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I'm actually surprised that we aren't already in a recession with the signs that we saw a few years ago. I was expecting we'd been in one by late 2006 with the downturn in the RE market, rising oil prices, and inflation. Right now it feels a lot like the early 1990's with how the housing prices keep dropping and the credit crunch. If we do fall into a recession before the presidential elections in 2008, that could be costly for the GOP candidate.
A recession is just a statistical measure and with all the revisions anymore we usually don't know if we are in one until well after it is over. There is no consensus that we are in one or expect one soon. The article is just one guys opinion.
I'm not saying we're not going to have a recession-- actually, nobody knows-- but Bad-Times-Are-Around-the-Bend Bill has been predicting one for almost three years now. At some point, he's bound to get it right. He's a doom and gloomer who misses more than he hits.
"A recession is a significant decline in economic activity spread across the economy, lasting more than a few months." Or in the words of business cycle forecaster Lakshman Achuthan of the Economic Cycle Research Institute: A recession is a "pronounced, pervasive and prolonged" slowdown in the economy. Pronounced means deep, pervasive means wide and prolonged means long.
To measure economic activity, the NBER uses four monthly indicators: payroll growth, real income growth, industrial output and real business sales."
When in an recession or depression there aren't signs up everywhere stating such - yes the media may start obsessing over the economic indicators but likely no one broadcasts "this is now day 4 of the recession" - etc. All things considered, I'd say we're in a rough economic situation right now nationally. The stock market keeps going up and down but I hardly consider that the recession or depression indicator many others do. I think that wage growth hasn't kept up with inflation for a lot of people and the real estate market issues everyone is experiencing or reading about (ie record numbers of foreclosures) both indicate there is a problem. I also know that our Dollar's value has dropped significantly lately and our government continues to operate on a dysfunctional budget which is not balanced. I also know that there's a massive trade deficit which keeps growing as well. Has anyone made a run for the banks - not yet, but it might be futile in the future anyway since nearly everyone operates using credit cards instead of cash these days and no matter which you pay with if the dollar's value falls too much/too drastically, it won't matter... prices might shoot up to levels out of reach for most consumers.
All that said we need to operate withen our own sphere's of influence and stop worrying about the big picture and start focusing on our personal finances and who to support and vote for at our local and national government elections. Those are the folks who will make a difference for the big picture. If we each work to get out of debt, invest wisely, start saving, and vote for fiscally intelligent individuals, I suspect that the rest will fall into place or at least only minimally impact us.
"A recession is a significant decline in economic activity spread across the economy, lasting more than a few months." Or in the words of business cycle forecaster Lakshman Achuthan of the Economic Cycle Research Institute: A recession is a "pronounced, pervasive and prolonged" slowdown in the economy. Pronounced means deep, pervasive means wide and prolonged means long.
To measure economic activity, the NBER uses four monthly indicators: payroll growth, real income growth, industrial output and real business sales."
...
There are many that want to interpret when there is a recession, but the traditional measure of ‘two quarters of GDP decline' takes the subjectivity out of it. Without a precise definition it is no more than an opinion.
There are many that want to interpret when there is a recession, but the traditional measure of ‘two quarters of GDP decline' takes the subjectivity out of it. Without a precise definition it is no more than an opinion.
And with the current Fed plan to just dump more printed money into the system for any and all problems -- and not keep legit track of inflation, we can have years of decline without it even being measured as a decline. When in truth, if inflation were presented, we have been in decline for years.
And with the current Fed plan to just dump more printed money into the system for any and all problems -- and not keep legit track of inflation, we can have years of decline without it even being measured as a decline. When in truth, if inflation were presented, we have been in decline for years.
The published 'street inflation' numbers are realistic and the 'core inflation' numbers are a different way to look at a change that is hard to track. I do not know what you mean by not tracking... the Fed has said for years that inflation is not in their target range.
But the Fed has to look out for economic momentum as well as inflation and has tried to adjust money/credit supplies to accommodate both issues…very difficult to do without a good crystal ball and no one has one. I don't know what you think they should do but they have a good committee doing their best and it will not always be spot on with timing or action. Too many are critical after the fact but have little proactive strategy to offer.
The fall in the value of the dollar (and resulting rises in gold, oil, and other commodities) shows the market is making adjustments, but there is much more in play than just Fed policy.
The statistics won't show up for a while, because that is the nature of the stats involved.
HOWEVER based on consumer activity, consumer confidence and (admittedly) anecdotal evidence, there is a real and painful slowdown. It would be a mistake to discount what is happening in "the street" while waiting for a formal declaration.
I think a big portion of the country has been in a stealth recession for at least the last 5-10 years.
-Wages have not kept up with the cost of living. How can you have meaningful economic growth if peoples daily lives are stagnating or declining?
-Unemployment is low, but what kind of employment has their been? Great, booming jobs or mostly low paid, short term work (or something cyclical like housing)?
-Debt has gotten crazy. Sure, things can grow, but everyone has been borrowing more and more money to stay the course.
Where would we be without this credit boom, that turned housing into ATM machines?
And the big question thats never answered....
It use to take one person to comfortable support a family, with little debt, with plenty of safety nets in places (mom could work, full pension, some savings).
Now it takes at least 2-3 people to support a household, debt has soared, little if any safety nets. Has there really been alot of growth as the average persons position in life has declined?
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