Recession predictions

Arthur Daley · 12-08-2020 4:15pm

Jim Power on with Dunphy was suggesting that the Income tax has held up because more or less the only people who have lost their jobs were paying little or no tax.

But from a business perspective certain businesses looking to cut costs won't be 'top heavy' for long with high earners, and if jobs or parts of jobs can be done from home, there may be a suggestion that the job (or part of it) can be done anywhere.

Mongfinder General · 12-08-2020 9:08pm

Arthur Daley wrote: »

Jim Power on with Dunphy was suggesting that the Income tax has held up because more or less the only people who have lost their jobs were paying little or no tax.

But from a business perspective certain businesses looking to cut costs won't be 'top heavy' for long with high earners, and if jobs or parts of jobs can be done from home, there may be a suggestion that the job (or part of it) can be done anywhere.

It's the anywhere part that is most interesting. Employing somebody in a developing European state will have a saving in labour costs and most probably a lower threshold of employment rights domestically - although most of employment law is boxed off at EU level these days. We might find that it's also easier to dismiss staff if you've never actually physically met them.

Geuze · 13-08-2020 3:09pm

Four months of mild deflation so far:

https://www.cso.ie/en/releasesandpublications/er/cpi/consumerpriceindexjuly2020/

Both CPI and HICP.

Consumer prices are now 3.1% higher than Dec 2011.

Very little inflation over 9 years.

Regarding industrial production, it's interesting to note that we are the only EU country higher than a year ago:

https://ec.europa.eu/eurostat/documents/2995521/10545423/4-12082020-AP-EN.pdf/7c638d68-3e54-d560-73f4-a6aeb6ced59c

Wanderer78 · 13-08-2020 3:14pm

Geuze wrote: »

Four months of mild deflation so far:

https://www.cso.ie/en/releasesandpublications/er/cpi/consumerpriceindexjuly2020/

Both CPI and HICP.

Consumer prices are now 3.1% higher than Dec 2011.

Very little inflation over 9 years.

Regarding industrial production, it's interesting to note that we are the only EU country higher than a year ago:

https://ec.europa.eu/eurostat/documents/2995521/10545423/4-12082020-AP-EN.pdf/7c638d68-3e54-d560-73f4-a6aeb6ced59c

you can understand why some are fearing deflation, the only inflation i can see is in assets, but i can see what economist pippa malmgren calls shrinkflation, i think she has a point

celtic_oz · 15-08-2020 10:35am

apparently we are 2 months away from the start in the States (the dollar rising will be the key indicator), will last decades

https://www.youtube.com/watch?v=QS7b-BsAchE

Buffett finally turns to gold

https://www.youtube.com/watch?v=G1vkSEJ3CJ4

antimatterx · 15-08-2020 10:36am

celtic_oz wrote: »

apparently we are 2 months away from the start in the States (the dollar rising will be the key indicator), will last decades

https://www.youtube.com/watch?v=QS7b-BsAchE

Buffett finally turns to gold

https://www.youtube.com/watch?v=G1vkSEJ3CJ4

Just in time for the election :eek:

Wanderer78 · 15-08-2020 10:38am

celtic_oz wrote: »

apparently we are 2 months away from the start in the States (the dollar rising will be the key indicator), will last decades

Buffett finally turns to gold

its impossible to say, nobody knows for sure, but the dollar isnt looking healthy, it could very well lose its reserve currency in all of this, goldbugs such as jim rickards have been talking about this years now, who knows, they could be right, i guess theres a reason why countries such as china, russia and germany have been increasing their gold supplies significantly over the last few years

Roger the cabin boy · 15-08-2020 11:52am

If the answer to the problem of really low interest rates is even lower interest rates then we are in an alternative universe.

Darc19 · 15-08-2020 12:06pm

wassie wrote: »

And Covid-PUP payment is taxable also so people are still effectively in jobs paying tax.

This old chestnut. Again mis information from gutter journalism.

Technically it is correct as all income except a few very specific social welfare payments are taxable.

Jobseekers allowance is taxable - always has been.

The only way the PUP is taxable is if your earnings are above your tax free allowance AND the tax free allowance built up during the PUP meant that the after tax salary after you come off PUP has used the built up tax free allowance from your time on PUP

If you are on pup through to the end of the year, there will be zero tax liability.

If you earn €35,000 your normal annual tax (assuming single person) would be approx €3,500

If that €35k is made of €10k PUP and €25k from the company, you STILL will pay €3,500 tax. No difference whatsoever.

If your €35k becomes €30k over the year, your net tax would be about €2400 in total. Less tax.

