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Old 13th July 2022, 07:53 PM   #1
Orphia Nay
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Recession?

Will we have a global recession? Several local recessions?

Thought it was worth a thread.

Wikipedia while I'm here:

"In economics, a recession is a business cycle contraction when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending (an adverse demand shock). This may be triggered by various events, such as a financial crisis, an external trade shock, an adverse supply shock, the bursting of an economic bubble, or a large-scale anthropogenic or natural disaster (e.g. a pandemic). In the United States, it is defined as "a significant decline in economic activity spread across the market, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales". In the United Kingdom, it is defined as a negative economic growth for two consecutive quarters.

"Governments usually respond to recessions by adopting expansionary macroeconomic policies, such as increasing money supply or increasing government spending and decreasing taxation."

https://en.wikipedia.org/wiki/Recession?wprov=sfti1
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Old 13th July 2022, 09:58 PM   #2
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Originally Posted by Orphia Nay View Post
Will we have a global recession? Several local recessions?
We appear to be experiencing the opposite problem ATM - inflation caused by global market shortages - especially labour.

Central banks are trying to do the opposite of recessionary measures. They are trying to restrict the money supply by jacking up interest rates.

Of course, things could change on a button considering the corona virus pandemic and the Ukranian war.
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Old 14th July 2022, 09:09 PM   #3
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Originally Posted by Orphia Nay View Post
Will we have a global recession? Several local recessions?
Probably. Certainly a slowdown, at least.

The world's second-largest economy:

China’s GDP growth misses expectations in the second quarter

Quote:
China eked out GDP growth of 0.4% in the second quarter from a year ago, missing expectations as the economy struggled to shake off the impact of Covid controls. Analysts polled by Reuters had forecast growth of 1% in the second quarter.
USA:
Bank of America slashes S&P 500 target to ‘lowest on the Street’ after recession forecast
Quote:
Bank of America has lowered its 2022 target for the S&P 500 by 900 points, to 3,600, citing its forecast for a recession this year and expectations for a Federal Reserve “pivot” in 2023.

The new year-end target is “the lowest on the Street,” said equity and quant strategists at Bank of America in a BofA Global Research report Thursday. BofA now forecasts a “mild” U.S. recession starting in the second half of 2022, they said.
Right now the Fed is more concerned with squashing inflation. They may need to cause a recession to achieve that.
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Old 17th July 2022, 07:10 PM   #4
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The US is likely to have a mild-moderate recession,like the rest of Europe and Japan. Countries in the second and third world may see food riots, like those happening in Sri Lanka.
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Old 27th July 2022, 07:38 PM   #5
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Originally Posted by Orphia Nay View Post
Will we have a global recession?
Yes.

https://www.bbc.com/news/business-62310354

From what I can see, I think USA, NZ, UK, Italy and several other countries are currently in a recession, with this being the second quarter of contraction.

Does it matter? That's the question, and I think the answer to that is probably yes as well.

People are already deciding not to eat so they can feed their kids, so if things don't improve quickly I think we'll see some very negative results.

Governments are pretty powerless, with infrastructure spending not on the table because the resources to do the work isn't there.

We need a reduction in energy prices toot-sweet, and I don't see that happening.
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Old 28th July 2022, 10:47 AM   #6
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Two consecutive quarters of negative GDP growth in the US. Of course the media is quick to remind us that while that is considered the classic definition of a recession, technically it has to be announced by the wonks at the NBER, which almost certainly means there will be no announcement until after the midterms.
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Old 28th July 2022, 11:01 AM   #7
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Originally Posted by Brainster View Post
Two consecutive quarters of negative GDP growth in the US. Of course the media is quick to remind us that while that is considered the classic definition of a recession, technically it has to be announced by the wonks at the NBER, which almost certainly means there will be no announcement until after the midterms.
I'm sure that you can find this "classic definition" written down somewhere, right? But that certainly doesn't matter because a non-partisan organization is definitely in the tank for the Dems!



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Old 28th July 2022, 03:48 PM   #8
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For those curious, the NBER declared a 2 month long recession for Spring 2020...somewhat over a year after the end of that recession.
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Old 5th August 2022, 09:12 AM   #9
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Granted, unemployment and job gains are a lagging indicator, but seriously, 528,000 new jobs and an unemployment rate of about 3.5%? This is definitely a Jekyll/Hyde economy. Of course the jobs report could put more pressure on the Fed to raise rates again. The key will be the inflation numbers next week. I will say anecdotally that I have seen price declines on some of the food products I buy regularly; not to pre-2021 levels, but noticeable, and of course gasoline is the same. So they might get some break there but maybe not, since CPI-U excludes the volatile food and energy components.
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Old 5th August 2022, 10:16 AM   #10
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Funny how good news is bad for stocks:

Stocks fall after strong July jobs report points to more Fed action

Quote:
Stocks fell Friday in a volatile trading session after the July jobs report was much better than expected, as investors assessed what a strong labor market would mean for the Federal Reserve’s rate tightening campaign.
. . .

