Market Sentiment - Recession Length

[N02L84ER]

I would have thought that ACA subsidies were already the law of the land and baked into the cake so I'm not sure why that is considered "new" spending, but perhaps it wasn't fully funded in the past.

I think this funding is to keep the latest change that eliminated the PTC cliff for 2 years and set the maximum paid for ACA insurance to 8.5% of income.

 

[pb4uski]

Ah, I see.... so another band-aid on fixing the ACA cliff I guess.

 

[Gumby]

Rasing taxes during a recession. Increasing spending with high inflation. Picking economic winners and losers.

It is unwise regardless.

People can disagree with the law for any reason they want. But at least they should be accurate about what it contains. That's all I ask. It doesn't "spend $900B."

 

[misanman]

I don't know about this new legislation but what I've noticed in the past is that the 10 year financial analysis front loads the spending and backloads the savings. Also, I think the spending is never really "connected" to the savings such that the spending takes place in concrete terms while the savings are usually estimates for the "out years" that may or may not be realized. But, never mind, no one will come back to reconcile the data later.

 

[eytonxav]

I disagree. I look at each item individually. From what I have heard, the proposed corporate minimum tax will prevent corporations from using certain tax credits to totally offset the taxes that they owe... so effectively scaling back corporate welfare. I'll admit that it is a mystery to me how prescription drug reform results in revenue... I need to learn more about that one. I'm fine with better IRS enforcement... not really a revenue enhancement that will reduce economic activity. And I have long favored reforms to the carried interest loophole and it is chump change in the whole scheme of things. With all the adverse weather events that we are experiencing to improve our efforts at climate change initiatives seems sensible to me. I would have thought that ACA subsidies were already the law of the land and baked into the cake so I'm not sure why that is considered "new" spending, but perhaps it wasn't fully funded in the past.

Also remember that each of these numbers are 10 year numbers and who knows how it is loaded to near-term years vs further out and that has a significant impact on any "recessionary" impact. The enhanced IRS enforcement efforts will take time because they don't currently have the staff to do that work. The reality may be that the climate change spending is actually loaded to later years to the extent that those projects take time and planning, so the actual spending may be well after the current recession is over.

IOW, its complicated.

The projected revenue is over 10 years, right? Do you think the spending will also be over 10 years or are we going to see more short term money printing to add to the mess we already have? Anyway increasing corporate taxes to minimum 15% might or might not yield what they claim and further corporations will most likely pass on cost to end customers. Not a good recipe for inflation fighting in my opinion. They should have termed this the inflation fueling bill.

 

[38Chevy454]

The projected revenue is over 10 years, right? Do you think the spending will also be over 10 years or are we going to see more short term money printing to add to the mess we already have? Anyway increasing corporate taxes to minimum 15% might or might not yield what they claim and further corporations will most likely pass on cost to end customers. Not a good recipe for inflation fighting in my opinion. They should have termed this the inflation fueling bill.

Good points. Especially that raising corporate taxes is a pass through to the consumer. The bill is political posturing and influencing the general masses low financial understanding for votes with false information. I do think the bill, if passed, will not help curb inflation, but rather will contribute to the problem.

IMHO inflation is the big problem we have now. Increased government spending only makes it worse. There is an old saying "You can't spend your way to prosperity", and it applies here.

 

[FLJim]

IMHO inflation is the big problem we have now. Increased government spending only makes it worse. There is an old saying "You can't spend your way to prosperity", and it applies here.

Totally agree. And another quote, "You can't get out of debt by borrowing more money."

 

[pb4uski]

The projected revenue is over 10 years, right? Do you think the spending will also be over 10 years or are we going to see more short term money printing to add to the mess we already have? Anyway increasing corporate taxes to minimum 15% might or might not yield what they claim and further corporations will most likely pass on cost to end customers. Not a good recipe for inflation fighting in my opinion. They should have termed this the inflation fueling bill.

Of course the spending is over 10 years. Besides much of the spending will probably have a hard time getting done within the next two years because of planning, permitting, contracting, etc. all of which take time.

The corporate tax increases will more realistically be borne by shareholders due to competition with competitors who are not subject to the tax increases.... remember, the "tax increase" is limiting the utilization of tax credits for companies that currently totally offset their tax with tax credits.

 

[MichaelB]

This thread is about recession and isn’t the proper place to discuss the Inflation Reduction Act. A new thread was created for that purpose, here https://www.early-retirement.org/fo...duction-act-of-2022-a-114831.html#post2808682

 

[almost there]

Recession? What Recession?

Strangest times ever...
Historically, it would be talked about by MSM, all news outlets etc.
This time? Lets pretend the last 2 quarters didn't exist.
Maybe nobody will notice... Shhhh

 

[jazz4cash]

Strangest times ever...

Historically, it would be talked about by MSM, all news outlets etc.

This time? Lets pretend the last 2 quarters didn't exist.

Maybe nobody will notice... Shhhh

It’s very prominently discussed on every news outlet I’m using.

 

[Bigdawg]

It’s very prominently discussed on every news outlet I’m using.

^Talked about? yes. Referred to as recession? Not by the main stream media.

