Combining news items today helps summarize where I think we are going.

  • On Friday, Q1 GDP came in stronger due to net exports and inventories.   So basically messing with numbers that don’t impact our daily lives to make the GPS number to technically looks stronger.  Though “real life” components like gas prices are up.
  • Today March spending was up .9% (expected .7%) and Income up .1% (expected .3%).  Gas prices are up as well.  Sooooo, the “economy” looks good because the pace of spending is increasing at 9x the wage growth and Savings is going down.     Read that again.   Spending 9 times the pace our wages are going up.  How does that even work??!!
  • We already have more household debt than before the crisis.   And last years’ tax cuts were basically put on a giant credit card.

Everyone talks about recession-recession.    My prediction?  We won’t ‘technically’ have a recession because things like import, export, and inventory numbers will be messed with to prevent the definition from happening.   Remember that the technical definition of a recession is 2 consecutive quarters of decreasing GDP.   No matter how shitty your life feels.   So one month they could start a trade war with China to decrease imports.  Another month they could sell more arms to Saudi Arabia to lower gas prices.

Problem is that people will be maxing out credit lines, giant student loans will be coming due, cars and houses are super expensive and PEOPLE GET CRABBY WHEN THEY CAN’T BUY NEW STUFF.  If people start missing student loan payments, they can’t get new credit cards to keep spending 9X growth in income.   Then the lower credit scores lead to higher interest rates on the hella expensive cars that people want.   Rents are up, cars are up, iphones and Samsung S10’s are $1000.   Higher inventories and net exports aren’t going to compensate for that.

Governments might not have to but people have to pay the piper at some point.