If your total income for the year is under the about €18k tax free allowance, there is ZERO tax due no matter whether is comes from Jobseekers, PUP or earnings or any mixture of that.

wassie · 15-08-2020 12:27pm

You are technically correct. Let me rephrase...

And Covid-PUP payment is taxable, allowing a lot of people to return to their jobs and pay tax.

Better?

Thierry12 · 15-08-2020 12:49pm

Roger the cabin boy wrote: »

If the answer to the problem of really low interest rates is even lower interest rates then we are in an alternative universe.

Avant are rumoured to be bringing in 1.5-1.8% 5 year fixed mortgages next month here

Rest will have to follow?

Won't be far off tracker rates in 12 - 18 months if that's true

Will that drive house prices up or down?

thomas 123 · 15-08-2020 12:52pm

Thierry12 wrote: »

Avant are rumoured to be bringing in 1.5-1.8% 5 year fixed mortgages next month here

Rest will have to follow?

Won't be far off tracker rates in 12 - 18 months if that's true

Will that drive house prices up or down?

My guess would be up, but I think the banks internal quotas for mortgage approvals and the help to buy scheme rule changes would have a much bigger impact.

Wanderer78 · 15-08-2020 12:56pm

Roger the cabin boy wrote:

If the answer to the problem of really low interest rates is even lower interest rates then we are in an alternative universe.

We re already there to some degree, I wonder will we enter the world of dual rates?

silver2020 · 15-08-2020 1:03pm

Thierry12 wrote: »

Avant are rumoured to be bringing in 1.5-1.8% 5 year fixed mortgages next month here

Rest will have to follow?

Won't be far off tracker rates in 12 - 18 months if that's true

Will that drive house prices up or down?

That's the rate they charge in Spain (owned by BankInter since last year). It will not be the rate they charge here. There will be at least a 0.5% premium due to the near impossibility of repossession in a reasonable timeframe and the legal costs involved.

But what they will bring is long term fixed rates. Definitely 10 year and 15 year options which will be their headline generator, possibly up to 25 years but not initially. Some brokers have been given an indication of what they will be offering, but nothing is set yet. Launching with a 20 year fixed rate of 3% would see massive interest from people.

I expect to see a 15 year fixed rate of 2.99%. That would see a 30 year mortgage of 400k fixed at €1686 per month. This may also bring the central bank to ease multiples for long term fixed rates and allow for 4.5 times borrowing.

On the general theme of recession, I can see a slowdown but no prolonged recession as there is not the personal credit bubble of previous recessions. Spending will move to other areas and job creation will increase in many sectors and these will be filled from the sectors that will see a downturn.

But share prices in many companies are in bubble territory and I'm moving out of my higher risk pension funds even though there's a 4% charge for doing so.

Wanderer78 · 15-08-2020 1:35pm

silver2020 wrote:

On the general theme of recession, I can see a slowdown but no prolonged recession as there is not the personal credit bubble of previous recessions. Spending will move to other areas and job creation will increase in many sectors and these will be filled from the sectors that will see a downturn.

But there is bubbles in asset markets, as you said, which if they burst simultaneously, we could have serious problems, so, who knows. Spending requires confidence, which is effectively none existing at the moment, this takes time to recover, and nobody can predict when that will occur, accurately, and what happens those that lose their jobs? This has the potential to go horribly wrong, very quickly, but who knows.....

Roger the cabin boy · 15-08-2020 2:32pm

https://news.sky.com/story/coronavirus-debenhams-owners-draw-up-plan-for-department-store-chains-liquidation-12049794

House prices rising you say?

RGARDINR · 15-08-2020 3:44pm

Roger the cabin boy wrote: »

https://news.sky.com/story/coronavirus-debenhams-owners-draw-up-plan-for-department-store-chains-liquidation-12049794

House prices rising you say?

Just wondering on the Debenhams situation, how much longer in the tank do they have? Realistically if you read it until end of next month if no buyer is found, would that be right. Staff who were in Irish stores might be thinking there is no point in still picketing their stores now if looks like there going in the UK. Wonder would the store even make it to Xmas time in the UK. I still buy from online Debenhams. Could be a lot more bigger sales on their website soon.

Roger the cabin boy · 15-08-2020 4:13pm

RGARDINR wrote: »

Just wondering on the Debenhams situation, how much longer in the tank do they have? Realistically if you read it until end of next month if no buyer is found, would that be right. Staff who were in Irish stores might be thinking there is no point in still picketing their stores now if looks like there going in the UK. Wonder would the store even make it to Xmas time in the UK. I still buy from online Debenhams. Could be a lot more bigger sales on their website soon.

