Signs of slowing

[nod]

Just called at my local quarry to collect a couple of tone of sand 

Very quiet for a Saturday morning and the first time I’ve been without there being a restriction on building sand 

For the last twelve months there’s been a 60 tone per day restriction 

Collection or delivery 

[Kelvin]

Problem is there’s talk of stagflation…

[SteamyTea]

27 minutes ago, Kelvin said:

Problem is there’s talk of stagflation

Why is that a problem, general, and sector, inflation takes cash out of the economy.

As long as personal debt does not get out of control, then inflation can quickly drop: that does not mean prices go back to the level of before the inflation cycle, just a 'new normal' is created.

[ProDave]

I genuinely think the economists don't have the slightest clue how to deal with the present situation.

 

We have high inflation cause by a war (mostly)  They are applying the "traditional cure" for inflation that is caused by overheated consumer spending and too much consumer borrowing, that is to raise interest rates.  THAT is going to create the recession that is now inevitable. and won't fix the high fuel costs and probably food shortages / high food costs. Overheated consumer spending is not the cause of this inflation so why do they think the traditional fix will help this time?

 

On the other hand, I agree interest rates have been WAY too low for a very long tome so need to rise.  The fact they have stayed so low for some time means the economy was very fragile already before the present problems.  They have been so low for so long, we now have a generation of consumers who have never know 7 or even 10% interest rates.  A LOT of people are going to have a very big shock.

 

Oh boy I am so glad I will be drawing my largest pension in 7 months and at that point I don't care if I have any work or not, the plan is to wind down and retire very soon.  the coming recession will make it easy to wind down my business and quietly close down with no expectation of starting up again after the recession.

 

The good thing to come out of the forecasts is the recession will be only a year or so long, so time to leave my SIPP invested to hopefully catch the recovery  at the end of the recession to boost it before I need to draw on that one.

 

 

[JohnMo]

The man delivering gravel this week also does concrete, he was saying lots of self builds are being put on hold, doing enough to initiate the project for building control and then stopping, they have lots of recent cancellations.

[LA3222]

11 minutes ago, ProDave said:

I genuinely think the economists don't have the slightest clue how to deal with the present situation.

 

We have high inflation cause by a war (mostly)  They are applying the "traditional cure" for inflation that is caused by overheated consumer spending and too much consumer borrowing, that is to raise interest rates.  THAT is going to create the recession that is now inevitable. and won't fix the high fuel costs and probably food shortages / high food costs. Overheated consumer spending is not the cause of this inflation so why do they think the traditional fix will help this time?

 

On the other hand, I agree interest rates have been WAY too low for a very long tome so need to rise.  The fact they have stayed so low for some time means the economy was very fragile already before the present problems.  They have been so low for so long, we now have a generation of consumers who have never know 7 or even 10% interest rates.  A LOT of people are going to have a very big shock.

 

Oh boy I am so glad I will be drawing my largest pension in 7 months and at that point I don't care if I have any work or not, the plan is to wind down and retire very soon.  the coming recession will make it easy to wind down my business and quietly close down with no expectation of starting up again after the recession.

 

The good thing to come out of the forecasts is the recession will be only a year or so long, so time to leave my SIPP invested to hopefully catch the recovery  at the end of the recession to boost it before I need to draw on that one.

 

 

I disagree with you in a lot of ways as to the cause. Consumer spending absolutely plays a big part, all the COVID money saved up, now being spent at a time when supply chains collapsed played a big part and still does. The war is the other half of the story. Interest can impact on some of that but not the other. It's a complicated soup and there is no silver bullet.

 

I suspect the only thing that will 'fix' it long term will involve Joe public sucking it up and taking the hit, all the while Shell, BP etc will continue to announce records profits. Sucks ass but seems to be the way the world works.

[ProDave]

4 minutes ago, LA3222 said:

all the while Shell, BP etc will continue to announce records profits. Sucks ass but seems to be the way the world works.

If that bothers you, buy shell, BP etc shares and enjoy the dividend.

[Kelvin]

37 minutes ago, SteamyTea said:

Why is that a problem, general, and sector, inflation takes cash out of the economy.

