Adult Content Warning

This community may contain adult content that is not suitable for minors. By closing this dialog box or continuing to navigate this site, you certify that you are 18 years of age and consent to view adult content.

The Inflation/Recession Thread

Discussion in 'General Discussion' started by GTE, May 6, 2022.

  1. GTE

    GTE
    Expand Collapse
    Emotionally Jaded

    Reputation:
    531
    Joined:
    Oct 20, 2009
    Messages:
    2,696
    I was going to try and write some eloquent post but due to being brain dead after a long week and just generally being a shitty writer, I'll just ask.

    If there is a recession or inflation continues on a path not seen in 40 years; how does it affect you? Of course it affects all our wallets as we fill our tanks or buy food, but what about big ticket items; Job/Income? Retirement? Kids college fund? etc

    My job is recession resistant but not recession proof. If there is a hard hit and the car is undrivable, then people don't really have a choice to have their car fixed. When times are good and Little Mrs. Soccer Mom gets bumped in her brand new Tahoe, she's probably going to get it fixed. But if Little Mrs. Soccer Mom gets bumped in her brand new Tahoe as her adjustable rate mortgage is going up, she may take that insurance money and put it in her bank account which means I have one less car in the shop. Multiply that by a few people and suddenly, I'm down 15% in sales a month.
     
  2. Juice

    Juice
    Expand Collapse
    Moderately Gender Fluid

    Reputation:
    1,372
    Joined:
    Oct 19, 2009
    Messages:
    13,327
    Location:
    Boston
    If you have a reasonably diversified portfolio, your retirement accounts shouldn't be terribly impacted in the longer term. Overall, the value of domestic companies was at 1.5x GDP around the last recession. Now its at 2.5x. People are going to have a difficult time getting credit if a recession actually occurs.
     
  3. Flat_Rate

    Flat_Rate
    Expand Collapse
    Emotionally Jaded

    Reputation:
    132
    Joined:
    Apr 26, 2010
    Messages:
    2,488
    I’m fortunate enough to have a stable recession proof job, just got a small promotion which switched me to straight salary, easier to budget and control spending when I don’t get anymore OT. Which is the first thing they just cut out all together. My wife is a teacher for the public school system so while the pay isn’t great she has long term job security.

    Just focused on paying off debt now, her student loans and a few credit cards would really give us some more freedom to save more than we do.

    Both of us contribute to our state pension funds which faired pretty well the last go round.

    I’m really glad I am not a dealership, I wouldn’t have anything I do today, 9 years went by quick.
     
  4. dixiebandit69

    dixiebandit69
    Expand Collapse
    Emotionally Jaded

    Reputation:
    820
    Joined:
    Oct 20, 2009
    Messages:
    4,155
    Location:
    The asshole of Texas
    Okay, I've got to ask: how much of this is actually inflation, and how much of it is corporate greed/ price gouging?

    My understanding of inflation is that things are hard for everyone, but it doesn't look like big business is having such a bad time if they're posting record profits.
     
  5. Juice

    Juice
    Expand Collapse
    Moderately Gender Fluid

    Reputation:
    1,372
    Joined:
    Oct 19, 2009
    Messages:
    13,327
    Location:
    Boston
    It gets fairly complicated in that regard. Profit margins going up during periods of inflation is pretty normal, but companies are generally raising prices in this cycle in response to higher resource, production and freight costs, especially. However some are definitely getting into gouging territory. Without responsive monetary policy, this cycle accelerates until the bottom drops out. Demand drops, purchasing drops, supply value craters and the stock market tanks.
     
  6. downndirty

    downndirty
    Expand Collapse
    Emotionally Jaded

    Reputation:
    478
    Joined:
    Nov 18, 2009
    Messages:
    4,354
    My investment portfolio is reasonable diverse, and I had a few grand in stocks that has absolutely tanked. Like, down 11% this year...which mirrors the Dow, so I'm not like, butt hurt, but....yikes.

    Some of that was house down payment money, should I find a place that needs an additional $50k, but...mostly I'd love to just plunk more into the market to catch the rebound.

    The frustrating part of this is there's not a sense of how to end it, as a lot of the counter-inflation measures were left "on" during the Trump administration, so now we're reaping the whirlwind. Also, the interest rates going up means home buying is simply not going to happen. I'm struggling with this notion of "3 years ago, this place was 180k. 2 years ago, it was 220k. Now it's 300k." and that still being a "real" price. I dunno how long it takes to get to normal, but I can certainly feel like 2008 happening again, especially as the recession drags on.

