Early business recovery from a mini-2015 and 2016 recession

by

Federal Reserve Chairman Jerome Powell sees the U.S. economy generating highly optimistic expectations.

The jobless rate is at 3.9% and inflation is around the Fed’s goal of 2%. Historically, low unemployment has fueled inflation and sometimes has forced the Fed into hiking interest rates rapidly.

Many forecasters are predicting that these favorable conditions are likely to continue.

The US GDP looks like it can sustain 3+% GDP growth for some time.

The Fed has now recognized a mini-recession in 2015 and 2016. There was a sharp slowdown in business investment, caused by an interrelated weakening in emerging markets, a drop in the price of oil and other commodities, and a run-up in the value of the dollar.

The pain was confined mostly to the energy and agricultural sectors and to the portions of the manufacturing economy that supply them with equipment. Overall economic growth slowed but remained in positive territory. The national unemployment rate kept falling.

If 2016 was a recession then the recovery is only 2 years old and not 9 years

If we recognize the 2015-2016 weakness as a bear market recession, then it might change the age of the recovery. Do we reset the clock on the economic recovery?

Only US unemployment and GDP did not hit the definitions of recession.

There was barely any GDP growth for two quarters at the end of 2015. There was two-quarters of anemic GDP growth at the end of 2012. There was a very weak first three-quarters of 2011.

There is the definition that a bear market occurs if the S&P 500 falls 20%. This is a consistent term with a defined meaning because it can’t be manipulated. However, it is causing investors to lose sight of how weak 2015-2016 was. If you understand the weakness and change your mind from thinking the stock market is on a 2-year run instead of a 9-year run, you can allow yourself to be bullish if the facts such as private domestic fixed investment and capex spending growth support this narrative.

* Median S&P stocks were down 25% (the S&P had a 15% pullback)
* Russell 2000 was down 27%
* Japan stocks were down 29%
* Dow Jones was down 32%
* Emerging stocks were down 40%
* China stocks were down 49%
* Crude oil was down 76%

There was a pullback in Capex spending at the start of 2016.

70 thoughts on “Early business recovery from a mini-2015 and 2016 recession”

  1. But that bounce-back does not have to happen. The conservative preferred plan for dealing with a Major Recession is to do nothing except to severely cut spending and give a tax break to the rich. If they had their way they would remove every thing that was put in place to protect the economy after the Great Depression. If the Short Sellers are driving the stock market to zero, do nothing. If there is a run in the bank do nothing. In fact they would get rid of Deposit Insurance. If people are starving, do nothing. If people riot, send out the national guard to mow them down. No food stamp, no unemployment insurance, no social security, no safety net. They still wonder why FDR served four terms.

  2. But that bounce-back does not have to happen. The conservative preferred plan for dealing with a Major Recession is to do nothing except to severely cut spending and give a tax break to the rich. If they had their way they would remove every thing that was put in place to protect the economy after the Great Depression. If the Short Sellers are driving the stock market to zero do nothing. If there is a run in the bank do nothing. In fact they would get rid of Deposit Insurance. If people are starving do nothing. If people riot send out the national guard to mow them down. No food stamp no unemployment insurance no social security no safety net. They still wonder why FDR served four terms.

  7. The comment about the future is that Trump had one quarter of 4+% GDP growth and now every Trumpster is predicting 6+ years more of 4+% growth.

  8. The comment about the future is that Trump had one quarter of 4+{22800fc54956079738b58e74e4dcd846757aa319aad70fcf90c97a58f3119a12} GDP growth and now every Trumpster is predicting 6+ years more of 4+{22800fc54956079738b58e74e4dcd846757aa319aad70fcf90c97a58f3119a12} growth.

  9. But that bounce-back does not have to happen. The conservative preferred plan for dealing with a Major Recession is to do nothing except to severely cut spending and give a tax break to the rich. If they had their way they would remove every thing that was put in place to protect the economy after the Great Depression. If the Short Sellers are driving the stock market to zero, do nothing. If there is a run in the bank do nothing. In fact they would get rid of Deposit Insurance. If people are starving, do nothing. If people riot, send out the national guard to mow them down. No food stamp, no unemployment insurance, no social security, no safety net. They still wonder why FDR served four terms.