As long as personal debt does not get out of control, then inflation can quickly drop: that does not mean prices go back to the level of before the inflation cycle, just a 'new normal' is created.

 

Demand drops, prices are still going up, interest rates get pushed up to try and counter inflation, country tips into recession, unemployment starts to increase. The concern seems to be that inflation won’t quickly drop and could become embedded in the economy. 

[Kelvin]

10 minutes ago, JohnMo said:

The man delivering gravel this week also does concrete, he was saying lots of self builds are being put on hold, doing enough to initiate the project for building control and then stopping, they have lots of recent cancellations.

The problem we have is the way Heb Homes works is you need to pay for 20% of the kit price to get the final building warrant drawings. Had I known this at the beginning I wouldn’t have gone with them. A year ago I didn’t know there was going to be a war of course. We could of course still pause but we talked that through this week. Therefore, we are going to battle through this and get the house built. We might gain by better availability of labour and materials. We’ll just have to suck up the extra cost. We are also using all our own cash so no mortgage so the quicker we build it the better. 

 

 

[oldkettle]

22 minutes ago, ProDave said:

We have high inflation cause by a war (mostly) 

 

Sorry, Dave, have to disagree here. Remember when the sudden surge in natural gas prices occurred? Last year, well before the war. The same and worse for say building materials. And now it is partially self-sustaining as the rise in energy prices makes pretty much everything more expensive. Yes, we do hope that the interest rate rise plus "will do whatever it takes" stance of Central Banks can bring the inflation down, preventing the spiral - if moronic green policies are suspended. 

Look at what idiots across the world do: ignoring the lesson Sri-Lanka taught (and anyone who cared knew about it last year) they try to limit usage of fertilisers and take land out of agricultural use. Really hard not to suspect a conspiracy. Trudeau doesn't come up with ideas like this himself. 

 

https://www.msn.com/en-ca/news/other/trudeau-pushes-ahead-on-fertilizer-reduction-as-provinces-and-farmers-cry-foul/ar-AAZSrBZ

https://www.bbc.co.uk/news/world-europe-62335287

[Marvin]

49 minutes ago, SteamyTea said:

 

As long as personal debt does not get out of control,....

IMHO I think personal debt is already out of control, caused by the reliance of never ending low interest rates and large borrowing giving rise to a false sense of security as to the future cost of servicing debt. People are already facing bank of England interest rates seven times more than it was this time last year. August 2021 = 0.25%  August 2022 = 1.75%. and I do not expect it to go down any time soon....

 

Many governments have been "printing money" for a few years and propping up the economy when they should have corrected the problem by raising interest rates (including ours): Kicking the can down the road.  This will all end it tears.  

 

[Marvin]

Hi @Kelvin

 

If you are self building your own place then in my humble opinion you are right, the best thing you can do is build it.  

 

Good luck

 

M

[Marvin]

12 minutes ago, oldkettle said:

Sorry, Dave, have to disagree here. Remember when the sudden surge in natural gas prices occurred? Last year, well before the war.

This was the start, and interestingly Russia seems to have been part of the mix along with more energy required for Asia and industry generally.

 

https://www.bayes.city.ac.uk/news-and-events/news/2021/september/what-is-behind-the-rising-gas-prices

[Kelvin]

12 minutes ago, Marvin said:

Hi @Kelvin

 

If you are self building your own place then in my humble opinion you are right, the best thing you can do is build it.  

 

Good luck

 

M

Yep. It won’t get any cheaper if we wait. 

[nod]

1 hour ago, Kelvin said:

Problem is there’s talk of stagflation…

I think the talk BBC in particular are pushing us into a recession 

Covids a good example Hardly mentioned on the BBC and others 

But it’s just as bad as at its peak 

If there hadn’t been a war they would still be publishing infection and death artistic

[SteamyTea]

49 minutes ago, Kelvin said:

inflation won’t quickly drop and could become embedded in the economy. 

Been embedded for 90 years at least.

Savers are looking forward to higher interest rates. There are, last time I looked at the ONS and BoE figures, more savers than borrowers, and we have historically high amounts of savings.

