More Arrows Seen Pointing to a Recession

Discussion in 'Politics, Religion, Social Issues' started by solvs, Aug 6, 2008.

  1. solvs macrumors 603

    solvs

    Joined:
    Jun 25, 2002
    Location:
    LaLaLand, CA
    #1
    We don't seem to have too many recent economy threads, so I'll start another to depress us all:

    http://www.nytimes.com/2008/08/01/b...ssuserland&emc=rss&pagewanted=all&oref=slogin
    Also:

    Jobless rate climbs as 51,000 jobs vanish

    And for those wondering:

    The Real State of the US Economy

    Hint, not so good.
     
  2. Desertrat macrumors newbie

    Joined:
    Jul 4, 2003
    Location:
    Terlingua, Texas
    #2
    GDP measures money-flow transactions, right? Our GDP growth rate has been less than the inflation rate of consumer prices for quite some time, particularly if you look at the inflation rates before the methodology was changed. (http://www.shadowstats.com)

    To me, if you're spending more and getting less for it, the GDP number may go up, but that doesn't strike me as "growth" in the economy. Well, cancerous growth, maybe.

    IMO, we've been in a recessionary trend for quite a while. Further, IMO, it's getting worse and it's gonna get even moreso for the next 18 months if not longer. The real estate/credit deal is nowhere near over. Given the ongoing consumer price inflation, again IMO, we're into a period of stagflation.

    Whether or not it will be worse than 1981, I dunno. So far, it looks that way.

    I've been reading (Agora; Doug Casey) some estimates that this is to some extent a worldwide contraction, but many other countries face no more than 1.5 to 2 years before a recovery. There are quite a few doubts expressed about the US and Britain.

    'Rat
     
  3. KingYaba macrumors 68040

    KingYaba

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    Up the irons
    #3
    Something is fishy when I have to pay almost $100 to gain access to his material. :rolleyes: So we went from .9 growth to 1.9 practically doubling the growth rate. Stagflation? Yes you can argue that. Recession? no.

    “We already knew the economy was weak, and now you have both a negative growth number coupled with job losses,” said Dean Baker, a director of the liberal Center for Economic and Policy Research. “There’s a lot of real bad times to come.”

    What is this guy talking about? Negative growth number? What the hell? Is he referring to GDP? Negative growth number...... :D
     
  4. Rodimus Prime macrumors G4

    Rodimus Prime

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    Oct 9, 2006
    #4
    I was reading some articles the past few days that pointed to the entire world going into a rescission or at least a very much slowed economy. The US dollar is already gaining strength and is predicted to continue over the next year because the EU economy will slow more than the US. Same goes for Japan and so on.

    The US is predicted to pull out first. Price of Oil as dropped a lot be a combonation of a stronger dollar and reduced demand.

    As for shadow economics sight I agree with the poster above. It seems to fishy to be true. They want to much money for access to the information.

    As for the US going into another great depression that is far from the truth. Things are not slowing as badly, the goverment like it or not is acting like the anchor this time and preventing it from happening because it is larger now and has the resourses to prevent it. most of the problems are being over blown by the media.

    Now I am in the state of Texas right now and as a state it has not been as effected. It still is growing, adding more jobs, oh and did I forget to add housing prices here are still going up. Sells are a bit slower but housing values are still rising.
    Something they tend to not report is a lot of the time the local economy is very different than everyone else.
     
  5. Ugg macrumors 68000

    Ugg

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    Penryn
    #5
    Just because oil is dropping now doesn't mean much. As soon as the economy picks up steam, you can be assured that oil prices will rise again and when that happens, the US will be hit more than the EU or Japan will. Simply due to our voracious demand.

    There have also been a lot of structural changes in the EU. Sarkozy despite his sophomoric antics has successfully taken on the unions. Merkel has as well. What's more, eastern Europe, especially Poland, has a much firmer economic footing now.

    In the past, US labor laws have generally meant that the US recovers more quickly. I'm not so sure that that will happen this time around.

    Even at $120 a barrel, oil producers are making 5x more than they were just a few years ago. Their economies aren't going to slow down at all.
     
  6. Rodimus Prime macrumors G4

    Rodimus Prime

    Joined:
    Oct 9, 2006
    #6
    it could be any number of reasons. One reason a recession going to happen or is happening is the economy for lack of a better term is just exhausted and just needs to reset it self. The world is already showing signs of slowing down a lot.

    Like it or not the EU is being effected by the US. China booming economy is slowing and more than likely going to go into a recession. The reason is for China is the US economy slowing down and that its growth just was not sustainable. EU is linked to the rest of the world.

    I personally feel the reason the US is going to pull out first is it was the first country to go into a recession and is the main one that set off the domino effect.
     
