Recession Ending?

[Mike Furley]

seems like there has been a steady mooing recently from the herd of economists and media that the recession is either over or is ending.

this would be welcome news if this is true. my economics knowledge is limited, but for those on the board who do have some knowledge, from the right, middle, or left wing, could someone explain to me how this is possible when the following has just happened, or is due to happen by years end:

the minimum wage was just increased again this past week - a scheduled bump up from the 2006 bill that passed Congress. I've always understood that an increase in the minimum wage always led to job cuts. The boss won't take home less pay so instead of hiring or keeping someone that is due to make the extra money, they get rid of some positions on the lowest end.

The Bush tax cuts enacted in 2001 are due to expire at the end of the year. An expiration of a tax cut is another way of instituting a tax increase. How will the job creating segment of our society create new jobs when they are being taxed more?

Ben Bernanke has a plan to suck all of the money printed to have been infused into the economy out of the economy to combat the expected increase in inflation. I've yet to hear what this plan is, but the age old adage about there being no free lunch in this world - I would think that wouldn't be miraculously inapplicable in this case. I assume the money will be sucked out by raising interest rates. How will raising interest rates help keep our economy in a recovering state?

What will happen if and when Israel bombs Iran? What will happen to oil prices if that happens. They go up when the Middle East just rattles sabres. How will our economy recover if oil goes back up to a price per barrel in line with what we saw during the summer 2008?

What happens when the next wave of home forclosures happen? I keep hearing the next wave of ARMS is due to hit us in the next quarter. Housing barely has a pulse right now.

What if pending health care legislation passes with the "millionaires surcharge" included? Again, these are the job creators in the private sector who will be getting soaked with the tax bill in addition to the other taxes being levied against them in the Obama budget. He campaigned on raising taxes on people making over 250k a year.

All of these things individually can slow a recovery or contract an economy. How will recovery push through if just three of these six things come to fruition? Like I said at the outset, I want to see the economy recover because I like having a job. At some point, if the jobs keep getting cut, mine will be among them. I just don't see a "green shoot" or silver lining in what's ahead.

[MICHDAD1]

seems like there has been a steady mooing recently from the herd of economists and media that the recession is either over or is ending.

this would be welcome news if this is true. my economics knowledge is limited, but for those on the board who do have some knowledge, from the right, middle, or left wing, could someone explain to me how this is possible when the following has just happened, or is due to happen by years end:

the minimum wage was just increased again this past week - a scheduled bump up from the 2006 bill that passed Congress. I've always understood that an increase in the minimum wage always led to job cuts. The boss won't take home less pay so instead of hiring or keeping someone that is due to make the extra money, they get rid of some positions on the lowest end.

The Bush tax cuts enacted in 2001 are due to expire at the end of the year. An expiration of a tax cut is another way of instituting a tax increase. How will the job creating segment of our society create new jobs when they are being taxed more?

Ben Bernanke has a plan to suck all of the money printed to have been infused into the economy out of the economy to combat the expected increase in inflation. I've yet to hear what this plan is, but the age old adage about there being no free lunch in this world - I would think that wouldn't be miraculously inapplicable in this case. I assume the money will be sucked out by raising interest rates. How will raising interest rates help keep our economy in a recovering state?

What will happen if and when Israel bombs Iran? What will happen to oil prices if that happens. They go up when the Middle East just rattles sabres. How will our economy recover if oil goes back up to a price per barrel in line with what we saw during the summer 2008?

What happens when the next wave of home forclosures happen? I keep hearing the next wave of ARMS is due to hit us in the next quarter. Housing barely has a pulse right now.

What if pending health care legislation passes with the "millionaires surcharge" included? Again, these are the job creators in the private sector who will be getting soaked with the tax bill in addition to the other taxes being levied against them in the Obama budget. He campaigned on raising taxes on people making over 250k a year.

All of these things individually can slow a recovery or contract an economy. How will recovery push through if just three of these six things come to fruition? Like I said at the outset, I want to see the economy recover because I like having a job. At some point, if the jobs keep getting cut, mine will be among them. I just don't see a "green shoot" or silver lining in what's ahead.

Check your inbox.