The labor market added 528,000 jobs in July, easily beating a Dow Jones estimate of a 258,000 increase. The unemployment rate ticked down to 3.5%, below the 3.6% estimate. Wage growth also rose more than estimated, up 0.5% for the month and 5.2% higher than a year ago, signaling that high inflation is likely still a problem.
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Old 5th August 2022, 11:32 AM   #11
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It's almost as if economies are too complex to easily attribute effects to particular immediate causes.
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Old 5th August 2022, 12:39 PM   #12
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Originally Posted by Brainster View Post
Two consecutive quarters of negative GDP growth in the US. Of course the media is quick to remind us that while that is considered the classic definition of a recession, technically it has to be announced by the wonks at the NBER, which almost certainly means there will be no announcement until after the midterms.
Originally Posted by wareyin View Post
I'm sure that you can find this "classic definition" written down somewhere, right? But that certainly doesn't matter because a non-partisan organization is definitely in the tank for the Dems! : thumbsup :



: rolleyes :
"You know how the NBER consistently declares a recession after two consecutive quarters of negative GDP growth? Well we just had two consecutive quarters of negative GDP growth. I guess that means we're in a recession."

"No! Wrong! Only the NBER is allowed to notice those numbers and tell us about them! You can't know about a recession until the high priests issue their decrees ex cathedra! Now shut up, sit down, and recite your catechism like a good little catholic." Effing protestants I swear.
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Old 5th August 2022, 01:08 PM   #13
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YouTube Video This video is not hosted by the ISF. The ISF can not be held responsible for the suitability or legality of this material. By clicking the link below you agree to view content from an external website.
I AGREE


Some analysis of the real estate crisis in China. Could be a big deal, maybe. One thing for sure is that China wants to suppress this news.
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Old 5th August 2022, 01:09 PM   #14
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Originally Posted by theprestige View Post
"You know how the NBER consistently declares a recession after two consecutive quarters of negative GDP growth? Well we just had two consecutive quarters of negative GDP growth. I guess that means we're in a recession."

"No! Wrong! Only the NBER is allowed to notice those numbers and tell us about them! You can't know about a recession until the high priests issue their decrees ex cathedra! Now shut up, sit down, and recite your catechism like a good little catholic." Effing protestants I swear.
Or...and this is where things might be too complicated for you so stay with me...NBER doesn't use 2 quarters of negative GDP growth and only 2 quarters of negative GDP growth to declare a recession. It's not like it was even pointed out in this thread that NBER declared a 2 month (which, for those struggling with the numbers is less than 1 quarter and also a lot less than 2 quarters) recession for the spring of 2020.
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Old 5th August 2022, 01:13 PM   #15
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Originally Posted by theprestige View Post
"You know how the NBER consistently declares a recession after two consecutive quarters of negative GDP growth? Well we just had two consecutive quarters of negative GDP growth. I guess that means we're in a recession."

"No! Wrong! Only the NBER is allowed to notice those numbers and tell us about them! You can't know about a recession until the high priests issue their decrees ex cathedra! Now shut up, sit down, and recite your catechism like a good little catholic." Effing protestants I swear.
Technically, GDP numbers are subject to revision, and numbers for the most recent two quarters will always be preliminary estimates. I don't dispute that there is a recession, but it doesn't really become official until those preliminary estimates a finalized. They could be revised up or down.
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Old 5th August 2022, 03:41 PM   #16
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Originally Posted by Puppycow View Post
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Some analysis of the real estate crisis in China. Could be a big deal, maybe. One thing for sure is that China wants to suppress this news.
Maybe they should reach out to the NBER, make sure they don't say anything counter-productive to Chinese interests.
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Old 5th August 2022, 03:42 PM   #17
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Originally Posted by Puppycow View Post
Technically, GDP numbers are subject to revision, and numbers for the most recent two quarters will always be preliminary estimates. I don't dispute that there is a recession, but it doesn't really become official until those preliminary estimates a finalized. They could be revised up or down.
Point taken. I'll keep that in mind going forward. Thanks!
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Old 5th August 2022, 05:50 PM   #18
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Originally Posted by theprestige View Post
Point taken. I'll keep that in mind going forward. Thanks!
Actually, I should revise what I said above slightly. There are GDP numbers released each month. The first two are preliminary and the third one is final. So Q1 is now final. Q2 is still preliminary:

https://www.investing.com/economic-calendar/gdp-375

I also think that the NBER uses a more complicated formula to define a recession than two consecutive quarters of negative GDP growth:

https://www.nber.org/research/business-cycle-dating

It's very unusual to have strong job growth, like the most recent jobs report, in the middle of a recession.
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Old 11th August 2022, 06:15 AM   #19
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The NBER doesn't use a formula at all. The business cycle dating committee holds a discussion and looks at a variety of data.
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Old 26th September 2022, 02:09 AM   #20
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I think we're not just looking at a recession, but something quite extraordinary.

