A global recession is on the horizon - please read OP for mod warning

Yurt2

https://www.boards.ie/discussion/comment/119109697#Comment_119109697

The poster dumped data from 2021 showing aggregate savings increased by x billion in response to a poster noting that lower income deciles were struggling with inflation.

No sh*t aggregate savings increased in 2021, vast swathes of the year saw people locked in their homes. That tells us nothing and was a fairly useless response to a poster speaking to 2022 economic conditions. Especially given that it's accepted fact that upper income deciles increased their wealth and savings disproportionately during this period.

You're the one inserting "months to survive". Put words in someone else's mouth, not mine.

Worse than conjecture is dumping irrelevant aggregate data that tells us little about where this is hitting hardest on the income distribution (which is what he/she was responding to) and expecting people to swallow a sunny side up narrative about live economic conditions for a large amount of the population.

So you can do yourself a favour and leave your smartarsery outside the door.

patnor1011

https://www.boards.ie/discussion/comment/119109370#Comment_119109370

And I would say that cooking books was here since forever. You can create stats to support any and every point of view.

While if may look nice on paper reality is bit more different.

Geuze

Here is savings and wealth data for Q4 of 2021:

Key Points – Q4 2021

Publication date: 12 May 2022

• Household net wealth increased by €38.5bn in Q4 2021, to reach a record high €995bn. It should be noted that this growth may not reflect the underlying experiences of all households, or the distribution of wealth.
• Household housing assets also reached a series high of €630bn in Q4 2021, above its previous peak of €604bn in Q4 2007. 
• Positive revaluations in housing assets represent the dominant driver of increases in net wealth in recent quarters. However, increasing deposits and upward revaluations of other financial assets have also been important sources of growth in net wealth.

Chart 3: Household Savings

View data for chart 3 | xlsx 21 KB

The increase in financial assets of €4.4bn in Q4 2021 is mainly related to investment in currency and deposits of €3.4bn. Additionally, investment in new housing has remained steady at €1.7bn.

Private sector debt as a proportion of GDP marginally increased by 1 percentage point to stand at 198 per cent in Q4 2021 (Chart 4). However, in terms of value, there was a large increase in private sector debt, to stand at €835bn in Q4 2021, driven by an increase in NFC debt by €28bn over the quarter.

Geuze

So in Q4 of 2021 household ownership of currency and deposits grew by 3.4bn.

Divide that by 13 weeks, means 260m per week additions to household savings during 2021 Q4.

Yes, this data is skewed, by age, by household type, etc.

My parents and their friends couldn't go on trips/hols during COVID, so I'm sure their deposits grew strongly.

hayse

https://www.boards.ie/discussion/comment/119109825#Comment_119109825

Were your parents on pup?

Yurt2

https://www.boards.ie/discussion/comment/119109812#Comment_119109812

Why are you responding with data dumps about aggregate savings from 2021? The poster was noting the effects of inflation on median and lower individuals on median and lower earnings in 2022.

You may have noticed (or maybe you haven't) that we've been in the most significant inflationary cycle in 30 years starting from February or so.

What do you imagine has become of this notional savings bonanza for median earners and lower income earners?

markodaly

From what I've read, the data from the US and UK is pretty bad, with many households burning through cash and savings just to survive. However, there are plenty of people who are well off, with no mortgages and plenty of spare cash saving their money. I think there is a huge inter-generational divide here, where the under 50's are the ones trying to keep afloat and the over 50's are the ones saving vast amounts of cash.

Danzy

https://www.boards.ie/discussion/comment/119109467#Comment_119109467

It's kind of baffling the lengths modern Govts go avoid them.

It's also probably highly destructive long term. The equivalent of ignoring a nagging pain that has appeared and not going to the doctor.

Recessions balance out economies and stop flaws and mistaken from compounding.

It's chemo and successful chemo at that.

Geuze

The ownership of assets is skewed by age, and by income, and by family type.