  7. Desertrat macrumors newbie

    Joined:
    Jul 4, 2003
    Location:
    Terlingua, Texas
    #7
    Shadowstats is useful in that the free part shows how we juggled the numbers in calculating inflation. The "basket" has carefully been changed to ignore the things we use--like housing, transportation and food. And, assumptions: If the price of a brand name food increases, Mrs. Housewife will buy generic--which is total BS.

    China to recession? Slowing, yes--but from 12% growth down to 9%, maybe 8%. We should do so good...

    From this morning's Daily Pfennig:

    "Is the US economy any stronger now than it was a few months ago?
    >
    > Nope. Numbers released yesterday show US consumers borrowed more than twice as much as economists forecast in June as a decline in home equity forced Americans to fund purchases with credit cards and other loans. Consumer credit rose by $14.3 billion, the most since November, to $2.59 trillion. Consumers here in the US are using credit cards and loans to cover expenses as falling home values cause banks to restrict access to home-equity lines.
    >
    > And the weekly jobless claims released yesterday showed another 455,000 workers filed last week, 30,000 more than economists predicted. Continuing claims also rose to 3,311,000. The only positive piece of data released in the US yesterday showed pending sales of previously owned homes rose in June as buyers swept up foreclosed properties. But I don't think you can look at an increase in foreclosure sales as a real positive for the US economy.
    >
    > No, the underlying economic fundamentals of the US economy have not improved. In fact, they have actually worsened. Last week I reported how the administration is projecting a record high deficit in 2009. The 2008 fiscal deficit forecast of $289 billion equals 2.7% of GDP, while the 2009 fiscal deficit estimate of $482 billion is equivalent to 3.3% of GDP based on a 2.2% GDP growth projection for 2009. And if you take the IMF's projection of only .8% US GDP growth instead of the administrations overly optimistic 2.2% GDP rate, the fiscal deficit would stand at 3.5% of GDP, matching the 2004 high.
    >
    > The administration have also predicted a declining current account deficit to 4.9% and 4.7% of GDP in 2008 and 2009 respectively. This puts the total of these twin deficits (budget and current account) to near 8.0% of GDP in 2009."

    Those numbers do not give me a case of the warm fuzzies.

    King Yaba, if you merely look at the numbers, yes, the GDP is increasing--barely. But if you pay more money for fewer goods and services, is that not actually a decline in economic growth? If you spent $100 on oil last year, and spend $100 on oil this year, is your oil--your "goods"--increasing or decreasing?

    FWIW, the numbers for such things as debt ratios, money owed as a percentage of GDP, e.g., haven't been this high since the 1930s.

    'Rat
     
  8. leekohler macrumors G5

    leekohler

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    Location:
    Chicago, Illinois
    #8
    I'm glad I decided not to buy property when everyone else did.
     
  9. Desertrat macrumors newbie

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    Terlingua, Texas
    #9
    leekohler, the deal is not to buy when everybody else does. The deal is to buy BEFORE "everybody else". That is, identify a trend that looks to be heading for a bubble and buy in early--and get out BEFORE the top, when everybody else is indeed buying. That's why so many dot-com folks became millionaires, as did those home buyers who bought early, and didn't buy late and hang on too-late.

    Speculators who used I/O loans in 2001 to buy rental houses and then sold in late 2004 or early 2005, cut a real fat hog in the butt. Those who bought in mid-2005, at the peak, cut themselves in the butt.

    I sat here in my paid-for house and mostly just watched...

    'Rat
     
  10. leekohler macrumors G5

    leekohler

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    Dec 22, 2004
    Location:
    Chicago, Illinois
    #10
    I know that. What I don't understand is why so many others don't. Everyone for the last five or so years has kept telling me "Oh, it's a great time to buy!" What? Do I look stupid? Of course I knew it wasn't.
     
  11. stevento macrumors 6502

    stevento

    Joined:
    Dec 10, 2006
    Location:
    Los Angeles
    #11
    for investors it is a great time to buy. if you can pay cash for a house now's a great time. i wouldn't be taking out a mortgage right now though
    when you've got 5 foreclosures on one block, its obscene how cheap these houses come.
     
  12. Rodimus Prime macrumors G4

    Rodimus Prime

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    Oct 9, 2006
    #12
    on the other hand we are currently entering a great time to buy with the market near bottoming out. If I could afford a house I would buy now.
     
  13. Desertrat macrumors newbie

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    Terlingua, Texas
    #13
    The long-term historical average peak-to-bottom for the housing market is four years. The last peak was mid-2005. That means that on average, we'd not see bottom until mid-2009.

    Past cycles, absent the 1930s, saw the country having a helluva lot less debt and a helluva lot more savings. That tells me that this cycle could very well last more than four years to the bottom.

    Now, the bust is not everywhere in all cities and states. But there are many areas where the "best guesstimates" are for another 15% to 25% decline in housing prices. IOW, do your homework if you think that the bottom has occurred. Me, I think that's optimistic.

