I recently sat in a briefing given at Univ of Denver by a prominent Colorado person. The CHIEF ECONOMIST of U.S. Bank.
Her track record is excellent, she beats most of the other pro's in the business.
Her briefing states that the worst of the problems in the housing and building areas are now behind us. She predicts very low growth of 0.5% for 2008, and those numbers mean a recession of 2-3 quarters, which we *may* already be in. We never know we're in a recession until after it starts and is confirmed by the National Bureau of Economic Research (NBER). She says that 2009 will be a much better year than 2008.
National Bureau of Economic Research
Her economist forecast, including one for Colorado, is on-line at:http://www.coloradoeconomy.com/downloads/USB_Forecast08_FINAL.pdf (broken link)
Interest rates fell 0.5% the other week. As of this morning, Wall Street is betting on another reduction. Lower interest rates will help move some of the housing stock by making prices/mortgages more affordable for buyers.
Misc notes I took during the briefing to help people decipher economist-speak:
JOB STATS
Job and unemployment statistics are lagging indicators. Job stats are often a bit misleading, too. For example, if a well-paid software specialist is let go and then has to work at waiting tables or doing part time work to make ends meet, the job stats don’t change, the stats still show him/her as being employed, though the salary takes a big hit, with obvious impact to consumer spending. Currently, there are about 4.5 million people working part time because they cannot find full time work. This stat is up 10% in the last year. Further, if you do not “look” for work for more than 4 weeks, you simply fall out of the job stats altogether. Job stats are again skewed in that tiny companies with only 1-4 employees are not in the stats at all. The undocumented workers are not being counted, either as employed or unemployed persons.
CONSUMER SPENDING:
Consumers aren’t a good predictor of recession, either the start or end of one. Current estimates say the U.S. economy is 80% driven by consumer spending and this is closely watched. Another 17% of the economy is business spending. Consumer spending is growing at 2.5% per year, but a lot of that spending was done with credit cards and re-financing of homes to draw out appreciation. Credit card debt is now $1T, home values are not rising as they were, and in some areas declining, which prevents drawing out value for spending. Many jobs in home building have gone away in the current environment, with some undocumented workers going back home (to Mexico). If consumer spending declines it will negatively impact the economies of China, Japan, Germany, too, and thus lower our exports to them as they no longer buy as much.
MORE ON RECESSION TALK:
See Posting 16 on page 2 of:
https://www.city-data.com/forum/polit...-2008-a-2.html
s/Mike from back east