Here is the distribution of net wealth:

With rising assets, and falling liabilities, the household balance sheet is well able to cope with a slowdown in income growth.

Geuze

Here are median values of financial assets in 2020:

Lone parents have really low financial assets.

Danzy

https://www.boards.ie/discussion/comment/119109918#Comment_119109918

You could still have that and mass unemployment, deprivation.

It wouldn't be the first time. Look at America in the Great depression.

Yurt2

https://www.boards.ie/discussion/comment/119109918#Comment_119109918

Whose household balance sheet is well able to cope with a slowdown in income growth? Now you're posting deciles of wealth (which includes assets like property) and ignoring that the conversation is centred around inflation and it's effects those on the lower income strata.

You're speaking in aggregate again, when the poster you tried to pooh pooh made an accurate observation that in the here and now,in 2022, a large amount of people are expending their savings making ends meet.

Beasty

https://www.boards.ie/discussion/comment/119107427#Comment_119107427

You do realise recession = significant increases in unemployment? Prices outstripping wages? Yes and high interest rates resulting in debt defaults at business and personal levels?

I've lived through a few of them. They are not pleasant.

Beasty

https://www.boards.ie/discussion/comment/119109663#Comment_119109663

They may suffer that decline in living standards when they cannot get insurance against flooding. When they cannot afford to run their car. When the weather disrupts daily activities on a more regular basis. The longer we put off dealing with it, the harder it becomes to handle it,

Geuze

I do not agree with this statement by Blaaz:

"Something like 50% of the population are burning through savings to keep on top of day-to-day expenses.....with food & energy price inflation still to peak..."

There is no proof provided.

In contrast, here are some facts:

the UN rate has thankfully fallen to 4.8%

employment is rising, there are labour shortages

wages are rising

incomes are rising

retail sales are up

Yes, the following are also true:

There is a price squeeze

real wages are falling in some sectors

consumers are more wary?

the supply-side shock will cause lower economic growth

interest rates are set to rise towards more normal rates

But to say that 50% of households have incomes less than their expenditure is a gross exaggeration.

Yurt2

https://www.boards.ie/discussion/comment/119109974#Comment_119109974

"But to say that 50% of households have incomes less than their expenditure is a gross exaggeration."

The poster never said that

https://www.boards.ie/discussion/comment/119107427#Comment_119107427

Recession means less mortgage lending being approved.

So unless people have savings of close to 200k, which aren't going to be exempt from DIRT increase, they still aren't getting a house if the price falls by 56% in Dublin like in 2008 - 2010, when mortgage approval rates fell by nearly 80%

FintanMcluskey

https://www.boards.ie/discussion/comment/119109467#Comment_119109467

Because the vast majority of people are very naive.

Stupid in fact.

FintanMcluskey

https://www.boards.ie/discussion/comment/119109971#Comment_119109971

When the weather disrupts daily activities on a more regular basis.

Is that likely to happen any time soon?

HBC08

https://www.boards.ie/discussion/comment/119109971#Comment_119109971

As a business owner I'm very familiar with insurance costs,flooding as a result of climate change is not high on the scale of things we have to worry about,flooding in the likes of the certain parts of Galway and Cork has been an issue long before climate change was in the popular vernacular.

Immediate threats and costs related to war,inflation,house prices etc will always Trump noble side excercises like climate change,that's just a fact.

People will acknowledge and adapt to help deal with climate change but for most when sh1t gets real its not a top priority.

https://www.boards.ie/discussion/comment/119108849#Comment_119108849

TBH I've been expecting such an invasion for ages now. Xi made promises both when he rose to power, and to keep his position as glorious leader. Returning Taiwan to the fold was one of those promises, along with the chance for the military to exercise all their shiny new toys. Throughout the entire time I lived in China, the propaganda ebbed and flowed, but generally, increased slightly each time with further expressions of nationalistic fervour by the local peoples. I fully expected it to happen within the last five years,

However.. covid, and Ukraine have happened, and... judging by the conversations I've had with Chinese friends and colleagues, there's very little general support for any kind of State adventures against Taiwan. Drug use and violence has been on the rise for a long time, mostly kept out of sight, but it's becoming a bigger issue now, especially with the approach of the CCP towards China's rich segment. Unemployment, availability of food, and the breaking down of traditional medicine systems, are of greater concern to the average Chinese person. There's not a lot of space left to be all nationalistic.. when they're no longer blaming outsiders for everything. Now there's a lot of blame being cast towards the CCP as a group, rather than local political figures.

