Is the Recession Here?

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Submitted by jg on April 2, 2007 - 9:14pm

Personal consumption is 71% of GDP.

In February 2007, real outlays were down from January 2007 for the following EIGHT personal consumption categories: furniture and household equipment; other durable goods; food; clothing and shoes; gasoline and oil; other non-durable goods; transportation; and recreation.

The last important recession was dated by NBER to have begun in July 1990. In July 1990, real outlays were down from June 1990 for the following FIVE categories: furniture and household equipment, food, clothing and shoes, electricity and gas, transportation.

So, broadly speaking, compared to the beginning of the last real recession, consumer spending is suffering broader weakness, now (my wife asked me the question, how did the February numbers stack up to the numbers at the beginning of the early '90s recession; good question!).

Fixed investment is 16% of GDP. In the Q4 2006 GDP figures, both residential and non-residential fixed investment had declined from Q3 2006.

So, as of Q4 2006, 16% of the economy was in decline. As of February 2007, important chunks of consumer spending, which in total account for 71% of the economy, were in decline.

It will be interesting to see the retail sales figures for March, reported in two weeks, and the personal consumption figures for March, reported in one month. Will the declines seen in February hold in March?

April should be an interesting month, with Q1 earnings releases and early reads into important elements of Q1 GDP.

‹ Share your thoughts on inflation... Why not take a 2nd mortgage and buy puts? ›
JG, On a scale of 1-10,
Submitted by carlislematthew on April 6, 2007 - 6:13am.

JG,

On a scale of 1-10, please rank the following (1 = completely disagree, 10 = completely agree)

-Roubini is a great economist.
-Roubini's predictions are always accurate, and even when wrong, he is right.
-Roubini is sexy, in that "I'm a miserable economist and don't know how to laugh" kinda way
-I love Roubini

Thanks. :)

Matthew

Chris Johnston I do not
Submitted by Chris Scoreboar... on April 6, 2007 - 8:04am.

Chris Johnston

I do not think we are near a recession as I have stated repeatedy in here. Especially with todays non-farm report showing a good employment picture. It is unlikely that GDP will show two consecutive quarters of negative growth anytime soon, and that is how recessions are defined. There may be sectors that individually have them, like RE, but the economy as a whole does not appear to be headed for one right now.

If someone wants to define an alternative concept for a recession, than maybe one can occur, but not by the traditional standards, itleast in the next 2 or 3 quarters.

Chris Scoreboar, I agree
Submitted by Happy renter on April 6, 2007 - 10:37am.

Chris Scoreboar,
I agree with you that we may or may not have recession. It depends on how bad the RE MKT will be. Stock MKT is very sensitive. If the RE MKT crashes hard, the stock MKT may drop 10-20% easily right away. But it does not mean we will have recession.

jg,
Remember you said I was prudent to put only some of my $ to short RE only, not the whole market. The reason were:
1. I was more sure the RE MKT would not be better, but only worst.
2. I felt the whole market was not ready to decline or collapse so soon yet.

I like to monitor the market closely for any opportunity to max my return but min my risk. Your strategy is for long term that is fine as soon as you are confident to yourself.

Ha, ha, Matthew! Roubini is
Submitted by jg on April 6, 2007 - 5:04pm.

Ha, ha, Matthew!

Roubini is good, be he's not perfect: he, himself, bought a place in NYC, relatively recently; he disdains gold; he has odd socialist/paranoia ideas about government and sectors of the the economy (e.g., the Halliburton bashers); he does not think our upcoming/underway recession will tip into a depression.

But, I think he does a great job analyzing the current and historical data, and projecting the near-term implications.

Roubini has been premature in his recession call. But not wrong; it's underway, now.

I'm a very happily married heterosexual male, and will leave the Roubini lovefest comments to ps and Perry.

CS and HR, we'll see how the
Submitted by jg on April 6, 2007 - 5:07pm.

CS and HR, we'll see how the dust settles at the end of the year. I remain confident in my approach.

But, I'll admit, March has been no fun, and has not been kind to my portfolio, for my get-out-of-gold and double-short-the-S&P 500 strategy!

I'm a very happily married
Submitted by carlislematthew on April 7, 2007 - 7:43pm.

I'm a very happily married heterosexual male, and will leave the Roubini lovefest comments to ps and Perry.

LOL!!!