  13. Yes, there was a mini-recession in 15/16. And no, it wasn’t the fault of any president. And, to be sure, presidents don’t “create” deficits. Congress does. Last I looked, the president can’t spend a dime of our money except what Congress allows him to. We can talk about Democrat or Republican congressional appropriations that occurs during the term of one or the other president. However, presidents do influence the economy. They can cheerlead and support Congress (Obamacare, Gulf War, Tax cuts) or obstruct them, using the bully pulpit. Ultimately, CONgress (yes, intentional spelling) taxes and spends. There is an exception, and that is the Fed. QE was dreamt up by Bernanke (with a lot of help from Goldman) and in effect, two private citizens who don’t report to “the people”, did Congress’ job and pumped in huge amounts of money. Namely, QE squished the interest rates, especially the long ones. This gave Congress the ability to borrow twice as much money as before for the same cost. And they did. All intentional. Tax receipts had cratered and the only other option was to slash spending. So, both Republicans and Democrats alike gladly took advantage of this “gift” from the Fed. Politicians don’t get re-elected on a platform of saving money. As for the 15/16 downturn, several factors. Commodity prices fell, as did oil prices (strong dollar, ECB QE, China downturn yada yada), so significantly less capex (laying down rigs). But the kicker was the Fed – again. The Fed began to ease QE to soon. Turns out all their “assumptions” of oil prices-economy were wrong (and had been for years). So they cranked up borrowing costs precisely when the two huge industries that are credit-heavy, needed them. Oops. Idiots. Fed finally realized they goofed and relaxed things, and by the end of 2016 the economy got better.

  14. Yes there was a mini-recession in 15/16. And no it wasn’t the fault of any president. And to be sure presidents don’t create”” deficits. Congress does. Last I looked”” the president can’t spend a dime of our money except what Congress allows him to. We can talk about Democrat or Republican congressional appropriations that occurs during the term of one or the other president. However presidents do influence the economy. They can cheerlead and support Congress (Obamacare Gulf War Tax cuts) or obstruct them using the bully pulpit. Ultimately CONgress (yes intentional spelling) taxes and spends.There is an exception and that is the Fed. QE was dreamt up by Bernanke (with a lot of help from Goldman) and in effect”” two private citizens who don’t report to “”””the people”””””” did Congress’ job and pumped in huge amounts of money. Namely QE squished the interest rates especially the long ones. This gave Congress the ability to borrow twice as much money as before for the same cost. And they did. All intentional. Tax receipts had cratered and the only other option was to slash spending. So”” both Republicans and Democrats alike gladly took advantage of this “”””gift”””” from the Fed. Politicians don’t get re-elected on a platform of saving money.As for the 15/16 downturn”” several factors. Commodity prices fell as did oil prices (strong dollar ECB QE China downturn yada yada)”” so significantly less capex (laying down rigs). But the kicker was the Fed – again. The Fed began to ease QE to soon. Turns out all their “”””assumptions”””” of oil prices-economy were wrong (and had been for years). So they cranked up borrowing costs precisely when the two huge industries that are credit-heavy”” needed them. Oops. Idiots. Fed finally realized they goofed and relaxed things”” and by the end of 2016 the economy got better.”””

  15. It was a bounce-back from the 2009/9 pull-back. Basically, in 2008/9 companies retrenched extremely fast, slashed inventory, cut off suppliers, cleared the underbrush as it were. They (rightly) thought the end was near. Then QE happened and the credit spigots opened up again. Household debt was never really reduced, it just plateaued slightly and then shot up again. Companies geared up production and GDP growth shot back up. Very unusual see-saw from the past, but with modern supply chain systems etc, the economy can turn very quickly. The lead time for companies to react to economic events has been extremely shortened. But I wouldn’t read much into GDP. Filling up thousands of acres of cars in lots by “channel stuffing” isn’t always a good indicator of a growing economy.

  16. It was a bounce-back from the 2009/9 pull-back. Basically in 2008/9 companies retrenched extremely fast slashed inventory cut off suppliers cleared the underbrush as it were. They (rightly) thought the end was near. Then QE happened and the credit spigots opened up again. Household debt was never really reduced it just plateaued slightly and then shot up again. Companies geared up production and GDP growth shot back up. Very unusual see-saw from the past but with modern supply chain systems etc the economy can turn very quickly. The lead time for companies to react to economic events has been extremely shortened. But I wouldn’t read much into GDP. Filling up thousands of acres of cars in lots by channel stuffing”” isn’t always a good indicator of a growing economy.”””

  17. You forgot that when Bush left he left us with the “Great Recession” so Obama and the Democrats couldn’t cut spending then. Eventually when the economy recovered they were able to reduce the deficit. Of course Trump and teh Republicans were happy to cut taxes again and boost the deficit.