Honestly, I don't see it happening now. It could. The Chinese are incredibly unpredictable, and the CCP are even worse.. but force projections before covid/Ukraine said that China was still lacking the capabilities to manage a successful invasion and maintain the beachhead necessary for maintaining an occupation. That was before the impact of Ukrainian resistance to Russian forces, but also a range of Asian alliances, which have been given time to become established, even to the point of shared exercises. That will make Beijing hesitate, because they'll be waiting to see what happens to Putin.

If Putin manages to get out of this war with all his assets and escaping war crimes, then... I would expect Beijing to tackle Taiwan. If we see the US/EU going after Putin, the Russian leadership, and the Oligarchs, then, probably Taiwan will be left for the next generation of party leaders to deal with. No CCP leadership group will want to see their own assets become threatened...

TheTruth89

https://www.boards.ie/discussion/comment/119106838#Comment_119106838

Definitely agree about the whole goods thing, we have a culture of gluttony and greed and instant gratification in the western world, we are completely out of touch with reality and the long term sustainability of our lifestyles, our own country is rife with it, people building houses far bigger than they need more for "status" than anything else not a thought given to the logical side of things, only appeasing a "want" we think we are entitled to.

We are so far on the buying what we want excessively rather than what we need side of things now its a joke and it all boils down to outright greed.

Something is going to give and there will be a fair rattle of a wake up call for alot of people and when the cushy lifestyle goes alot of people wont know what to do with themselves.

Xidu

Disposable income is not net income right?

does it mean after paying rent or mortgage. Esb wifi …other necessities

how much you have that you can use?

Pussyhands

https://www.boards.ie/discussion/comment/119109944#Comment_119109944

We've got a split economy between home buyers and non home buyers. Those who have homes are wealthy, they've built up massive equity in their homes and save more money than renters.

Renters are falling further and further away from owning their own home.

I don't think homebuyers realise how awful not being able to buy a home is. You can't move on in life. Very difficult to start a relationship. Nervous about rental increases or landlords kicking you out. No good having a decent job if half your wages go on rent and you can never own your own place as you watch those who have got money from their parents to buy, increase their wealth and quality of life on a yearly basis.

The current situation only looks amazing on paper with GDP stats and employment numbers. The country is too overcrowded. We need a recession and emigration and if people have to go through some pain, then they're willing to do it as the recovery starts from a lower base.

Times were better back in 2014. I'm earning a way more money now but it was easier back in 2014.

Recessions are mostly deflationary btw. The last recession there were massive bargains to be had. Bargain alerts forum was buzzing back then and you could get real bargains. Now there's no bargains.

Boggles

https://www.boards.ie/discussion/comment/119108460#Comment_119108460

We are better off, however, societally we are not

If you long for a society embedded by a religious cult who thought serial child rapists were a minor inconvenience or females should be treated no differently than cattle, than yeah they were super times. 👍️

hayse

We need over 100,000 council houses built. Far from a recession.

Geuze

https://www.boards.ie/discussion/comment/119110338#Comment_119110338

In terms of economics and CSO data:

disposable income = earned market income + social benefits - direct taxes.

It is before any spending.

Xidu

thanks for the clarification

I was wondering 54k would be a huge number if it’s counted as after paying rent or mortgage.

it make senses now.

