Could It Have Been Better to Have Had a Recession?

[MercyMe]

I'm probably speaking way above my own intelligence with this question, but it popped into my caveman head today and won't leave.

It seems to me like we're past the point at which the next recession will be mild and short. I think we're in for a doozy sometime. So I then wondered if the Fed's actions for a soft landing (along with everything else it does) has set up the economy for a harder fall... whenever it may happen. Perhaps a harder fall than just having let a moderate recession take place lat year and then responding to it. I know that would have meant hardship for many people by way of unemployment and reduced investment values. And I don't want anyone harmed.

Go gentle on me if I'm way out of line. I dare not post this on the other forum!

 

[flyingaway]

Be careful what you wish for.

 

[Koolau]

Predicting a recession is so difficult. My guess is that we'll get an economic "honeymoon" for a while. Then, who knows.

I've kinda quit worrying too much about it as my plan runs out at age 99 and that's only 21 years from now. I think I have enough to weather most such storms but YMMV.

 

[audreyh1]

They can’t engineer/conduct a recession that precisely.

 

[Koolau]

They can’t engineer/conduct a recession that precisely.

Yeah, and we don't even know who "they" are.

 

[Stormy Kromer]

My parents and the people I grew up around lived through the Great Depression. Many of them thought the next big Depression was overdue and lived like it was coming tomorrow. Some never dared to borrow money to buy a home or farm or start a business, because the next depression was over due. They were right. They lived their lives like it was a depression even though there wasn't one.

 

[Koolau]

My parents and the people I grew up around lived through the Great Depression. Many of them thought the next big Depression was overdue and lived like it was coming tomorrow. Some never dared to borrow money to buy a home or farm or start a business, because the next depression was over due. They were right. They lived their lives like it was a depression even though there wasn't one.

My mom and dad were a bit that way. In any case, they certainly NEVER got over the Great Depression.

 

[TheWizard]

I'm probably speaking way above my own intelligence with this question, but it popped into my caveman head today and won't leave.

It seems to me like we're past the point at which the next recession will be mild and short. I think we're in for a doozy sometime. So I then wondered if the Fed's actions for a soft landing (along with everything else it does) has set up the economy for a harder fall... whenever it may happen. Perhaps a harder fall than just having let a moderate recession take place lat year and then responding to it. I know that would have meant hardship for many people by way of unemployment and reduced investment values. And I don't want anyone harmed.

Go gentle on me if I'm way out of line. I dare not post this on the other forum!

Good idea not to post this on the Bogleheads forum. They tend to be nasty.
Good that you're on this forum...

 

[TheWizard]

My mom and dad were a bit that way. In any case, they certainly NEVER got over the Great Depression.

My dad, born 1921, was similar.
We threw out a ton of junk that he saved for dubious reasons...

 

[target2019]

Will we have another period like the Great Depression?

 

[2HOTinPHX]

I'm probably speaking way above my own intelligence with this question, but it popped into my caveman head today and won't leave.

It seems to me like we're past the point at which the next recession will be mild and short. I think we're in for a doozy sometime. So I then wondered if the Fed's actions for a soft landing (along with everything else it does) has set up the economy for a harder fall... whenever it may happen. Perhaps a harder fall than just having let a moderate recession take place lat year and then responding to it. I know that would have meant hardship for many people by way of unemployment and reduced investment values. And I don't want anyone harmed.

Go gentle on me if I'm way out of line. I dare not post this on the other forum!

Why do you think we are in for a doozy?

 

[audreyh1]

2000 to 2002 was a pretty bad recession.

2007 to 2009 was very bad with a major financial crisis, and was even called the Great Recession thereafter. It was followed by at least half a decade of weak global growth and close to deflation at times.

 

[Koolau]

My dad, born 1921, was similar.
We threw out a ton of junk that he saved for dubious reasons...

Dad kept a huge cabinet full of canned goods. He had experienced actual starvation at one time. He never wanted his kids to experience that. We didn't have much when I grew up but we always had food.

 

[RetiredHappy]

We don't NEED a recession. We cannot predict when one will take place. If I have to guess, I would say it will be 10 years out.

 

[pb4uski]

Why do you think we are in for a doozy?

Yeah, a slowdown perhaps, but a doozy? I don't get it.

 

[Koolau]

Yeah, a slowdown perhaps, but a doozy? I don't get it.

Scariest thing to me is that someday - hopefully not for a long time - someone (some country - or several) will decide they don't want to buy our debt any more or hold our dollars. That could be ugly. Til then, I think we'll muddle through most problems okay. YMMV

 

[GrayHare]

The solution applied to every recession has been more gov't borrowing. Eventually that well will run dry and then The Doozy will occur.. Does that happen this decade? This century? Who knows?

 

[RetiredHappy]

2000 to 2002 was a pretty bad recession.

