as a result.

 

they do drive people to buy new cars though.

 

 

 

There’s a cap on failed emissions... for the poor folks.  If you spend $735 (I think) towards a failed emissions repair and the car still isn’t fixed then the state can issue a waiver assuming the repairs were done at a state approved facility.

 

The fail rate is fairly low, maybe 5% of the cars tested.

 

And it’s of my opinion that emissions components on cars are important.  Wasn’t around in the 70’s with the massive smog issues around LA, but I surely wouldn’t want that in DC right now.

[twa]

I've had many over the years come to me in tears needing help over that BS, just $735 is one hell of a lot to some folk.

 

anywho...back to the coming doom.

 

 

 

 

[tshile]

https://equitablegrowth.org/the-federal-reserves-new-distributional-financial-accounts-provide-telling-data-on-growing-u-s-wealth-and-income-inequality/

 

look at the graphs

 

The bottom 50% of the economy is just getting back to where they were in 2000

 

Right now is not a good time for another recession. The lower ends of the economy are already pissed. 

[Springfield]

21 minutes ago, tshile said:

https://equitablegrowth.org/the-federal-reserves-new-distributional-financial-accounts-provide-telling-data-on-growing-u-s-wealth-and-income-inequality/

 

look at the graphs

 

The bottom 50% of the economy is just getting back to where they were in 2000

 

Right now is not a good time for another recession. The lower ends of the economy are already pissed. 

 

 

I can’t help but look at this graph and notice that the bottom 50% increased under democrat presidents and decreased under republican presidents.

 

The top 50% generally increased as the stock market did.

[TheGreatBuzz]

So assuming I believe a recession is coming.  Currently putting money above what employer matches into 401k that is set up for retiring at 55.

 

Would it be better to leave it how it is or lower my contribution and use that money to pay off other crap/put in savings?  Then increase my contribution again when I think we are at low point of the recession?

[twa]

long term is better to put in 401k....unless you think a total collapse is coming.

 

if you have high interest loans it is better to eliminate those, savings other than emergency funds are a waste at these rates

 

add

 on the other hand cash on hand during recessions can land you bargains and more flexibility.

do you want to protect or use it?

Edited August 23, 2019 by twa

[TheGreatBuzz]

8 minutes ago, twa said:

do you want to protect or use it?

 

Little of both.  Just sold our house so that is an additional chunk of change.  We don't have any debt with high interest.  

 

I'm thinking wait until I think we are around the bottom of the recession then buy a large chunk of land as an investment.  (Obviously location of that land would be strategically considered.)

[twa]

I'm a fan of land , but watch out for property tax money grabs from poorly run areas.

[Elessar78]

19 minutes ago, TheGreatBuzz said:

So assuming I believe a recession is coming.  Currently putting money above what employer matches into 401k that is set up for retiring at 55.

 

Would it be better to leave it how it is or lower my contribution and use that money to pay off other crap/put in savings?  Then increase my contribution again when I think we are at low point of the recession?

To the former, paying off debt is always a good plan.

 

To the latter, That’s called Market Timing and it rarely works (never really). Keep doing what you are doing and put in money at regular intervals-“dollar cost averaging”.

 

As I said in an earlier post, a recession means stocks go “on sale”. Best time to keep buying them through your retirement account.

 

[tshile]

Yeah stick to the long term strategy with you’re retirement. Adjustments should involve how long you have not market timing. Unless you know what you’re doing or have an advisor your trust. Most of us don’t really know what we’re doing. 

 

If you want to play open an account with someone with low fees. I treat that money the same way I treat loaning money to family and friends - don’t expect it back.  

[Larry]

1 hour ago, TheGreatBuzz said:

So assuming I believe a recession is coming.  Currently putting money above what employer matches into 401k that is set up for retiring at 55.

 

Would it be better to leave it how it is or lower my contribution and use that money to pay off other crap/put in savings?  Then increase my contribution again when I think we are at low point of the recession?

 

Larry's completely free financial advice, here.  

 

Disclaimer:  Larry is a 60 year old guy who has absolutely no retirement savings, who is assuming that he's going to have to work till at least age 70.  His investment history consists of buying like 4 different stocks, and has lost money on every one of them except his ine investment in Disney, which paid off really well.  

 

I'd say the first question is whether to put it in the 401K or not.  

 

One piece of advice I'd heard, which sounds really good to me, but I'm too stupid to do it myself is, you should have enough savings so that you can go 6 months without a paycheck.  If you put all your money in the 401K, then you get laid off or injured or some such, then you can't get at the money without paying really huge penalties.  