[byebyelloyd]

seems like there has been a steady mooing recently from the herd of economists and media that the recession is either over or is ending.

this would be welcome news if this is true. my economics knowledge is limited, but for those on the board who do have some knowledge, from the right, middle, or left wing, could someone explain to me how this is possible when the following has just happened, or is due to happen by years end:

the minimum wage was just increased again this past week - a scheduled bump up from the 2006 bill that passed Congress. I've always understood that an increase in the minimum wage always led to job cuts. The boss won't take home less pay so instead of hiring or keeping someone that is due to make the extra money, they get rid of some positions on the lowest end.

The Bush tax cuts enacted in 2001 are due to expire at the end of the year. An expiration of a tax cut is another way of instituting a tax increase. How will the job creating segment of our society create new jobs when they are being taxed more?

Ben Bernanke has a plan to suck all of the money printed to have been infused into the economy out of the economy to combat the expected increase in inflation. I've yet to hear what this plan is, but the age old adage about there being no free lunch in this world - I would think that wouldn't be miraculously inapplicable in this case. I assume the money will be sucked out by raising interest rates. How will raising interest rates help keep our economy in a recovering state?

What will happen if and when Israel bombs Iran? What will happen to oil prices if that happens. They go up when the Middle East just rattles sabres. How will our economy recover if oil goes back up to a price per barrel in line with what we saw during the summer 2008?

What happens when the next wave of home forclosures happen? I keep hearing the next wave of ARMS is due to hit us in the next quarter. Housing barely has a pulse right now.

What if pending health care legislation passes with the "millionaires surcharge" included? Again, these are the job creators in the private sector who will be getting soaked with the tax bill in addition to the other taxes being levied against them in the Obama budget. He campaigned on raising taxes on people making over 250k a year.

All of these things individually can slow a recovery or contract an economy. How will recovery push through if just three of these six things come to fruition? Like I said at the outset, I want to see the economy recover because I like having a job. At some point, if the jobs keep getting cut, mine will be among them. I just don't see a "green shoot" or silver lining in what's ahead.

lets not forget we are still hemorrhaging jobs at record pace before any of these policies are implemented. foreclosures were up 15% last quarter over the same time period last year which was the previous record, and we have a horribly inexperienced president who is tripping over himself at every turn. i'm not seeing any signs of recovery, just typical propaganda.

[amazinblue]

Furley,

You raise some excellent points. And, there is one thing to remember, IMO - something that cost Bush "41" the '92 election - which is the definition of a recession - two consecutive quarters of negative GDP growth.

I'm no economist, but what I find quite interesting are the thoughts of economists from the University of Chicago about Obama's plan. And, their thoughts are far from positive. IMO, we should have swallowed a much bigger pill than we did, and deal with the negative consequences of that and then pursue a track of activities to foster a recovery. I believe the economy is lingering, and continuing its decline. We may see a "slowly in the decline" of GDP, which really means things are not going downhill as fast as they were before - we're still going downhill. The key is the "low water mark" of this period of economic conraction. My guess, we're getting closer to it, but we probably won't see it stabilize and return to some growth - certain any substantial growth - until 2010.

The one thing going through my mind is - let's say we've had several quarters of -3 to -5% growth. The economy "stablizing" and starts growing at 0.1 or 0.2% growth. Well, by definition, the recession would be over - since, it's growing. However, it would take a while to recover what was lost while we were on this downhill slide.

(And for Furley - I hope your job is safe, or that you make it through any 'actions' taken by your employer.)

The increased tax scenarios you've described and prescribed by the Obama administration impact me. And, my concern is that our country is headed toward socialism - which would be a very bad thing. And, the one thing I want to avoid - and believe the majority of us do - is to see those who build and invest in businesses - begin looking at other countries as a place to invest, rather than investing in the US - with technologies, products, and / or services that return our economy to growth.

We're already significantly at risk because of a decades long trend to buy things on credit and living beyond our means. And, the auto industry is just one example of the struggles an industry can have. I believe Hollywood and the entertainment industry are beginning to feel the pains as well.

[Mike Furley]

i should add an impending middle class tax increase to the list of things in my first post:

http://blogs.abcnews.com/george/2009/08/geithner-wont-rule-out-new-taxes-for-middle-class.html

i'm guessing they'll try and hold off on this until 2013 after Obama wins his second term.

[amazinblue]

...i'm guessing they'll try and hold off on this until 2013 after Obama wins his second term.

Furley,

I'm thinking the Dems are going to be hit pretty hard in the mid-term elections, and if Obama's favorability ratings don't turn around with the economy, he may turn into a one-term president.