 

[jazz4cash]

^Talked about? yes. Referred to as recession? Not by the main stream media.

No, the R word is being used prominently on the channels I watch. Radio, newspaper, websites too. It’s an ongoing debate but not really a big deal unless it goes deep and long.

 

[pb4uski]

Or unless you have some sort of political agenda to hone. It seems that those who are beside themselves because 2 consecutive quarters of economic decline isn't being widely referred to as a recession are those who are eager to make some political statement.

Get over it.

 

[Montecfo]

I disagree. I look at each item individually. From what I have heard, the proposed corporate minimum tax will prevent corporations from using certain tax credits to totally offset the taxes that they owe... so effectively scaling back corporate welfare. I'll admit that it is a mystery to me how prescription drug reform results in revenue... I need to learn more about that one. I'm fine with better IRS enforcement... not really a revenue enhancement that will reduce economic activity. And I have long favored reforms to the carried interest loophole and it is chump change in the whole scheme of things. With all the adverse weather events that we are experiencing to improve our efforts at climate change initiatives seems sensible to me. I would have thought that ACA subsidies were already the law of the land and baked into the cake so I'm not sure why that is considered "new" spending, but perhaps it wasn't fully funded in the past.



Also remember that each of these numbers are 10 year numbers and who knows how it is loaded to near-term years vs further out and that has a significant impact on any "recessionary" impact. The enhanced IRS enforcement efforts will take time because they don't currently have the staff to do that work. The reality may be that the climate change spending is actually loaded to later years to the extent that those projects take time and planning, so the actual spending may be well after the current recession is over.



IOW, its complicated.

Taxing corporations is an indirect tax on consumers. Also, when you overtax businesses, they flee to lower cost jurisdictions. We seem to have forgotten about that since the last round of tax reform. Taxing corporations is a false economy.

The IRS enforcement revenue is a gimmick.

These government programs will not change the weather, and "green energy" after 50+years should not need a special subsidy. This is throwing money away and is the corporate welfare you seemed to dislike.

I agree it is complicated but this overspending is just what we do not need.

I do appreciate your views as always.

 

[corn18]

Great news. Whatever my friend. I actually don't give a tinkers damn what people call it, it is definitely a slowdown. Whether its a recession or not doesn't impact me one iota but until NBER makes the call it isn't a recession... just the way it is.

And while we're waiting for them to call it in two years, the fact remains that the economy has shrunk two quarters in a row and inflation is @ 9%. People/governments should be acting accordingly (with or without a name for it).

 

[Dash man]

I thought a recession was when your neighbor lost his job, and a depression is when you lose your job. What is it when you’re retired and the neighbors on each side of you are also retired?

 

[kgtest]

Me too! In fact, to me that's the "official definition" of a recession for the nit-pickers to use.

But in my mind, the real, actual recession started back at the beginning of the year. That's when I definitely got that unmistakable sense of foreboding, and certainty that we were/are in the beginning stages of a recession.

I agree.

 

[kgtest]

I thought a recession was when your neighbor lost his job, and a depression is when you lose your job. What is it when you’re retired and the neighbors on each side of you are also retired?

I noticed a few neighbors started commuting with the more economical vehicles and spouses who drive less are stuck with the gas guzzlers in the household. TO me that was a sign that the tides rolled out. I live in an interesting neighborhood though because on the same street I have neighbors complaining about the price of groceries and gas, while other neighbors with 3 vehicles take months long international trips with their family. Just goes to show that it effects us all differently.

 

[Chuckanut]

And while we're waiting for them to call it in two years, the fact remains that the economy has shrunk two quarters in a row and inflation is @ 9%. People/governments should be acting accordingly (with or without a name for it).

And people are. Doing without, finding lower cost alternatives, and adjusting daily lives are already happening.

That Invisible Hand has been busy for many months.

 

[DJRR]

Just an interesting chart/article as to why things are not clear cut https://finance.yahoo.com/news/recession-economy-chart-explains-july-2022-153839171.html

For me we won't have a recession with consumer balance sheets and employment strong. My State is getting another "inflation" () stimulus check. Also looks like social security will get a 10%+ bump in January. That will be a large stimulus if the Fed can get inflation down to the 4-5% range by end of year. My guess is a year from now will look a lot worse if trends persist and employment falls.

 

[Markola]

^^^^ +1. There is a 1.8% unemployment rate in my state. No recession here.

 

[jazz4cash]

I thought a recession was when your neighbor lost his job, and a depression is when you lose your job. What is it when you’re retired and the neighbors on each side of you are also retired?

It’s Bliss.

 

[Koolau]

Great news. Whatever my friend. I actually don't give a tinkers damn what people call it, it is definitely a slowdown. Whether its a recession or not doesn't impact me one iota but until NBER makes the call it isn't a recession... just the way it is.

I never heard of NBER until the last week. No one ever mentioned NBER during the last dozen or so R-words. No one had a problem when previous administrations had an R-word on their watch. All the news outlets used the "old" definition of 2 quarters of negative GDP. They gladly screamed the R-word and no one ever denied it before. I think this one is on the folks pushing NBER as authority, not those using the old, established definition. YMMV

 

[braumeister]

Thanks for the interesting discussion.