Well, sales are going to tank with the threat of closure hanging around.
Who would want to spend any money when you might not be able to claim any warranty or returns.

Wanderer78 · 15-08-2020 4:40pm

Roger the cabin boy wrote:

Well, sales are going to tank with the threat of closure hanging around. Who would want to spend any money when you might not be able to claim any warranty or returns.

....and watch our politicians start their drumming machine of let's get spending, let's get borrowing!

Darc19 · 15-08-2020 7:44pm

RGARDINR wrote: »

Just wondering on the Debenhams situation, how much longer in the tank do they have? Realistically if you read it until end of next month if no buyer is found, would that be right. Staff who were in Irish stores might be thinking there is no point in still picketing their stores now if looks like there going in the UK. Wonder would the store even make it to Xmas time in the UK. I still buy from online Debenhams. Could be a lot more bigger sales on their website soon.

There's a potential buyer for the Irish stores in the wings. Mandate has asked picketers to withdraw.
This could happen quickly.

The likely buyer is Next who will use them to trial a new department store concept. They were going to do this in the uk but debenhams stopped them taking over 5 stores.

Debenhams has been a basket case for the past few years. Nothing was going to save them imo. The surprise is that they haven't gone bust yet in the UK

Even 20+ years ago they had issues (I used to be a sales manager in the uk and they were a customer - near impossible to get paid from them)

Roger the cabin boy · 18-08-2020 11:54am

Felipe Ashy Signboard wrote: »

https://twitter.com/SkyNews/status/1295605043593383937

6 months ago, this would have been earth shattering news.
Now, it's just another headline.

Rinse/repeat

Wanderer78 · 18-08-2020 12:30pm

Roger the cabin boy wrote:

6 months ago, this would have been earth shattering news. Now, it's just another headline.

Still devestating for employees though

Cyrus · 18-08-2020 12:31pm

Roger the cabin boy wrote: »

6 months ago, this would have been earth shattering news.
Now, it's just another headline.

Rinse/repeat

this isnt really covid related though, M&S have been in rag order for years, they may be using Covid as a smoke screen or it may have accelerated their plans but it was going to happen regardless.

For that see debenhams, BOI and the rest.

Cyrus · 18-08-2020 12:36pm

Arthur Daley wrote: »

Jim Power on with Dunphy was suggesting that the Income tax has held up because more or less the only people who have lost their jobs were paying little or no tax.

But from a business perspective certain businesses looking to cut costs won't be 'top heavy' for long with high earners, and if jobs or parts of jobs can be done from home, there may be a suggestion that the job (or part of it) can be done anywhere.

er surely whats important is who is doing the job, not where they are doing it?

saying a senior exec can work from home therefore that senior exec can be replaced by someone in a cheaper jurisdiction doesnt follow.

Eric Cartman · 18-08-2020 12:38pm

Roger the cabin boy wrote: »

https://news.sky.com/story/coronavirus-debenhams-owners-draw-up-plan-for-department-store-chains-liquidation-12049794

House prices rising you say?

High street retail has been on its deathbed for years, especially larger mid tier fashion brands. We're a few years behind the US but have a look at what happened big players like sears, Macy's etc...

if your store is an anchor tenant in a shopping centre , you're probably fighting for survival now.

AndrewJRenko · 21-08-2020 12:15am

Arthur Daley wrote: »

Jim Power on with Dunphy

Statler-and-waldorf-caxton-street_740_486_s_c1_GH_content_650px.jpg

combat14 · 22-08-2020 4:01pm

there wont be any recession .. a million students going back to school starting next week.. covid is gone god be praised .. the economy is saved

Wanderer78 · 22-08-2020 4:03pm

combat14 wrote: »

there wont be any recession .. a million students going back to school starting next week.. covid is gone god be praised .. the economy is saved

the economic story is just unfolding now, it doesnt look pretty, and covid is far from gone

Gerry Hatrick · 22-08-2020 4:04pm

combat14 wrote: »

there wont be any recession .. a million students going back to school starting next week.. covid is gone god be praised .. the economy is saved

Wrong on both counts.

Geuze · 22-08-2020 4:25pm

combat14 wrote: »

there wont be any recession .. a million students going back to school starting next week.. covid is gone god be praised .. the economy is saved

The recession started already.

We are in it now.

Q2 saw very sharp falls in GDP.

