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Yes we are in a recession, however the Bush Administration and the media want you to believe that we are not. And we will probably continue to be until the war is over and a new pres is elected.
I am not sure if we are or not - under the strict economic definition of a recession. We could be at the beginnings of one - depending on what growth is judged to be at the end of this quarter.
What suprises me is that people are suddenly complaining about salaries (or lack there of) as compared to the price of goods - like SUDDENLY there was a disconnect between increasing prices and salaries. As the mean wage in this country has barely budged since 1972, yet everything (cars, houses, furniture, food, gas) has gotten more expensive - why is it only suddenly that people are suddenly realizing they are being priced out of the economy?
Seriously - unless you lost your job in the last month or two - 2008 isn't that much more expensive than 2007/2006. Yes, gas is now $3 gallon instead of $2.50. But 10 years ago - gas was $1.50!!! So why in 2007/2006 did you feel economically okay?
Unless people really were using their houses as ATMs (which I just can't the average person doing) - why is it only suddenly they realized that they were just treading water?
That to me does seem to point to the influence of the media. Last year most people were making the same money, and things only cost a LITTLE bit less - so maybe at the end of the month, after all necessary expenses, people had $75 left over. For all intents and purposes - they are living paycheck to paycheck, but psychologically - their house is appreciating and they feel okay.
This year, even though they have no intention of moving or selling their house, they have $25 left at the end of each month - still living paycheck to paycheck - but now suddenly they are panicking and convinced the economic world is ending.
that to me is a little strange. Unless you are losing your house due to an ARM resetting, or you have lost your job -- life hasn't changed all that much for the rest of us. So why the panic?
Location: Sitting on a bar stool. Guinness in hand.
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Technically NO we are not in a recession. You need to quarters of negative growth for that. But from what I’m seeing and feeling out there I’m taking a defensive position. Of course as one poster said some sectors of the economy are doing good ( exporters ) and some are doing bad (housing). So it’s a really a balancing act. But in my mind I think that the good sectors will be overwhelmed by the bad sectors of the economy and we will either be at almost zero growth or will have negative growth in some of the quarter upcoming.
Call it a slow down or call it "headwinds" (which I think is a hilarious) but, to me, the obvious signs of a recession are already here:
Corporate profits are down, pretty much across the board ... companies ranging from Kraft foods to Google are all reporting reduced earnings. For those companies that haven't reported reduced earnings yet, generally they're forcasting reduced earnings for future quarters.
Auto, RV, boat sales ... all of them are down, way down. Usually the first industries to go during a recession.
Add to that the housing disaster, the severe credit crunch, sky high gas prices, rising inflation and ...
The fact that the Fed is obviously in a panic slashing interest rates trying to stem the tide ... (which is what they did during the last recession) and ....
The fact that the government passed a "stimulus" package where they'll be mailing out checks to taxpayers (which also happened during the last recession).
At this point ... there's no question that we ARE in recession.
If you want to wait for the "official" numbers then ... ok but, it seems pretty obvious to me. Again, I'm not sure why people are even debating it at this point but I guess they'll do anything to avoid the dreaded "R" word.
Call it a slow down or call it "headwinds" (which I think is a hilarious) but, to me, the obvious signs of a recession are already here:
Corporate profits are down, pretty much across the board ... companies ranging from Kraft foods to Google are all reporting reduced earnings. For those companies that haven't reported reduced earnings yet, generally they're forcasting reduced earnings for future quarters.
Auto, RV, boat sales ... all of them are down, way down. Usually the first industries to go during a recession.
Add to that the housing disaster, the severe credit crunch, sky high gas prices, rising inflation and ...
The fact that the Fed is obviously in a panic slashing interest rates trying to stem the tide ... (which is what they did during the last recession) and ....
The fact that the government passed a "stimulus" package where they'll be mailing out checks to taxpayers (which also happened during the last recession).
At this point ... there's no question that we ARE in recession.
If you want to wait for the "official" numbers then ... ok but, it seems pretty obvious to me. Again, I'm not sure why people are even debating it at this point but I guess they'll do anything to avoid the dreaded "R" word.
"Headwinds" .... anyone?
Spending the day last week drinking(hey,it helps!),with a Goldman Sachs analyst,(we WERE in Hawaii),I was amazed how he believed that second quarter profits would magically come back...it could be some form of hypnosis,think good things,new age beliefs,who knows...but when we sat down and did the numbers,actually,Danny the bartender operated the calculator(too many moving parts) with a 20% decline in earnings for Q1/08,which is aknowledged fact,even a flat earnings scenario for Q3&4/08,which is rosy indeed puts us back at $68-72 earnings for S&P500,plug in any reasonable P/E multiple (14-16 times),anything higher is unsustainable in current and impending inflationary enviorment,and we're from 950 to 1150,S&P was 1349 on friday,think we could go down far and FAST!
Good article about people starting to raid their retirement accounts just to pay the mortgage:
wcbstv.com - More Americans Are Tapping Into Their Retirement Savings In Order To Make Ends Meet (http://wcbstv.com/national/401k.mutual.funds.2.657860.html - broken link)
And it will be a bad one, to make up for the fact that the last one got interupted by the housing boom.
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