The signs across the world are strongly negative right now, with the Sterling at historical lows and likely to drop further, while markets are showing all the signs of real trouble ahead.

Combine that with China heading into deep trouble and I think there's a very nasty period about to start, albeit with very full employment.

In the past, full employment has cushioned recessions, but this time, wage-earners are under severe monetary pressure and there doesn't seem to be an easy fix.

Go short on everything!
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Old 26th September 2022, 02:13 AM   #21
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Thankfully in the UK we are not going to see a recession, in fact our economy is now going to grow 2.5% each and every year going forward, our dynamic new PM and her team have assured us they've taken the necessary steps to make this happen.
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Old 26th September 2022, 02:30 AM   #22
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Originally Posted by The Atheist View Post
Combine that with China heading into deep trouble and I think there's a very nasty period about to start, albeit with very full employment.

In the past, full employment has cushioned recessions, but this time, wage-earners are under severe monetary pressure and there doesn't seem to be an easy fix.
It's not that simple. I'll point you at the Phillips curve. Very low unemployment tends to push inflation up.

And really, I wouldn't say we're in a recession per se. We haven't stopped making stuff or anything. We're just in an inflation burst.
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Old 26th September 2022, 11:22 AM   #23
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Originally Posted by Darat View Post
Thankfully in the UK we are not going to see a recession, in fact our economy is now going to grow 2.5% each and every year going forward, our dynamic new PM and her team have assured us they've taken the necessary steps to make this happen.


The good news is, if you travel to America you won't have to worry about silly exchange rates. 1 = 1.

Originally Posted by HansMustermann View Post
Very low unemployment tends to push inflation up.
Yes, I've mentioned that, which is why interest rates are increasing.

Trouble is, because the inflation has mainly come from outside the wage system, workers are playing catch-up, exacerbating the economic impact.

We're caught in a feedback loop and there doesn't seem to be an easy way out.

Originally Posted by HansMustermann View Post
And really, I wouldn't say we're in a recession per se. We haven't stopped making stuff or anything. We're just in an inflation burst.
People still make things during a recession, so that's not relevant.

Whether it's a recession or not depends on what metric you use. I see nothing wrong with the traditional two consecutive negative quarters, and we're already there.

China's just spent $US1T failing to halt the fall of the yuan. It looks to me like Xi's and the CCP seem to think they won't end up with the same results as every other country who tried that, much like the no-covid rule they're crippling themselves with.
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Old 26th September 2022, 04:37 PM   #24
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Originally Posted by The Atheist View Post
Whether it's a recession or not depends on what metric you use. I see nothing wrong with the traditional two consecutive negative quarters, and we're already there.
Who is 'we'?

United States Economic Forecast
Quote:
15 September 2022

Every day, observers change their stance, as one day’s news provides a different picture from the previous day’s news. And often, it seems like a never-ending stream of bad news...

And yet, for all the noise, the US economy doesn’t look that bad. Employment growth remains strong, and many measures of economic activity are growing—even if more slowly than last year. Oil and food prices have been falling at the wholesale level, and consumers are beginning to see the results in stores. Gasoline prices fell below US$4 per gallon in August. Consumer spending remains positive...

Talk of a recession occurring in the first half of 2022 was premature. Our experience in following the economy suggests that the state of the jobs market alone precludes the possibility that the economy was in recession before August. Two-quarters of negative GDP do not define a recession (see the sidebar, “Defining recessions (and the danger of revisions)” for more details).

Defining recessions (and the danger of revisions)

When the first estimate of GDP in the second quarter was negative, some commentators declared that the economy must be in a recession. After all, it was the second negative quarter in a row, and two negative quarters define a recession, right? Actually, this definition of recession has never been used in the United States.


Originally Posted by The Atheist
China's just spent $US1T failing to halt the fall of the yuan. It looks to me like Xi's and the CCP seem to think they won't end up with the same results as every other country who tried that, much like the no-covid rule they're crippling themselves with.
China's in trouble alright, and it started long before Covid. Hopefully the Ukraine war will dissuade Xi from adding another straw to the camel's back (attempting to invade Taiwan).
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Old 26th September 2022, 09:56 PM   #25
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Originally Posted by Roger Ramjets View Post
Who is 'we'?
Most of the countries already showing one negative quarter.

https://stats.oecd.org/index.aspx?queryid=350

A significant majority of the non-American world considers recession to be two consecutive negative quarters, so what some clown in America writes concerns me about as much as their inability say or write aluminium.
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Old 27th September 2022, 11:24 AM   #26
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Bloomberg's front page today:

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Old 30th September 2022, 01:59 AM   #27
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Looks like a lot of people agree with my analysis:

Quote:
The managing director of the Swiss-based World Economic Forum, Saadia Zahidi, says dark clouds detected in May seem to be turning into “a full-blown economic storm”.