An economic slowdown is not always a bad thing, a lot depends on what was driving the growth. In the UK it is not productivity, usually cheap money.

 

We will have a skew to the economy, and growth will be hampered because we have left the EU trading block, but, if you believe this government, it is what everyone wanted.

[SteamyTea]

32 minutes ago, Marvin said:

Many governments have been "printing money" for a few years

Usually buying and selling bonds/gilts, not the same as physically/electronically printing money.

On day the bonds will mature, then we will see who has their pants down when the tide goes out.

Hopefully we will have swapped out our bad ones for better ones.

[SteamyTea]

10 minutes ago, nod said:

But it’s just as bad as at its peak

Deaths from it are a lot lower now.

https://coronavirus.data.gov.uk/

Edited August 6, 2022 by SteamyTea

[Kelvin]

High inflation could become embedded. I’m sure you knew that’s what I meant. High inflation, low growth, recession and possible increasing unemployment isn’t  a great economic outlook if that’s the direction of travel.

[SteamyTea]

1 minute ago, Kelvin said:

low growth

Depends where the growth is reduced, if it takes away the froth in the economy, not so bad.

2 minutes ago, Kelvin said:

increasing unemployment

We have had historically low unemployment rates for a decade or more now.

No large nationalised companies to close down.

 

[Marvin]

2 minutes ago, SteamyTea said:

We have had historically low unemployment rates for a decade or more now

Yes, adding to a false sense of security as to the future cost and ability of servicing debt.

If you believe "When America sneezes the world catches cold" watch America as they catch a cold.

[Kelvin]

Depends on what you mean by froth and whether your business benefits from it. You’ve already heard on this thread some anecdotal evidence of people putting builds on hold. That might just mean that demand falls back to a more normal level rather than the overheated levels we’ve seen. I was chatting to the farmer we bought the land off. He was telling me he’s already seen a reduction in demand for the soft fruit he grows. It’s taken him a bit by surprise just how quickly it’s changed. 
 

I’m not convinced we will see an increase in unemployment given the big gap between number of jobs needed and number of people available to fill them. This gap will probably reduce a bit as companies reduce/stop recruitment and folk that left employment during the pandemic go back to work. 

[nod]

37 minutes ago, Kelvin said:

Depends on what you mean by froth and whether your business benefits from it. You’ve already heard on this thread some anecdotal evidence of people putting builds on hold. That might just mean that demand falls back to a more normal level rather than the overheated levels we’ve seen. I was chatting to the farmer we bought the land off. He was telling me he’s already seen a reduction in demand for the soft fruit he grows. It’s taken him a bit by surprise just how quickly it’s changed. 
 

I’m not convinced we will see an increase in unemployment given the big gap between number of jobs needed and number of people available to fill them. This gap will probably reduce a bit as companies reduce/stop recruitment and folk that left employment during the pandemic go back to work. 

I totally agree 

This recession will be totally different from the last three that some of us have lived through 

All three where driven by job losses and high unemployment 

There is still massive labour  shortages in every industry This is unlikely to change anytime soon 

 

I’m doing the plastering and framing on a site of 215 homes We are in week 104 Only nine homes completed Nothing handed over 

Covid has played a big part But labour shortages are still effecting productivity

I think inflation and interest rates will continue to rise and wages also 

 

Im still getting plenty of work into price for 2023-24 But one phone call can quickly put this on hold 

 

Its going to be a tough 18 months 

 

But on the up side I’m being chased by suppliers to commit to windows ASHP etc We even had a call from Rational window suppliers offering to knock 20% off there ridiculous quote 

[SteamyTea]

3 hours ago, ProDave said:

I genuinely think the economists don't have the slightest clue how to deal with the present situation.

It is not their job to deal with it.

We have an elected government, who chooses a Chancellor, to do that job.

Economists basically describe what is happening, and give viewpoints on possible courses of action, based on history and ideology.

[ToughButterCup]

2 hours ago, nod said:

...

But it’s [COVID]  just as bad as at its peak 

...

 

Down 34.3% this week ..... I'm surprised too

https://coronavirus.data.gov.uk/