Donald Trump

https://www.boards.ie/discussion/comment/119108266#Comment_119108266

Sure as long as you keep getting your free mickey, you'll be happy

Donald Trump

https://www.boards.ie/discussion/comment/119109370#Comment_119109370

https://www.boards.ie/discussion/comment/119109386#Comment_119109386

100m a week is 20 quid per person.

Or about 1000 quid per person per year.

Even for a family of 5 (2 Adults two kids) it's only 5k a year.

I would have expected more tbh.

https://www.boards.ie/discussion/comment/119110184#Comment_119110184

we have a culture of gluttony and greed and instant gratification in the western world

The same attitude is pretty much everywhere.. There is no nation on the earth with any kind of enlightened state where such doesn't occur. The difference is only the relative ease of access to resources in the West, but if you spend any real time in Asia or Africa, and you'll see the same behaviours manifest when the opportunities arise.

Something is going to give and there will be a fair rattle of a wake up call for alot of people and when the cushy lifestyle goes alot of people wont know what to do with themselves.

They'll adapt/adjust and eventually become comfortable to the changing environment.. They'll deal with it because there aren't any other realistic options. You make it sound like people are stuck in a particular mode that they can't change out of, but when presented with no choice, people are remarkably quick to change behaviours and attitudes... Just look at how quickly Irish society has shifted over the last 30 years, whether it's the decline of the Catholic Church, or the greater acceptance of homosexuality. Same with the rising standards and costs of living in Ireland.. people adjust to the life they live.

https://www.boards.ie/discussion/comment/119110452#Comment_119110452

I don't think homebuyers realise how awful not being able to buy a home is

How does that work, considering they had to struggle themselves to get their home? Sure, some people were gifted their home through inheritance, but most people have to go through various struggles to get their place. Different eras have different problems. My parents had to deal with the gender discrimination against women working, along with a vary fragile economy, with various international crisis's, etc. My own generation went through the banking crash, various recessions, austerity, etc.

People are very quick to think that their generation faces something worse than past ones. It's rarely true.

You can't move on in life. Very difficult to start a relationship. Nervous about rental increases or landlords kicking you out. No good having a decent job if half your wages go on rent and you can never own your own place as you watch those who have got money from their parents to buy, increase their wealth and quality of life on a yearly basis.

Whereas, for myself and many of my friends of a similar age group (mid-40s), we don't want to own our own homes, and are perfectly content with renting for the rest of our lives. Some of us have owned houses previously, and want to avoid the headaches associated, or others will remain single, preferring the freedom of being a renter provides.

Not everyone wants to settle down, or have a family. There's a growing number of people in society wanting to avoid both. You want these things.. grand, but there's a market out there who don't. Personally, as a single male and who had a house in Ireland, I'll never do that again. Not in Ireland.

The current situation only looks amazing on paper with GDP stats and employment numbers. The country is too overcrowded. We need a recession and emigration and if people have to go through some pain, then they're willing to do it as the recovery starts from a lower base.

The country isn't overcrowded. Just the two main population centres are, with the heavy focus for investment going to the cities. Ireland is a relatively small country, which allows easy commuting when the infrastructure is in place, but the attitude was to see Dublin and Cork grow beyond what they should have, taking people, and resources away from the rest of the country.

While we do need a recession to take some steam off the economy, and to force unprofitable or unsustainable businesses/institutions to die off (to be replaced with something better if the actual market can support them), along with the government reining in it's spending impulses, we don't need any kind of new diaspora or large scale emigration (we continue to have a steady stream of emigration at all times, naturally). Simply do what countries like Japan have done with the tech'ing up of their economy to be operated with a "smaller" population, and to decrease this near constant encouragement of low-skilled immigration to support failing industries.

Pussyhands

https://www.boards.ie/discussion/comment/119110992#Comment_119110992

Unless you have lots of assets, you're going to run into trouble when you reach retirement.

long term leases aren't a thing here. What are you gonna do when you're 70 and your landlord tells you they are selling in a year. You're gonna hop onto daft and go around doing house viewings? Or what about if you need nursing home care? Hope you have the cash to pay for it as they won't be using your house as payment.