Geuze · 22-08-2020 4:26pm

Eric Cartman wrote: »

High street retail has been on its deathbed for years, especially larger mid tier fashion brands. We're a few years behind the US but have a look at what happened big players like sears, Macy's etc...

if your store is an anchor tenant in a shopping centre , you're probably fighting for survival now.

And have retail rents fallen to reflect the difficulties faced by retailers?

I don't think so?

Wanderer78 · 22-08-2020 4:26pm

Geuze wrote:

Q2 saw very sharp falls in GDP.

What's the official definition of a recession again?

Wanderer78 · 22-08-2020 4:28pm

Geuze wrote:

And have retail rents fallen to reflect the difficulties faced by retailers?

Have the banks reduced their rates, and reduced landlords overall debts, in order to do so?

Geuze · 22-08-2020 4:33pm

Wanderer78 wrote: »

What's the official definition of a recession again?

Standard definition is two consecutive quarters of falling real GDP.

According to that defn, we won't know until the Q3 data is released, whether Ireland is officially in recession.

There was growth in Q1.

https://www.cso.ie/en/releasesandpublications/er/na/quarterlynationalaccountsquarter12020final/

Here is a discussion:

http://econbrowser.com/recession-index

Geuze · 22-08-2020 4:35pm

Wanderer78 wrote: »

Have the banks reduced their rates, and reduced landlords overall debts, in order to do so?

Prices can fall even if costs remain the same.

Many buildings are owned outright.

Many may have small loans.

Wanderer78 · 22-08-2020 4:43pm

Geuze wrote: »

Prices can fall even if costs remain the same.

Many buildings are owned outright.

Many may have small loans.

oh i understand that alright, but we dont know the details, so nobody really knows for sure, but its all interconnected

Geuze · 01-09-2020 11:18am

Estimated mild deflation in over 10 EU countries now.

https://ec.europa.eu/eurostat/documents/2995521/10545459/2-01092020-AP-EN.pdf/7c0db6bb-3974-ce20-a7f0-6281743d0d7c

-1.2% estimated for Ireland for August.

Mainly driven by energy prices falling.

Wanderer78 · 01-09-2020 3:49pm

Geuze wrote:

Estimated mild deflation in over 10 EU countries now.

What are the issues with deflation?

KyussB · 01-09-2020 5:10pm

The main issue with deflation, is that it increases the real value of debts (making them bigger), and risks getting the economy trapped in Debt Deflation - where deleveraging/paying-down of Private Debt, suppresses peoples purchasing power and spending in the economy - at a time when such spending is desperately needed, to restore/boost the economy back to Full Output.

If Private Debt levels are high enough, this can become a malaise on the economy that lasts for decades - like in Japan from the 90's onwards - and in most western countries since 2008.

Deflation is probably the thing that is most universally agreed among economists, as being a bad and undesireable thing - which is why such huge contortionist policies, like QE and negative interest rates, are being undertaken by central banks in order to (unsuccessfully) reverse it - and is why we're nearly at the point where direct financing of governments using money creation, is acceptable (as all other methods gradually become ineffective, and end up hugely distorting wealth inequality).

Wanderer78 · 01-09-2020 5:39pm

KyussB wrote: »

The main issue with deflation, is that it increases the real value of debts (making them bigger), and risks getting the economy trapped in Debt Deflation - where deleveraging/paying-down of Private Debt, suppresses peoples purchasing power and spending in the economy - at a time when such spending is desperately needed, to restore/boost the economy back to Full Output.

If Private Debt levels are high enough, this can become a malaise on the economy that lasts for decades - like in Japan from the 90's onwards - and in most western countries since 2008.

Deflation is probably the thing that is most universally agreed among economists, as being a bad and undesireable thing - which is why such huge contortionist policies, like QE and negative interest rates, are being undertaken by central banks in order to (unsuccessfully) reverse it - and is why we're nearly at the point where direct financing of governments using money creation, is acceptable (as all other methods gradually become ineffective, and end up hugely distorting wealth inequality).

had a feeling of this, just needed it confirmed, thanks as always

Arthur Daley · 01-09-2020 6:39pm

Good if you're fixed income though. Pensioners won't complain.

Wanderer78 · 01-09-2020 8:09pm

KyussB wrote:

Deflation is probably the thing that is most universally agreed among economists, as being a bad and undesireable thing - which is why such huge contortionist policies, like QE and negative interest rates, are being undertaken by central banks in order to (unsuccessfully) reverse it - and is why we're nearly at the point where direct financing of governments using money creation, is acceptable (as all other methods gradually become ineffective, and end up hugely distorting wealth inequality).