The biggest problem with the actions taken by his administration were several "turnaround" positions, that resulted primarily because of 1) inexperience, or 2) lack of knowledge. One such example is Guantanamo.

[byebyelloyd]

Furley,

I'm thinking the Dems are going to be hit pretty hard in the mid-term elections, and if Obama's favorability ratings don't turn around with the economy, he may turn into a one-term president.

The biggest problem with the actions taken by his administration were several "turnaround" positions, that resulted primarily because of 1) inexperience, or 2) lack of knowledge. One such example is Guantanamo.

it was a widely accepted belief around here that anyone elected in 2008 would be a one term president. the dems believe they won a major battle this time around only, i believe, to find out americans collectively have a shortage of patience. anyone in ohio knows that ohio is less than enamored with obama being the first state for his approval rating to go under .500 as MM pointed out. couple that with the fact the governor strickland is doing some serious backtracking and generally pissing off a lot of people, the midterms will be pretty detrimental for dems here and i also believe nationwide.

[Medic]

I can make a pretty strong case for "the press and economists are flat out lying to you because they need your money and attention" but unless someone tries to actually make the case for the economy improving I'll leave it at this:


You cannot borrow your way out of debt
Almost 100% of the disposable income growth in Q2 was credit swaps on government bonds (many economists have been using disposable income as a metric for economic recovery...foolish)
The government is now the proud owner of almost 45 trillion in new debt (leveraged)
The GDP contraction is accelerating
There is an enormous amount of consumer debt even after *all* the defaults in Q1 and Q2. While the savings rate has increased, it's deceptive because the government counts paying off debt as savings (lol)


http://market-ticker.org/uploads/GDP-Graph1.png

Some local areas may see temporary improvements. I am calling this a dead cat bounce by the market.

Edit: something fun to add http://www.usdebtclock.org/
Bernanke will keep the shell game going as long as possible. I'm sure he is hoping to be out of office by the time the next schmuck has all this come crashing down on them instead of him.

[Medic]

Let's dispel some other bullshit I've been hearing all weekend. One way economists also love to measure recovery is durable goods sales and manufacturing. Let's check on the car makers month of July:

http://www.marketwatch.com/story/chrysler-us-july-sales-fall-9-2009-08-03

Maybe GM did better?

http://www.marketwatch.com/story/general-motors-us-july-sales-fall-194-2009-08-03

Oh shit...ok well how about foreign car makers who manufacture here?

http://www.marketwatch.com/story/honda-us-july-sales-decline-173-2009-08-03

The other car manufacturers all have similarly dismal reports with ONE exception:

http://www.marketwatch.com/story/ford-us-july-sales-rise-23-2009-08-03

Well yay Ford. In a sea of epic failures they were the one bright spot in July. Back to the point though, The overall indicators show consumers have not returned to the market. Nor can they, the debt of the American consumer is at its highest since recording began, they are maxed out. Cash for clunkers is a one time reinvestment that in the long run will have very little impact and is nothing more than a debt swap.

[zilla]

Being on the front line (sales) things are looking much better. Budgets are opening up and my company is doing much better than last year at this time. If that means a recession is over is beyond me. My life is good however.

[chriswebber]

Being on the front line (sales) things are looking much better. Budgets are opening up and my company is doing much better than last year at this time. If that means a recession is over is beyond me. My life is good however.

Best Buy is doing better?

[zilla]

Best Buy is doing better?


I was wondering who from the nerd club was going to post such a lame thing first and you won the prize. Good job.

[bighousemike84]

the thing is these so called experts that are saying this are the same ones that tried telling us for a year and a half that the American economy was NOT in a recession, Everything would be fine and there is nothing to worry about. I didnt believe them then and I sure as shit dont believe them now!

[chriswebber]

I was wondering who from the nerd club was going to post such a lame thing first and you won the prize. Good job.

You must work returns. It explains why you are so grumpy.

[Mike Furley]

as for the part I included about an impending middle class tax hike, the Detroit News is basically calling everyone stupid for not expecting it already.

http://detnews.com/article/20090804/OPINION01/908040310/1008/Editorial--Soaking-the-middle-class

I checked - they endorsed McCain.

[michAGAIN]

This is the perfect solution for the economy. I strongly endorse it.

http://www.youtube.com/watch?v=TRgRz3nSG7o