I'm not talking about my generation v previous generation. Two people aged 40 earning 40k. One has their own house and one is renting. There's a massive difference in the outcomes of these two people on the same salary all because one has a house and the other doesn't. It's not right, for something so basic as housing.

https://www.boards.ie/discussion/comment/119111089#Comment_119111089

Oh, I know exactly where and how I'll be dealing with "retirement", and it's not in Ireland. As for my friends, they've done their due diligence preparing for their old age in differing ways. We all went through the banking crash and fully comprehend just how unreliable assurances are. Owning a property used to be the pinnace of securing the remainder of your life.. it's not anymore.

I'm not talking about my generation v previous generation. Two people aged 40 earning 40k. One has their own house and one is renting. There's a massive difference in the outcomes of these two people on the same salary all because one has a house and the other doesn't. It's not right, for something so basic as housing.

I never quite understand the need to dumb down or make situations so simplistic as to have them lose all meaning. In any case, your example doesn't really address the points I made, or add to your previous post. It's a shift in the narrative. However, the renter manages to use the monies dedicated towards the mortgage (and all those associated costs) towards other ventures, possibly generating greater value in the future. [never mind the scenario of those paying a mortgage but being unable to afford living in their own home without renting it out, and so continue renting all the same, until circumstances change]

As for being "right"... ahh.. Life is not fair. It's not supposed to be. I think people have embraced a lot of wishful thinking about what should be rather than what is.

Pussyhands

https://www.boards.ie/discussion/comment/119111128#Comment_119111128

Oh, I know exactly where and how I'll be dealing with "retirement", and it's not in Ireland

Wonderful, your advice for anyone not owning their home at retirement is emigrate.

timmyntc

https://www.boards.ie/discussion/comment/119109370#Comment_119109370

while the OP is wrong that families are burning through savings to keep afloat, the big growth in household deposits is a bad sign in itself.

If consumer sentiment was good, people would be spending not saving. Tightening of belts or putting money aside is not a good thing for the economy.

B2021M

https://www.boards.ie/discussion/comment/119110992#Comment_119110992

Just curious...why do you feel you'd never want to own a house in Ireland again?

https://www.boards.ie/discussion/comment/119111218#Comment_119111218

No, it isn't. Nowhere have I suggested such a thing. I said how I felt on the matter, but I also referred to those staying in Ireland.

Grand.. You don't want to engage with what I wrote previously.. let's just let the discussion end.

https://www.boards.ie/discussion/comment/119111260#Comment_119111260

My own experiences were.. difficult, and costly. I'm not going to go into this here.

B2021M

https://www.boards.ie/discussion/comment/119111386#Comment_119111386

No worries. I was genuinely curious. I tend to agree that there are many hidden issues with home ownership here.

Amadan Dubh

https://www.boards.ie/discussion/comment/119110008#Comment_119110008

This is why I think it is possible we will see a bigger price decline in housing and no "soft landing". We have not invested the corporate taxes and zero rate borrowing in building a more sustainable economy; it has largely gone in the blackhole of health, on housing market supports, tax cuts and welfare increases.

Yurt2

https://www.boards.ie/discussion/comment/119111231#Comment_119111231

The poster (not the OP) was quoting aggregate deposit rates from 2021, without reference to where the savings were on the income distribution.

He's refusing to countenance how radically the economic picture has shifted since 2022. It's not news that aggregate deposits were up in '21.

Median and lower income families of course are seeing their savings from the previous year shredded. Only the most obtuse would refuse to acknowledge that with inflation running at its current rate.

Pussyhands

https://www.boards.ie/discussion/comment/119110489#Comment_119110489

Correction, 100k houses to be available.

If the foreign tech workers leave and the foreign students start to leave, that's going to free up accomodation. Then when downward pressure on prices happens, government will phase out the 30k HTB meaning prices drop even more.