Neoclassicals, are still bloody digging their heels in though, it's kinna disturbing to watch unfold, we all could end up in serious trouble, even the wealthy

Geuze · 01-09-2020 9:53pm

Wanderer78 wrote: »

What are the issues with deflation?

Deflation due to productivity, increased supply, etc. is welcome.

Think of computers, TVs, etc.

Price deflation due to a recession is not welcome, it's a symptom of a lack of demand.

One factor causing the current mild deflation are falling energy prices, these positive supply-side shocks should not be conflated/confused with a recession.

combat14 · 01-09-2020 9:58pm

electricity prices set to go up about 10 euro a month in october with change to PSO levy charge

Wanderer78 · 01-09-2020 9:58pm

Geuze wrote:

Deflation due to productivity, increased supply, etc. is welcome.

Geuze wrote:

Price deflation due to a recession is not welcome, it's a symptom of a lack of demand.

Can't bait neoclassical!

KyussB · 02-09-2020 2:46am

Geuze wrote: »

Deflation due to productivity, increased supply, etc. is welcome.

Think of computers, TVs, etc.

Price deflation due to a recession is not welcome, it's a symptom of a lack of demand.

One factor causing the current mild deflation are falling energy prices, these positive supply-side shocks should not be conflated/confused with a recession.

Agreed generally - though on the last sentence, falling energy prices is often a symptom of a recession

brisan · 02-09-2020 7:45am

KyussB wrote: »

Agreed generally - though on the last sentence, falling energy prices is often a symptom of a recession

Exactly
Lack of demand for oil and energy from manufacturing industries leads to an oversupply and a price drop.

Geuze · 02-09-2020 9:38am

KyussB wrote: »

Agreed generally - though on the last sentence, falling energy prices is often a symptom of a recession

The sharp falls in crude oil prices in March 2020 were due to Saudi-Russian tensions within OPEC, about Russia's refusal to cut production.

Nothing specifically to do with COVID.

Tea drinker · 02-09-2020 7:06pm

Wanderer78 wrote: »

i am indeed, and i ll keep going until its widely accepted. we need to step away from the idea of constantly feeling the need to reduce public debt, private debt has in fact, historically caused far more damage, as we ve recently discovered. create the bonds, keep creating the bonds, until confidence returns, particularly in the private sector, then redirect towards servicing public debt

UK is spooked https://www.independent.co.uk/news/uk/politics/coronavirus-pandemic-economy-tax-rises-national-insurance-vat-a9696751.html

“Hefty” tax rises will be needed to deal with the economic aftermath of the coronavirus pandemic, but chancellor Rishi Sunak will have to delay as long as two years to introduce them to avoid choking off recovery, a respected thinktank has said.

And the director of the Institute for Fiscal Studies, Paul Johnson, said that Mr Sunak will have to hike rates of the most high-profile taxes, like income tax, national insurance and VAT, in order to raise the “really serious amounts of money” needed to fill the black hole in state finances.

Rises in levies paid by all would be politically perilous, as their impact would be felt in voters’ pockets just as Boris Johnson is preparing for the general election scheduled for 2024.

but will they be delayed for 2 years? Meanwhile over 'ere https://www.independent.ie/business/irish/resilient-taxes-cant-match-ballooning-government-spending-as-9452bn-defecit-recorded-39498950.html

The amount of tax being collected by the State has continued to defy the scale of the pandemic economic crash but nowhere near enough to fund ballooning spending, new Exchequer data shows.

The State recorded a deficit of €9.452bn for the nine months to the end of August as government spending dramatically outstrips income.

Total net voted expenditure to the of end of July was €43.2bn, up 28pc on last year.

The rise is driven by the State's response to the Covid-19 pandemic, including a sharp rise in health spending and spending by the Department of Employment Affairs and Social Protection on wage supports and job subsidies.

One bright spot in the numbers was a payment of €2bn from NAMA to the Exchequer.

A bright spot? Just means we are down 11 billion not 9.

Wanderer78 · 02-09-2020 7:15pm

Tea drinker wrote: »

UK is spooked

but will they be delayed for 2 years? Meanwhile over 'ere https://www.independent.ie/business/irish/resilient-taxes-cant-match-ballooning-government-spending-as-9452bn-defecit-recorded-39498950.html

A bright spot? Just means we are down 11 billion not 9.

unfortunately cant read the uk link, whats the craic?

keep covid payments in place, keep people spending, consider rolling this out to all citizens, should make things a little easier, but it will introduce its own issues, but things will probably be far worse if you dont!

Recession predictions

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