Duck! A Recession is coming!

[PD]

From Roubini's blog today:

 

In conclusion, the argument that the housing recession is not spilling over to other sectors and to the consumer is faltering: we already have a housing recession, a coming non-residential construction recession, an auto recession, a manufacturing recession, a durable goods recession, an industrial sector recession, and now signs of faltering of the service sector starting with the retail sector and the fall in consumer confidence. Q4 growth is headed to be even worse than the dismal Q3 and the economy is highly likely to enter into an outright recession by Q1 or at the latest Q2 of 2007. t

[Anonymous]

Disregard the above, independents and Republicans.

All is well:

http://news.yahoo.com/s/ap/20061103/ap_on_bi_go_ec_fi/economy_37

Jobs are being created, unemployment is down, services are expanding, wages are up.  Life is good!

After Tuesday and your vote for the weak-but-lesser-of-two-evils Republicans (please ensure that you hold your nose, as I do), you may put your economic x-ray vision goggles back on.  But not until then!

PD, reread the 'Vast Right Wing Conspiracy Memo' please, point three:  'No bad news until Wednesday, and then only through Fox, Rush, Bill, Michael, et al.'

Conform, people!

[4plexowner]

Sounds like time for another false flag event to distract the populace.

(Google ‘false flag’ if you don’t recognize the term.)

Or maybe a war with Iran so the sheeple don’t notice the economy tanking.

[poorgradstudent]

The coming recession seems closer to me now than it did a month ago. (And more than just a month closer, hahaha) It’s a shame that it happens when wages FINALLY start to gain some ground on profits.

I still feel Roubini is overly bearish, but it’s almost as if he magnifies his take to try to contrast the media at large and public perception, which is overly bullish.

Interestingly, I don’t think this recession will hurt the average American as much as it does corporate profits, which have been sky high for the past 3-4 years. Unemployment is the big risk.

[PD]

Sorry JG! I just might get kicked out after all….
I’ve misplaced my Vast Right Wing Conspiracy memo. I promise to memorize it and learn how to BAAA like a proper sheeple. 🙂

[Anonymous]

PD, you don’t disappoint us RWVC types, as you’re on the correct side on the most important issues.

Please do continue to exercise independent judgement.

[powayseller]

Roubini has an amazing ability to stay focused on the facts. He is not distracted or blindsided by headlines.

[unlawflcombatnt]

How can anyone claim a jobs report of only 92,000 is good, following the previous month’s 148,000 jobs created? An increase of 150,000 per month is considered necessary to keep up with labor force growth. Over the last 2 months we’ve averaged only 120,000. Combine this with a 3rd quarter GDP growth of only 1.6%, which would have been only 0.9%, were it not for the artifactual 26% increase in auto production. Looks like the Bush administration is really struggling to find something positive to crow about.

Economic Populist Forum

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[powayseller]

The pro-Bush folks say this 92K number will also be revised upward, and that our productivity is at such a high level now, that it is natural for growth rates to level off. So a new growth rate of 1-2% is very good, based on the economic boom we’ve had. This same guy calls me a doom and gloomer.

However, if you look at history, each of the 13 GDP declines (a lower rate of growth) since the 1950’s has led to a bear market, where the S&P index fell at least 12%.

In the following quote from Ahead of the Curve, I just wanted to point out that the government and media report GDP in percent change from the previous quarter, whereas Ellis looks at the year over year rate of change. I’d like to give an example of the slowdown in the rate of change: a rise from 100 to 115, is a 15% increase. If the next year we increase to 120, we have only a 4.3% increase (5/115). So even though the number increased from 115 to 120, it was a lower percent increase, signaling a slowdown).

In the 2000-2002 recession, GDP was in 2000: 4.1%, 4.8%, 3.5%, 2.2%. In 2001: 1.9%, .6%, .4%, .2%. The recession started halfway through Q1, when GDP was still 1.9%, but the bear market began in Q2 2000, when GDP was still rising to 4.8%! Three quarters into the bear market, the unemployment rate fell to its lowest level, and capital spending stayed deceptively strong. So this again shows that employment is a lagging indicator.

Ellis explains that bear markets begin when the rate of change slows. “…most bear markets began when the year over year real GDP growth was at or near peak levels of 4% to 8% and occurred primarily as year over year real GDP increased fell TOWARD the zero level. In other words, most bear markets began when the rate of growth in real GDP was STRONG and occurred as that rate of growth slowed from peak levels….

Most recessions…occurred only after the year over year raet of change in real GDP had been declining from peak levels for at least several quarters, and often more than a year. .In most instances, by the time recession was reached, the bear market was largely over.”

So by the time economists measure a recession, the economic harm has already been done. Recessions are the end of the events, and there is too much time wasted in the media on this topic, since it is backward looking.

He continues, “By the time recession is upon us, attention might better be given to leading indicators that would help determine in advance the beginning of the next upturn.

So it is crucial for business managers and investors to distinguish between a decline in the growth rate of the economy, when most actual business and stock market harm is done, and an actual decline (recession) in the economy, which, by the time it is recognized, is little more than an afterthought.”

Ellis’ book is really good!

[Author]

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