 

As to paying off debts?  Obviously "6 months without a paycheck" depends on how many payments you're making.  Does 6 months without a paycheck include 6 car payments?  

 

I'd think the next question is how do you want your 401K allocated.  Do you get to pick your own investments?  If you think a recession is coming, then you might want to be out of the stock market.  We all know that the stock market can lose 25=50% of it's value in a matter of weeks or a few months.  If you're money's in cash, then you can wait till the market falls 30%, then buy.  (The market also tends to recover quickly, after a recession.)  

[WelshSkinsFan]

401k savings are fine provided you are not close to retirement age and can afford to ride out any turbulence.  If you are within 5 years of retiring you should be moving to more conservative investments if you are self directing.  If you let your company invest for you then they typically will have funds for each year stretching out 30 to 40 years into the future so if you are retiring in 2022 then you will be in your companys 2022 fund and that will target increasingly conservative investments the close it gets to maturity.  If you are really concerned most plans offer a Stable fund which is what people generally do with their funds after retirement age.  A stable fund is mostly bonds and ultra safe investments and whilst it won't lose you money it won't make you money either.

 

If you are 5 or more years away from retiring you can genuinely expect to recover any losses and actually grow your funds as the markets recover, you just need patience.  I have a customer who lost a ton of money in 2008 on his investments and pulled everything out and put it in a savings account.  His $100,000 has earned him around $1,000 in interest in 10 years at the crappy interest rates savings account pay.  If he had left his money in the Nasdaq and Small Cap markets where it was in 2008 that $100,000 would have another 0 on the end of it by now.

[mcsluggo]

i've never tried to timethe markets before.... but about 2 months ago i changed my TSP allocation from 10% bongs to 50% ...... and dropped the 90% stocks (across S&P, small cap and International) down to 50%.     

------------------------------------edit --------------------------------------------------

 

uhm... that would be 50% bonds.... 

 

..the return on bongs has traditionally been abysmal 

Edited August 23, 2019 by mcsluggo

[China]

31 minutes ago, mcsluggo said:

i've never tried to timethe markets before.... but about 2 months ago i changed my TSP allocation from 10% bongs to 50% ...... and dropped the 90% stocks (across S&P, small cap and International) down to 50%.     

------------------------------------edit --------------------------------------------------

 

uhm... that would be 50% bonds.... 

 

..the return on bongs has traditionally been abysmal 

 

The marijuana market is saturated.  I looked into it a while back but all the companies were overpriced with little room for growth.  Apparently I was too late to the party.

[DCSaints_fan]

I put money into my 401k, but it seems impossible to insulate it from any stock market hits.  it doesn't seem like theres any easy way to tell the fund to move the money to bonds.

[PeterMP]

I'll point out that recession doesn't mean massive economic or stock market decline.  

 

Also, obviously after months of growth, eventually, we will see months where the economy doesn't grow.  And as you spread it over time, it becomes more likely (somebody said a recession in next 22 months).

 

I think it is likely @tshile is right that the yield curve is not really currently a good predictor of a recession, and we'll enter a recession (in the next 22 months) just due to random chance.

 

But I generally don't see a lot of evidence that we are sitting in 2007 as compared to 2008 or that we'll enter a recession in the next few months (3 or 4).

Edited August 23, 2019 by PeterMP

[DCSaints_fan]

21 hours ago, Simmsy said:

I have also heard the NOVA has a somewhat isolated economy, so those of us in the area might be ok or more ok than others. I just started a job doing metal roofing, it is starting to slow down. Has anyone else in the area noticed any slow down? 

 

DC/Metro economy is somewhat insulated because alot of it is driven by government spending, which never decreases.  It is affected for sure but it is nowhere near like what happens in other regions of the country.

[88Comrade2000]

We are long overdue for recession,  so it's time for one.

 

Too bad our current leader will probably make the recession a depression.

 

One thing about recessions and it's political impact. Even if the recession is technically over, if voters don't feel that the recession is over; that has an impact. See 1992.

Edited August 23, 2019 by Rdskns2000

[mcsluggo]

 

 

you SHOULD have to pay investors more to keep your money for 10 years than you do for 2 years.... if that inverts, then the yield curve is telling you exactly one thing... that investors believe that the 2 year prospects are not good.    there is nothing more or less than that.   

 

stock markets are much much more complicated 

 

but bonds are relatively straight forward.... so they give a much cleaner view of investor sentiment.    Also, as of last poll something like 3/4 of market economists (not me) think there will be a recession in the next 2 years (this poll was before the yield curve inversion , and before the Fed lowered interest rates)