    'Rat
     
  14. mactastic macrumors 68040

    mactastic

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    #14
    I'd have to agree with you here. While there are bargains to be had right now, I think we're a long way from bottom yet. I think it's at least early to mid-2010 before we start to see the housing market (and the construction industry in general) regain it's footing based on the indicators I've seen. It's gonna be a slow year for builders and buyers.
     
  15. skunk macrumors G4

    skunk

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    #15
    Not a bad year for builders here - a term which includes what you would no doubt call "remodelers" - since many people will not move, but will extend their existing houses.
     
  16. iJohnHenry macrumors P6

    iJohnHenry

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    #16
    True.

    In every recession, cash is king.

    Many fortunes made on that basis.
     
  17. pdham macrumors member

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    Jan 28, 2003
    Location:
    Madison
    #17
    My wife and I just bought our first house (few months ago). I live in a City which is still seeing growth in housing prices - albeit less than 2%. And believe it or not the real estate numbers still point to it being a sellers market. I did my research before we purchased and my best guess is we are going to see stagnating prices (at least in the City) while most other places are experiencing decline. I decided that I could handle virtually no appreciation for a few years in turn for a 30 year fixed at 5.8%.

    Lets hope I am right
     
  18. iGary Guest

    iGary

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    May 26, 2004
    Location:
    Randy's House
    #18
    We're in for some deep poo-poo - at least here in the United States.

    In our small town/city (the state's capital no less) we have restaurants closing, high unemployment, they just closed our local state police barracks...

    My partner is out of a job and the market is flooded with out-of-work mortgage fall-outs. I'm lucky to be in a segment of the luxury yachting market that is usually recession-proof.

    Wait until all those people that have been using their homes as revolving ATM's to pay off their credit cards aren't able to refinance and pay them again.

    It's only going to get uglier. And if oil goes up again?
     
  19. Desertrat macrumors newbie

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    Jul 4, 2003
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    Terlingua, Texas
    #19
    You can't write down hundreds of billions of dollars among the big financials without there being a helluva credit contraction. Same for the operating losses, announced regularly in the billions.

    So, home loans now are much harder come by. Lenders are wanting high credit ratings and down payments in the 20% range. "Risk avoidance" is the buzzword of the day. That bodes ill for homebuilders, and then add in that there is something like a ten- or eleven-month inventory of unsold homes.

    By and large, the days of re-fi as an ATM are gone, gone, gone.

    There are multitudes of bits and pieces around the Internet: People talking of seeing all manner of toys for sale--SUVs, outboard boats, ATVs. Hock shops are making the news with stories of people pawning all manner of things to get the money for utility bills. Restaurant chains closing some of their places, and some even going bankrupt. And on and on.

    And McDonald's is setting sales records.

    'Rat
     
  20. mactastic macrumors 68040

    mactastic

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    #20
    I prefer to call them "modernizations". :)

    It's been pretty bad here for builders. Last couple projects we've bid have seen quite a large pool of bidders. Pretty good numbers too, since everyone is at least a little hungry right now.
     
  21. skunk macrumors G4

    skunk

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    #21
    Of course, we have the advantage of a load of spare capacity being soaked up by the Olympics building projects.
     
  22. AlphaBob macrumors regular

    AlphaBob

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    Rhode Island
    #22
    You are not kidding. People make money when the masses become scared. There is a mini housing boom going on in multi-family homes, those hardest hit by the mortgage problems. Investors are buying them for 10 cents on a dollar. 5 to 10 years from now that investment will pay off handsomely.

    The only thing that will keep the housing market from recovering is a lack of credit (a pretty big thing to be sure). Last I saw, with the exception of Hawaii, God isn't making new land, and more people are coming into the country every day.
     
  23. Desertrat macrumors newbie

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    Terlingua, Texas
    #23
    AlphaBob, just off the cuff, do you have any hard knowledge of "10 cents on the dollar"? So far, most of what I've read indicates around 60 to 70 cents. If so, and there's still some 15% to 25% decline to come in the retracting markets, it's not yet time to buy.

    The general history is that prices will decline to affordability. Affordability will vary from locale to locale, of course. But prices rose too far, too fast, to remain way up there...
     
  24. 63dot macrumors 603

    63dot

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    norcal
    #24
    The recession, or beginnings of it, started when W hit the white house.

    Former republicans, who had hoped for a Reagan type boom, are voting for Obama now, thus Obamacans.

    Fiscal conservatives are not going to vote for McCain if they even get a hint that he will resemble Bush. Right now, McCain needs to distance himself from the president and he hasn't done that.
     
  25. leekohler macrumors G5

    leekohler

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    Dec 22, 2004
    Location:
    Chicago, Illinois
    #25
    Agreed. It was utterly ridiculous how fast prices went up.

    Oh- and ready for this? The city of Chicago raises your property taxes as the value of your home goes up. Now that that home values are falling, do you think the taxes are as well? You guessed it- no.
     

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