  18. You forgot that when Bush left he left us with the Great Recession”” so Obama and the Democrats couldn’t cut spending then. Eventually when the economy recovered they were able to reduce the deficit. Of course Trump and teh Republicans were happy to cut taxes again and boost the deficit.”””

  25. Yes, there was a mini-recession in 15/16. And no, it wasn’t the fault of any president. And, to be sure, presidents don’t “create” deficits. Congress does. Last I looked, the president can’t spend a dime of our money except what Congress allows him to. We can talk about Democrat or Republican congressional appropriations that occurs during the term of one or the other president. However, presidents do influence the economy. They can cheerlead and support Congress (Obamacare, Gulf War, Tax cuts) or obstruct them, using the bully pulpit. Ultimately, CONgress (yes, intentional spelling) taxes and spends.

    There is an exception, and that is the Fed. QE was dreamt up by Bernanke (with a lot of help from Goldman) and in effect, two private citizens who don’t report to “the people”, did Congress’ job and pumped in huge amounts of money. Namely, QE squished the interest rates, especially the long ones. This gave Congress the ability to borrow twice as much money as before for the same cost. And they did. All intentional. Tax receipts had cratered and the only other option was to slash spending. So, both Republicans and Democrats alike gladly took advantage of this “gift” from the Fed. Politicians don’t get re-elected on a platform of saving money.

    As for the 15/16 downturn, several factors. Commodity prices fell, as did oil prices (strong dollar, ECB QE, China downturn yada yada), so significantly less capex (laying down rigs). But the kicker was the Fed – again. The Fed began to ease QE to soon. Turns out all their “assumptions” of oil prices-economy were wrong (and had been for years). So they cranked up borrowing costs precisely when the two huge industries that are credit-heavy, needed them. Oops. Idiots. Fed finally realized they goofed and relaxed things, and by the end of 2016 the economy got better.

  26. It was a bounce-back from the 2009/9 pull-back. Basically, in 2008/9 companies retrenched extremely fast, slashed inventory, cut off suppliers, cleared the underbrush as it were. They (rightly) thought the end was near. Then QE happened and the credit spigots opened up again. Household debt was never really reduced, it just plateaued slightly and then shot up again. Companies geared up production and GDP growth shot back up. Very unusual see-saw from the past, but with modern supply chain systems etc, the economy can turn very quickly. The lead time for companies to react to economic events has been extremely shortened. But I wouldn’t read much into GDP. Filling up thousands of acres of cars in lots by “channel stuffing” isn’t always a good indicator of a growing economy.

  27. Spending increased 13% under Obama. Spending increased 88% under Bush. Care to explain how the debt is Obama’s fault?

  28. Spending increased 13{22800fc54956079738b58e74e4dcd846757aa319aad70fcf90c97a58f3119a12} under Obama.Spending increased 88{22800fc54956079738b58e74e4dcd846757aa319aad70fcf90c97a58f3119a12} under Bush.Care to explain how the debt is Obama’s fault?

  29. Mark also thinks that the rich ‘hoard’ their money as cash that doesn’t circulate in the economy…think Scrooge McDuck’s money bins.

  30. Mark also thinks that the rich ‘hoard’ their money as cash that doesn’t circulate in the economy…think Scrooge McDuck’s money bins.

  31. No. Because the Democrats controlled both houses and the WH after Bush left. They could have cut spending down to any level they wanted to. But they didn’t want to. Especially since they have Kool-Aid drinkers on NBF who will cover for them with trolling about Bush and Trump. If the Dems didn’t bother to cut spending when they had the chance, they can’t b!tch when others point out the factual truth that the debt doubled under their watch. Can’t have both.

  32. No. Because the Democrats controlled both houses and the WH after Bush left.They could have cut spending down to any level they wanted to.But they didn’t want to. Especially since they have Kool-Aid drinkers on NBF who will cover for them with trolling about Bush and Trump.If the Dems didn’t bother to cut spending when they had the chance they can’t b!tch when others point out the factual truth that the debt doubled under their watch. Can’t have both.

  33. I really wish you’d pay attention. Obama DID double the national debt. FACT. Your propaganda that he ‘slowed down’ the growth of the federal debt doesn’t dispute that. Not even close. But you don’t want to talk about that…and, unlike Brenty who seems to think that Trump is relevant to a mini-recession in 2015…you had to spew something up that might have a chance to distract those with lesser critical thinking skills but not embarrass yourself like Brenty did.

