re: Taking a poll: Who thinks and why:

I agree with Big_Sur except for the political analysis.

Move #2 out to 6 months and I'm at 1.5.

We're flirting heavily with stagflation right now. The economy is shedding zombie companies like old skin, meaning millions are slowly trickling out into the job-seeking market while (at least higher paying) jobs are shrinking. Credit card rates being so high means they will not be able to live as long on the backs of their cards while they look for another job. This means fewer goods and services being sold.

Gasoline prices being ~$3.50/gallon (nationally) just adds to that poor outlook. Meanwhile, the federal government is throwing a fit about being told they have to cut just the rate of their spending growth (as opposed to cutting total spending YoY) while also pushing green policies which make just about everything more expensive.

Addendum: Inverted yield curves are pretty good at predicting recessions. The length and strength of the current inversion is something we haven't seen since the late 70s. If we do not go through a recession, it will be the first time we've seen an inversion like this not lead into one.

For those choosing the stonks answer (#3), what is it that you see in the economy which makes you choose that option?

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I say #2. Consumer tapped out. 68% of GDP. Bear Stearns was a crack in the system, but somehow none of the banking issues we have now seem to draw concern. It's amazing.

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That's because it's just an entirely different situation. Banks in 2007 (and financial firms like BS) were stuffed with inordinate amounts of rated, securitized products that were essentially worthless AND lending against housing was completely out of control. Neither of those conditions exist today.

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Not 1 or 2. We are back in the Obama economy: Very low to non-existent GDP growth and low unemployment caused in large part by so many people not participating in the labor market. Only this time we have rampant inflation. And for many what wage growth there is doesn’t come close to keeping up. Don’t know if that answers your question.

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Good post.
I expect unemployment to worsen. But worsening over great numbers is not doom and gloom.
Maybe it will stabilize wage growth which will continue to push up inflation over the next several years in my opinion.

There are worse things in the world than the world's slowest and longest bull runs.
I'm libertarian/conservative, but I don't wish any ill will economically for political gain. "At any cost" is sickening and both sides do it.

In the camp of a recession. Pandemic funds still juicing the system. This is a bubble everything economy that has been pricked by the FED who is backed into a corner. If the FED reversed course, dolla is toast. Hyperinflation here we come!

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Meh, 1% GDP growth is pathetic.

ETA: And this is coming out of a so called pandemic where the economy was crippled.

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1% real is not nothing in a high inflation environment. I think 1.5-2 is possibly sustainable, but 3+ is a pure pipe dream.

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Commercial Real Estate - Everyone bought with ballon loans coming due with rents that can't support the new interest rates. 100% fricked.

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Yes, this is a legit source of losses that will have to work through the system.

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Residential Real Estate - Transaction levels are approaching lock down velocity with interest rates showing no sign of coming down. Only thing keeping it from crashing is low unemployment rates. If we hang on to low unemployment, we might can weather this storm.

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Meh. Way less levered than 2007, way higher lending standards have persisted since then. Lots of equity in general to support a correction. Nothing existential.

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Stock Market - Much harder to predict as people much smarter than myself frick up their predictions all the time. My personal guess is we have many more banks go under due to the high interest rate environment that spreads throughout the market.

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On the one hand, I don't see many bull rallies STARTING at 18X earnings. But on the other, nominal earnings are keeping pace (and beating) inflation, so no reason for a crash or anything.

We’re not entering a recession with the labor market strength today.

Maybe it starts in 3mos.. but I vote option D) 6-9mos.

Rates moving up and stupid valuations are suggesting recession isn’t right here, right now.

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We were already in a recession, until they "literally" changed the definition of what a recession was.

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Yep. This administration gets the dubious honors of being the first ever to have 2 different recessions without ever ending the first.

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Imo people are spending money they don’t really have because they are too vain to lower their standards of living to match their economic situation.

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Tale as old as time. Keeping up with the "Joneses" is a real thing. I'm sure there are plenty of money board posters who have crumbled to their significant other's request for an awful purchase.