    I think some things are encouraging, like the used car market is slowly returning to reality. The housing market in most places is slowing down due to interest rates, but there's still a tremendous shortage that will keep prices high, and supply will take 3-5 years to work through the interruptions to supply chain we're experiencing now. I think some stuff will start to drop in price as well, like higher ed, because of the virtual environment.

    My job is recession-proof, but the virtual emphasis means less travel, which means less OT, less per diem, and less hotel/rental car points. I save about $250/month on parking, gas and food spent on going to the office, but a week's travel would offset that. Also, from what I can tell, travel costs are high as fuck, as companies are trying to make up for lost revenue. Like...Southwest emails me about $50 flights, and hasn't had a single fucking $50 flight for 2 weeks...

    A few months ago, I stopped buying meat, and just decided to eat vegetarian at home. That saved me some serious $, because chicken and beef have been absurd here.
     
  7. Aetius

    Aetius
    Expand Collapse
    Emotionally Jaded

    Reputation:
    773
    Joined:
    Oct 19, 2009
    Messages:
    8,423
    This is what gets me. Markets having good times and lean times is part of the game, and I'm prepared for it. Housing on the other hand doubling in price while everything else is losing value is fucking ridiculous. Our national policy is built around the idea not of housing being a necessary good that we want to be affordable for everyone, but rather around keeping a bunch of indigent boomers who bought their houses for pennies in the 70s able to not save a fucking nickel for retirement, and then just raid the savings of a Millennial via a home sale and retire on that.
     
  8. Nettdata

    Nettdata
    Expand Collapse
    Mr. Toast

    Reputation:
    2,852
    Joined:
    Feb 14, 2006
    Messages:
    25,608
    When my company got bought a couple years ago, my payments were vested in cash and stock over 4 years.

    My plan was to liquidate everything I could as fast as I could for the first 2 years... buy the toys, the house, etc, etc, while building up cash reserves. If the big investors were selling off for cash, it sounded like it was good enough for me.

    I firmly believed that a crash was coming, and have been saying so for the last 8 months or more, so now that it's close, I'm OK with that. Not that I want it to happen, but I'm mentally prepared for it, and won't get freaked out over it. I view it as a few different things... a valuation adjustment on a number of insanely priced companies, the FED printing money like nothing, rising inflation, pandemic costs starting to hit home, and now the Russian "war". Never mind a ton of market manipulation that has been brought to light from the whole gamestop thing.

    I'm fully prepared to just ride out the storm for the next year or two while things settle out, and I'm not going to freak because my investments are shitting the bed... "zoom out, long term trends go up" is my thinking.
     
  9. Fiveslide

    Fiveslide
    Expand Collapse
    Emotionally Jaded

    Reputation:
    400
    Joined:
    Oct 19, 2009
    Messages:
    2,228
    We've already seen a big drop in what we can save and invest every month. Just the gas prices and rising food costs cut into it big time. But, I work paying gigs very little right now, I will soon have to start doing something to generate more income. It will likely be back to working on boats, might try to get some summer delivery work when the kid gets out of school and can come with me.
     
  10. Juice

    Juice
    Expand Collapse
    Moderately Gender Fluid

    Reputation:
    1,372
    Joined:
    Oct 19, 2009
    Messages:
    13,327
    Location:
    Boston
    I want affordable housing developments for people, just not in my neighborhood. Yucky.
     
  11. Aetius

    Aetius
    Expand Collapse
    Emotionally Jaded

    Reputation:
    773
    Joined:
    Oct 19, 2009
    Messages:
    8,423
    I've worked for 35 years and have saved literally zero dollars. Why shouldn't I be entitled to retire in comfort?
     
  12. downndirty

    downndirty
    Expand Collapse
    Emotionally Jaded

    Reputation:
    478
    Joined:
    Nov 18, 2009
    Messages:
    4,354
    The childcare costs are staggering. One of my friends is a social worker, and she says that you could basically build a child neglect/abuse case on anyone not making 6 figures in this area because of how expensive childcare is, and how often it results in the children being left alone for a stretch or not being able to afford key elements of their care (medical care, food, diapers,etc.) and making what you do have stretch. I don't have crotch fruit (UGH Goddamnit), and the lack of support was a major reason for that.

    I know a few folks on the federal teat for affordable housing, and it's a joke. I just think subsidizing some of the construction costs (like a payroll tax break) would help alleviate the supply issues. Most of the folks in the construction game I know are confronting a dire labor shortage though, where few folks are entering the field.
     