  34. I really wish you’d pay attention. Obama DID double the national debt. FACT.Your propaganda that he ‘slowed down’ the growth of the federal debt doesn’t dispute that. Not even close.But you don’t want to talk about that…and unlike Brenty who seems to think that Trump is relevant to a mini-recession in 2015…you had to spew something up that might have a chance to distract those with lesser critical thinking skills but not embarrass yourself like Brenty did.

  38. Can’t wait for Obama to claim that that 2015 mini-recession was all Trump’s fault. Just wait.

  39. Yes that was bad, shame on Bush. Obama, not wanting to be outdone, created more debt than all past presidents combined. Well done Barry! Trump is setting good policy to help the economy – opposite of Obama – but he along with the Republicans are doing NOTHING to reduce the debt. Will our economy grow fast enough to keep it all from collapsing? Crazy game the politicians are playing.

  40. Yes that was bad shame on Bush. Obama not wanting to be outdone created more debt than all past presidents combined. Well done Barry! Trump is setting good policy to help the economy – opposite of Obama – but he along with the Republicans are doing NOTHING to reduce the debt. Will our economy grow fast enough to keep it all from collapsing? Crazy game the politicians are playing.

  41. I really wish conservatives would fact check more often. From Forbes article obamas-federal-debt-grew-at-a-slower-rate-than-reagan-h-w-bush-or-w-bush and using information from the Federal Reserve of St. Louis. “President Obama’s debt actually grew at a slower annual rate than any of the Republican presidents even though there were events that negatively impacted the deficit that started before he became President. The Great Recession is probably the biggest of them as can be seen in the yearly deficit numbers. While all politicians use data to support their positions, the sound bite that the debt doubled under Obama is very misleading.” In other words, it is a political lie to blame it on Obama when it was caused by something he inherited, instead of spending he racked up due to his own actions like the last three Republican presidents. Want to take a guess how much the federal debt will blow up under President Trump? Reagan Started Presidency: $965 billion Ended Presidency: $2.74 trillion Increased 184% or 13.9% per year H.W. Bush (I give him props for ending the tax breaks that blew up the deficit, that was a lot of moral courage and cost him the presidency) Started Presidency: $2.74 trillion Ended Presidency: $4.23 trillion Increased 54% or 11.5% per year (only in office for four years) Clinton Started Presidency: $4.23 trillion Ended Presidency: $5.77 trillion Increased 36% or 4.0% per year W. Bush Started Presidency: $5.77 trillion Ended Presidency: $11.1 trillion Increased 93% or 8.5% per year Obama Started Presidency: $11.1 trillion Ended Presidency: $19.85 trillion Increased 78% or 7.5% per year

  42. I really wish conservatives would fact check more often. From Forbes article obamas-federal-debt-grew-at-a-slower-rate-than-reagan-h-w-bush-or-w-bush and using information from the Federal Reserve of St. Louis.President Obama’s debt actually grew at a slower annual rate than any of the Republican presidents even though there were events that negatively impacted the deficit that started before he became President. The Great Recession is probably the biggest of them as can be seen in the yearly deficit numbers. While all politicians use data to support their positions” the sound bite that the debt doubled under Obama is very misleading.”” In other words”” it is a political lie to blame it on Obama when it was caused by something he inherited instead of spending he racked up due to his own actions like the last three Republican presidents. Want to take a guess how much the federal debt will blow up under President Trump?ReaganStarted Presidency: $965 billionEnded Presidency: $2.74 trillionIncreased 184{22800fc54956079738b58e74e4dcd846757aa319aad70fcf90c97a58f3119a12} or 13.9{22800fc54956079738b58e74e4dcd846757aa319aad70fcf90c97a58f3119a12} per yearH.W. Bush (I give him props for ending the tax breaks that blew up the deficit”” that was a lot of moral courage and cost him the presidency)Started Presidency: $2.74 trillionEnded Presidency: $4.23 trillionIncreased 54{22800fc54956079738b58e74e4dcd846757aa319aad70fcf90c97a58f3119a12} or 11.5{22800fc54956079738b58e74e4dcd846757aa319aad70fcf90c97a58f3119a12} per year (only in office for four years)ClintonStarted Presidency: $4.23 trillionEnded Presidency: $5.77 trillionIncreased 36{22800fc54956079738b58e74e4dcd846757aa319aad70fcf90c97a58f3119a12} or 4.0{22800fc54956079738b58e74e4dcd846757aa319aad70fcf90c97a58f3119a12} per yearW. BushStarted Presidency: $5.77 trillionEnded Presidency: $11.1 trillionIncreased 93{22800fc54956079738b58e74e4dcd846757aa319aad70fcf90c97a58f3119a12} or 8.5{2″

  44. If only Bush didn,t cut taxes twice while fighting two wars and then for the finish crashing the economy. You don’t think all of that had anything to do with the debt?