A survey of senior economists it released on Wednesday found most believed a global recession next year was either very or somewhat likely.

World Trade Organisation director-general Ngozi Okonjo-Iweala said on Wednesday that it was in the middle of revising its forecasts but all the indicators were pointing to “downside numbers”.

The IMF revised down its global growth projects to 3.2% in 2022 and 2.9% next year, in July, but there may be room for a further downgrade when it reviews its numbers next month.

Credit ratings agency S&P said on Thursday that the performance of the global economy over the next few quarters was “increasingly a one-way bet”.
https://www.stuff.co.nz/business/130...t-to-watch-for
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Old 30th September 2022, 11:56 PM   #28
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I think that a significant part of the current economy woe is the result of economic analysts not being able to adopt to an economy of microtransactions and freemium content, better public transportation, lower transaction cost: in short, people are getting more for less, but in economic terms it looks like consumption is dropping.
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Old 1st October 2022, 02:26 AM   #29
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Seems extremely unlikely to me.

I think they're drops in the ocean.
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Old 1st October 2022, 02:34 AM   #30
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Gotta say, this is the most bearish I've seen Bloomberg since the GFC:

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Old 1st October 2022, 07:55 AM   #31
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Surprisingly looks like we missed contraction last quarter and GDP increased by 0.2%.

https://www.ons.gov.uk/economy/gross...priltojune2022

But that's nothing compared to the next quarter when we will see 2.5% growth.
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Old 1st October 2022, 08:32 AM   #32
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Originally Posted by The Great Zaganza View Post
I think that a significant part of the current economy woe is the result of economic analysts not being able to adopt to an economy of microtransactions and freemium content, better public transportation, lower transaction cost: in short, people are getting more for less, but in economic terms it looks like consumption is dropping.
You seriously think that economists don't account for infrastructure improvements and lowered transaction costs?

Also, I'm pretty sure nobody thinks that microtransactions and freemium content are actually more for less, except the corporations using those techniques to get more money for less product.
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Old 2nd October 2022, 07:02 AM   #33
Dr. Keith
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The only treatment we have for inflation is increased rates. Rates have been historically low for so long that it seems like increased rates are inevitable. So, I’m selling the real estate I intended to sell next year. I missed the peak by about two months and am selling for about 90% of peak prices, but I don’t think we will be back at those prices for another couple of years, at best.

With the high employment and supply shortages I don’t see the increased rates having much effect. I expect they will continue to be increased for the next six months at least and will stay above current levels for at least a year, more likely two years.

I also bought a much smaller piece of real estate. So I’m not completely shorting the market.
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Old 2nd October 2022, 10:54 AM   #34
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Originally Posted by Darat View Post
Surprisingly looks like we missed contraction last quarter and GDP increased by 0.2%.

https://www.ons.gov.uk/economy/gross...priltojune2022

But that's nothing compared to the next quarter when we will see 2.5% growth.


You'll be considering yourself lucky if the economy only contracts by 2.% in Q4.

There's a point hidden in those numbers that suits politicians - inflation in Q2 was 3.5%, while GDP was only +0.2%. Obviously, GDP rises in conjunction with inflation, so it's taken into account via a GDP Deflator, so whatever numbers get shown are liable to manipulation or bias, because the deflator number is decided arbitrarily. There just isn't any way you can accurately get a real number, so it's only ever a best guess, and when you're dealing with fractions, one person's +0.2 is someone else's -0.2.

Also, your GDP is still lower than pre-covid, so in any non-depressed economy you'd expect to see much higher growth from simply catching up.

Originally Posted by Dr. Keith View Post
The only treatment we have for inflation is increased rates. Rates have been historically low for so long that it seems like increased rates are inevitable.
Already here.

Originally Posted by Dr. Keith View Post
With the high employment and supply shortages I don’t see the increased rates having much effect. I expect they will continue to be increased for the next six months at least and will stay above current levels for at least a year, more likely two years.
I've been doing international economics for 40 years and I've never seen anything like the scenario we have right now.

Labour shortages and high employment are an international problem, and it's causing a two-pronged assault on people. They're obviously spending more, but their wages have gone up. Then wage packets have increased further through overtime, with significant numbers of people working extra hours.

This is putting even more pressure on the bottom tier - which is evident at all ends of the globe: NZ, UK, USA, Germany*...

(*Props to the Krauts for using a photo of 2 non-white kids in the poverty story, you'd lose your balls for that here!)

I made the comment at a board meeting last week that people are being stretched like rubber bands, and sooner or later, people will start to go PING!
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