Then suddenly people turn from "get a mortgage at all costs as prices are only going up" to "sure maybe renting for another couple years isn't so bad as who knows if there'll be job cuts at my company and house prices seem to be coming down now"

Amadan Dubh

https://www.boards.ie/discussion/comment/119110054#Comment_119110054

This is the type of complacency that does not appreciate the risk of populism gaining ground. For a low paid worker that is renting, the last 7 years they have had a job, yes that's fine, but they have progressively gotten poorer because their salary has not increased meaningfully while their rent and their general cost of living has. Effectively, these people feel that the system is working against them and they have no reason to support the economic growth model the government are arguing for and implementing. They have no stake in a booming property market as they rent; and they have no interest in hearing MNC workers are high earners as that makes no difference to them. This is why I can understand why some people would indicate that a recession might not be such a bad thing as they would see cheaper housing costs, cheaper goods etc.

Wanderer78

https://www.boards.ie/discussion/comment/119108406#Comment_119108406

yes most older generations are indeed far better off, but public policy is more aligned with their wants and needs, but this is coming at a cost to younger generations, i.e. their own kids, grandkids, nieces and nephews. this approach is now starting to collapse, which means older generations are also gonna be in deep sh1t very very soon, as they age, their needs may not be fulfilled, i.e. their health care needs etc etc..... so get ready!

FintanMcluskey

https://www.boards.ie/discussion/comment/119111514#Comment_119111514

During which recession they will have no jobs regardless.

Housing gets cheaper during a recession but it doesn't get any more affordable, neither do goods or services.

NSAman

https://www.boards.ie/discussion/comment/119110482#Comment_119110482

Females treated no more than cattle? Really? While the church was still in power to a degree, it was a time when questioning and examination for most people started.

you really think the society is better now? Maybe gay rights, perhaps the loss of church power, in many other respects society was much poorer but more stable than now.

anyhoo, off topic.. considering Leo’s comments at Davos (a slowdown) it proves the guy cannot read all the signs that are there.

Wanderer78

https://www.boards.ie/discussion/comment/119111748#Comment_119111748

ah i d say people like leo know full well whats very likely to happen, but since our financial and economic systems are so easily spooked, we must tippy toe around the place!

Pussyhands

https://www.boards.ie/discussion/comment/119111720#Comment_119111720

Foreigners will emigrate at the first sign of economic trouble. In April 2009 - April 2010, 75% of emigrants were foreign nationals.

No idea how you say things don't get more affordable. Rent was far more affordable in 2012 than it is now. In 2012 I paid 55 a week for accommodation in a house as a student. A job I had for a few hours a week paid my rent.

NSAman

https://www.boards.ie/discussion/comment/119111853#Comment_119111853

Maybe in the past rent was more affordable PH, with the flood of private landlords leaving the system all that are left are the corporate (tax free) landlords. While rents would have fallen now the “return” is what’s important.

i don’t see any of this ending well for any renter.

thjis is not just an Irish issue, I see it playing out in many countries.

FintanMcluskey

https://www.boards.ie/discussion/comment/119111853#Comment_119111853

 In 2012 I paid 55 a week for accommodation in a house as a student. A job I had for a few hours a week paid my rent.

How much higher was the rent in 2006 for the same standard of accommodation? Id guess not much higher

After the last recession house prices dropped by 50% but rents only dropped by 20%

https://www.rtb.ie/images/uploads/general/prtb-rent-index-report-2007-2012.pdf

In addition the declines in house prices are more severe than the decline experienced in rent. From quarter 3, 2007 to quarter 4, 2012 house prices have fallen by close to 50 per cent, while market rents have fallen by just under 22 per cent.

Is a 20% rent drop really worth the recession fantasies some here have?

I certainty don't think so, and I sure as **** don't think its fair to wish negative equity on those who have worked and saved their bollix off to buy a house recently, all in the name of a 20% rent reduction