  13. sisterkathlouise

    sisterkathlouise
    Expand Collapse
    Emotionally Jaded

    Reputation:
    160
    Joined:
    Oct 21, 2009
    Messages:
    828
    We realized a little too late that we wanted to buy a house. Rates were back around 3.5% when we started looking a few months ago and today they’re 5.375. That coupled with insane prices and stocks taking a hit, our buying power has really gone down quickly. Though it’s really funny to compare the houses that feel like “the one that got away” for me and my husband. I’m still sad about a super charming craftsman with an open kitchen/family room addition. My husband is sad about a group home that could have admittedly turned into a giant ranch with an open floor plan plus a 2 br rental property, but was haunted as fuck.
     
  14. Juice

    Juice
    Expand Collapse
    Moderately Gender Fluid

    Reputation:
    1,372
    Joined:
    Oct 19, 2009
    Messages:
    13,327
    Location:
    Boston
    Or what, have them retire in squalor? Sorry boss, we reserve that privilege for military veterans.
     
  15. Binary

    Binary
    Expand Collapse
    Emotionally Jaded

    Reputation:
    379
    Joined:
    Oct 21, 2009
    Messages:
    4,045
    I've been very careful over the last ~10 years to ensure my living expenses were well below my income, so while I am fortunate in that my job is very recession-resistant, I also have a comfortable emergency fund that could sustain me for a long time.

    If you're not within 10 years of retirement, continuing to invest is still the best path. Stocks are "on sale" right now, which doesn't mean rushing out to dump money into the market, but continuing to invest on a regular, unemotional schedule will pay off in the future.

    One thing that I think is interesting is that quality employees have a ton of leverage in the market right now. Some salaries are going up significantly because of this, and other people are just walking away from jobs because they know someone will hire them. If this really goes downward quickly, there are going to be a bunch of people caught either without jobs, or in the awkward position of being one of the newest employees with a very high salary, which makes you ripe for a cost-cutting layoff.

    The housing market can go fuck itself, though.
     
  16. downndirty

    downndirty
    Expand Collapse
    Emotionally Jaded

    Reputation:
    478
    Joined:
    Nov 18, 2009
    Messages:
    4,354
    Hang on, what? My job lets me live nationwide, more or less....where is there affordable housing?

    You are going to have to substantiate that claim when housing costs have skyrocketed in the last few years, most places going up 10-15% a year, including my folk's places in Bumfuck, SC.

    I don't want to live in a city, I just don't want to compete with investors and financial institutions. I'm fine with flippers, that is adding value and doing work I don't want to do (to an extent).

    And I don't agree when the cities are where the jobs are and jobs are where the money comes from....It's not affordable if I can't get a job.
     
  17. Aetius

    Aetius
    Expand Collapse
    Emotionally Jaded

    Reputation:
    773
    Joined:
    Oct 19, 2009
    Messages:
    8,423
    What else are you supposed to do when you insist on inviting double the number of people without increasing the amount of filet mignon? Our population growth has outstripped our increase in the housing supply for decades. The only people this benefits are the ones who bought early and have been squatting ever since. That $150k house in Columbus used to be $100k inflation-adjusted; just because it's cheaper than Brooklyn doesn't mean it's not more expensive than it should be.
     
  18. Aetius

    Aetius
    Expand Collapse
    Emotionally Jaded

    Reputation:
    773
    Joined:
    Oct 19, 2009
    Messages:
    8,423
    That's all well and good for an econ-101 textbook, but it falls apart when you have to take into account restrictive zoning laws and other government interventions, ever-present externalities, and the problem of original acquisition.
     
  19. Aetius

    Aetius
    Expand Collapse
    Emotionally Jaded

    Reputation:
    773
    Joined:
    Oct 19, 2009
    Messages:
    8,423
    I do.

    I do.
     
  20. GTE

    GTE
    Expand Collapse
    Emotionally Jaded

    Reputation:
    531
    Joined:
    Oct 20, 2009
    Messages:
    2,696
    To piggy back off the filet analogy; If I go to a restaurant that offers steaks at prices dependent on where you're seated in the restaurant and since I enjoy a quiet table, I choose to pay a higher steak price to not be near the kitchen or near the table with the screaming kids. Then yes, I'm going to be irritated if halfway through my appetizer they say there's no more tables so they're to cram two families into the table next to me so everyone gets a piece of steak.

    We paid a premium for our house since it's in an older neighborhood with larger lots, no two stories and the lot behind us is empty. I would be fucking PISSED if some city official deemed it that we need more affordable housing options, gets the zoning laws changed and builds a three story quadplex right behind my house.