  45. If only Bush didnt cut taxes twice while fighting two wars and then for the finish crashing the economy. You don’t think all of that had anything to do with the debt?

  46. So what are those 4+% GDP growth during the Obama Presidency doing there? The future is rarely as predicted.

  47. So what are those 4+{22800fc54956079738b58e74e4dcd846757aa319aad70fcf90c97a58f3119a12} GDP growth during the Obama Presidency doing there? The future is rarely as predicted.

  48. You forgot that when Bush left he left us with the “Great Recession” so Obama and the Democrats couldn’t cut spending then. Eventually when the economy recovered they were able to reduce the deficit. Of course Trump and teh Republicans were happy to cut taxes again and boost the deficit.

  49. Wait, I thought Trump was a failed businessman who had less money than he claimed. Now he’s super successful and owes taxes? You guys need to get your story straight!

  59. No. Because the Democrats controlled both houses and the WH after Bush left.

    They could have cut spending down to any level they wanted to.

    But they didn’t want to. Especially since they have Kool-Aid drinkers on NBF who will cover for them with trolling about Bush and Trump.

    If the Dems didn’t bother to cut spending when they had the chance, they can’t b!tch when others point out the factual truth that the debt doubled under their watch. Can’t have both.

  60. I really wish you’d pay attention. Obama DID double the national debt. FACT.

    Your propaganda that he ‘slowed down’ the growth of the federal debt doesn’t dispute that. Not even close.

    But you don’t want to talk about that…and, unlike Brenty who seems to think that Trump is relevant to a mini-recession in 2015…you had to spew something up that might have a chance to distract those with lesser critical thinking skills but not embarrass yourself like Brenty did.

  63. Yes that was bad, shame on Bush. Obama, not wanting to be outdone, created more debt than all past presidents combined. Well done Barry! Trump is setting good policy to help the economy – opposite of Obama – but he along with the Republicans are doing NOTHING to reduce the debt.

    Will our economy grow fast enough to keep it all from collapsing? Crazy game the politicians are playing.

  64. I really wish conservatives would fact check more often. From Forbes article obamas-federal-debt-grew-at-a-slower-rate-than-reagan-h-w-bush-or-w-bush and using information from the Federal Reserve of St. Louis.

    “President Obama’s debt actually grew at a slower annual rate than any of the Republican presidents even though there were events that negatively impacted the deficit that started before he became President. The Great Recession is probably the biggest of them as can be seen in the yearly deficit numbers. While all politicians use data to support their positions, the sound bite that the debt doubled under Obama is very misleading.” In other words, it is a political lie to blame it on Obama when it was caused by something he inherited, instead of spending he racked up due to his own actions like the last three Republican presidents. Want to take a guess how much the federal debt will blow up under President Trump?

    Reagan
    Started Presidency: $965 billion
    Ended Presidency: $2.74 trillion
    Increased 184% or 13.9% per year

    H.W. Bush (I give him props for ending the tax breaks that blew up the deficit, that was a lot of moral courage and cost him the presidency)
    Started Presidency: $2.74 trillion
    Ended Presidency: $4.23 trillion
    Increased 54% or 11.5% per year (only in office for four years)

    Clinton
    Started Presidency: $4.23 trillion
    Ended Presidency: $5.77 trillion
    Increased 36% or 4.0% per year

    W. Bush
    Started Presidency: $5.77 trillion
    Ended Presidency: $11.1 trillion
    Increased 93% or 8.5% per year

    Obama
    Started Presidency: $11.1 trillion
    Ended Presidency: $19.85 trillion
    Increased 78% or 7.5% per year

  66. If only Bush didn,t cut taxes twice while fighting two wars and then for the finish crashing the economy. You don’t think all of that had anything to do with the debt?

  68. Wait, I thought Trump was a failed businessman who had less money than he claimed. Now he’s super successful and owes taxes? You guys need to get your story straight!

Comments are closed.