2007 to 2009 was very bad with a major financial crisis, and was even called the Great Recession thereafter. It was followed by at least half a decade of weak global growth and close to deflation at times.

Both these events had major triggers.

2000 to 2002 was the dot come bust. It came at a time when these high tech companies focused on burn rates as opposed to actually making money. Start ups were making hand over fist when they were bought out. Burn rates meant heavy losses without a business model that actually made money.

2007 to 2009 was caused by bad mortgage loans and being repackaged and resold and many financial institutions got caught when real estate market came down like a house of cards.

AI and crypto are generating alot of the gains in wealth. I am anti crypto and believe that it will collapse one day. I don't think it affects most of us and the overall economy. AI is the scary one. Are AI stocks way over valued? Will it continue to grow the economy? What I do know is that AI is real. It is very different from the burn rate that was used to measure the value of the tech company before dot.com bust.

 

[JackJester]

I have this quote saved in my retirement spreadsheet. Not sure of the source, maybe Investopedia. But basically it reinforces the notion to not panic when a bear occurs since most likely it won't be longer than a year. So worrying about when a recession might occur or how long it will last is a fools errand.
"Over the past 69 years, there have been 13 bear markets, lasting an average of 13 months and declining a total of 25.8% before recovering. By contrast, the 14 bull markets since 1949 have lasted roughly 46 months on balance, each growing an average of 125.3%"

 

[2HOTinPHX]

Both these events had major triggers.

2000 to 2002 was the dot come bust. It came at a time when these high tech companies focused on burn rates as opposed to actually making money. Start ups were making hand over fist when they were bought out. Burn rates meant heavy losses without a business model that actually made money.

2007 to 2009 was caused by bad mortgage loans and being repackaged and resold and many financial institutions got caught when real estate market came down like a house on cards.

AI and crypto are generating alot of the gains in wealth. I am anti crypto and believe that it will collapse one day. I don't think it affects most of us and the overall economy. AI is the scary one. Are AI stocks way over valued? Will it continue to grow the economy? What I do know is that AI is real. It is very different from the burn rate that was used to measure the value of the tech company before dot.com bust.

Will crypto be the next "To big to fail" thing?

 

[RetiredHappy]

Will crypto be the next "To big to fail" thing?

I think so, or rather it has to be so. But will it affect the overall economy to cause a recession? I have to believe that it won't.

 

[GrayHare]

Mild receessions are good to clear out marginal operations, like businesses that don't serve much purpose. That allows those resources to be reallocated where they can be put to better use.

 

[audreyh1]

Both these events had major triggers.

2000 to 2002 was the dot come bust. It came at a time when these high tech companies focused on burn rates as opposed to actually making money. Start ups were making hand over fist when they were bought out. Burn rates meant heavy losses without a business model that actually made money.

2007 to 2009 was caused by bad mortgage loans and being repackaged and resold and many financial institutions got caught when real estate market came down like a house of cards.

AI and crypto are generating alot of the gains in wealth. I am anti crypto and believe that it will collapse one day. I don't think it affects most of us and the overall economy. AI is the scary one. Are AI stocks way over valued? Will it continue to grow the economy? What I do know is that AI is real. It is very different from the burn rate that was used to measure the value of the tech company before dot.com bust.

There was a little more to the 2000-2002 recession than the dot com bust. The Fed had raised interest rates in 1999 and oil prices increased in late 1999. Both of these things put a lot of pressure on the economy, so it was vulnerable to a drop.

And the recession/bear market was extended by several corporate governance scandals in 2002 that spooked investors, Enron (2001), Tyco and Worldcom.

 

[Qs Laptop]

I'm probably speaking way above my own intelligence with this question, but it popped into my caveman head today and won't leave.

It seems to me like we're past the point at which the next recession will be mild and short. I think we're in for a doozy sometime. So I then wondered if the Fed's actions for a soft landing (along with everything else it does) has set up the economy for a harder fall... whenever it may happen. Perhaps a harder fall than just having let a moderate recession take place lat year and then responding to it. I know that would have meant hardship for many people by way of unemployment and reduced investment values. And I don't want anyone harmed.

Go gentle on me if I'm way out of line. I dare not post this on the other forum!

You are saying the Fed should not have done their job and averted a recession recently because you believe a moderate recession would have inoculated the US economy against the big bad recession that is obviously overdue.

You said this harder fall is coming but you don't know when. But we should have suffered just in case...

Honestly, where do these crazy ideas come from?

 

[Sunset]

Might not be any recession.
Could be that the market just remains in a narrow range for the next decade. Individual companies will rise, but some will fall and overall it will stay the same.

Nobody knows.

Could we have Depression, it would be triggered by some catastrophic event. Examples would be Yellowstone erupting or a Nuclear war, or a giant (relatively, but not actually all that big) meteorite hitting earth.