re: Why are there multiple articles regarding an impending crash of the markets?

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You have to make more positive positions than just "some stuff could go down in the next 15 years!!!".

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That's a bit different from your last demand.

I've stated in other threads that Q4-2023/Q1-2024 is likely when we see consumers reach the end of their credit rope (especially if food, shelter and energy continue to remain high).

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So you're saying we're not in a bubble yet?

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Poor word choice on my part. We're in a credit bubble and we're headed toward it popping (also something I've posted in other threads).

Are you seeing our economy as something different?

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And then what, exactly, happens?

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A consumer credit bubble? What happens when it pops?

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We have an environment where inflation is still rising, wages are still being outpaced and consumers have so tapped out their credit that delinquencies have started to rise (also add in student loan repayments for some). The only thing that can happen as consumer costs rise is that economic growth slows. The Fed can't spur growth without risking making inflation worse so the most likely outcome is stagflation leading to a recession.

That environment is housed within the greater sphere of the US dollar being burdened by ever-growing debt. In just over 5 years the federal government's spending has doubled what it takes just to service the debt (FAR outpacing revenue growth). As that amount grows, investments in US debt will falter unless returns on those securities climb even higher than they already are (meaning taking even more to service the debt).

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I don't see a corporate credit bubble.

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I agree. Revenues for many businesses have been positive, but what are they seeing when they adjust for inflation? (sincere question)

Along with that, how much of that growth has been from consumers living off their credit cards? If it's enough (whatever that amount may be), the consumer bubble popping will impact businesses regardless of if there's a corporate bubble or not.

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For households...maybe? People keep citing this credit card balance number, but it's only back to where it was (absolute dollars) in 2008 or so

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By "absolute dollars" do you mean dollars adjusted for inflation?

When looking at credit card debt then adjusting that for inflation, today's $1.019T of credit card debt would be $724B in Sept 2008 dollars. By comparison, credit card debt at the end of Sept 2008 was "only" $366B, so when adjusted for inflation our current debt is around 2x what it was in 2008.

It's not much different if we look at average household debt (that site is handy because it breaks housing off so you can see the how non-housing debt began growing faster than housing debt starting around 2013 or so).

When looking at real wages, we see they have increased only by ~10%.

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I invest in - and thus speak to - dozens of small private companies around the country dealing in super boring "real" sectors of the economy (i.e. not "tech"). And the picture on the ground is of staggeringly strong industrial demand with no end in sight.

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It seems like you're looking at the economy from the business end while I'm looking at it from the consumer end.

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Bard

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I think we should clarify if we're discussing "impending crash of the markets" or "impending recession". Would you please clarify?

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We have an environment where inflation is still rising,

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Do we?

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That environment is housed within the greater sphere of the US dollar being burdened by ever-growing debt. In just over 5 years the federal government's spending has doubled what it takes just to service the debt (FAR outpacing revenue growth). As that amount grows, investments in US debt will falter unless returns on those securities climb even higher than they already are (meaning taking even more to service the debt).

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I mean, I see this repeated all the time - and yet the USD index has pretty much only gone up over the same time period. I understand the logic, I'm just not sure it's as simple a mechanism as you seem to casually assume.

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I agree. Revenues for many businesses have been positive, but what are they seeing when they adjust for inflation? (sincere question)

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Stock and bond indices are quoted in nominal terms, so it makes a lot of sense to me that inflation hasn't been unkind to earnings.

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When looking at credit card debt then adjusting that for inflation, today's $1.019T of credit card debt would be $724B in Sept 2008 dollars. By comparison, credit card debt at the end of Sept 2008 was "only" $366B, so when adjusted for inflation our current debt is around 2x what it was in 2008.

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I've found this a hard stat to track, but it does seem like I need to update my numbers from the last time I looked.

e.g. take a look at this chart: Credit card debt

It tells a different story than your link.

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By "absolute dollars" do you mean dollars adjusted for inflation?

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My point was more just how much higher GDP is than it was 15 years ago - it's likely around 70% higher. I'm not saying this is dispositive for my viewpoint - just that I hate when people are like "the debt was only $x in 1964!!! - as if the GDP denominator is irrelevant (not you).

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When looking at real wages, we see they have increased only by ~10%.

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Yeah, that is concerning, although I'm sure household real wealth has gone up more than that.

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It seems like you're looking at the economy from the business end while I'm looking at it from the consumer end.

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Yeah, seems like it. Mostly, I'm reacting to how resilient things have been in the face of so much doomsaying in the past 2 years. Last October, literally "!00% of economists" agreed on a pending recession in the very near term.

I like the back and forth. I actually hate having to be the "things are better than they seem guy". In my career, I've called AT LEAST 25 of the last 3 recessions.

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I think we should clarify if we're discussing "impending crash of the markets" or "impending recession". Would you please clarify?

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Impending recession. Going just by the inverted yield curve timeline we should hit a recession to some level within the next 6-10 months.

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We have an environment where inflation is still rising,

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Do we?

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We do. CPI & PPI (the Big Mac Index was pretty handy for showing how inflation is actually higher than what BLS reports, but NASDAQ just pulled down their chart and I haven't found a more current replacement).

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I mean, I see this repeated all the time - and yet the USD index has pretty much only gone up over the same time period. I understand the logic, I'm just not sure it's as simple a mechanism as you seem to casually assume.

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It's likely more complex due to the heavy dependency the rest of the world has on the USD, but as deficit spending continues unabated that dependence is slowly waning. ( LINK). As debt continues to accumulate and debt servicing eventually eclipses every other cost in the federal budget, that dependency will continue dropping (and likely speed up, especially if the Treasury misses sales goals).

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e.g. take a look at this chart: Credit card debt

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Can you post an image of the chart? Statista is demanding I get an account. :(

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Yeah, seems like it. Mostly, I'm reacting to how resilient things have been in the face of so much doomsaying in the past 2 years. Last October, literally "!00% of economists" agreed on a pending recession in the very near term.

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I think everyone was caught flat-footed by how deeply the US consumer has been committed to fighting inflation by putting those rising costs on their credit cards.

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I like the back and forth.

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Same.

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As of October 11, credit card debt was $1.019T. March 18, 2022's debt adjusted to today's USD comes out to $1.023T.

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Come on baw. Tighten up.

Q4 2019 CC balances were 927 Billion.

Today they are roughly 1.02 Trillion.

To have matched inflation, CC balances would have to be 1.11 Trillion. So a nearly 100 Billion dollar difference from where it should be if balances were keeping up with CPI inflation.

and it should be well over 100 billion more if it kept up with "real" inflation, which some people are adamant is way higher than CPI figures.

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Where are you getting that from?

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NY Fed.

Why do you want to start at March 18, 2020? That was a month into pandemic hysteria and SL had paused, everyone was staying home and the stimmy checks were flowing.

Wouldn't it make more sense to go with Q4 2019?

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Adjusting the Q4 2019 number for inflation brings it to $1.102

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What are you using for your inflation factor?

I'm using 1.1977, which comes from BLS.

That makes the 927B they show for Q4 2019 1.1T in September 2023 dollars. So about ~90 billion off from the Q2 2023 figure.

But if you think that's not really a difference, then maybe you should we should use a factor that more lines up with your beliefs on actual inflation, considering you are a poster who routinely states that the published CPI numbers are bunk and inflation is much higher than the published numbers.