Where is the US economy headed?

@cicerone imposter,

Oh, I agree the recession will take longer than most people realize. But Robert's question was about what happens after the recession is over, not when it's over.

2 Replies

@Thomas,

Or, as cartoonist David Sipress puts it:

http://img.skitch.com/20090616-p9xr8iirmqmfj4wgxya7we8ubd.jpg

0 Replies

@Thomas,

Thomas wrote:

Oh, I agree the recession will take longer than most people realize. But Robert's question was about what happens after the recession is over, not when it's over.

Obama is now pre-empting more bad news by saying unemployment will top 10% before the end of the year. But he also said it would not go much past 8% with his stimulus package, which proves he never knew what he was talking about then, and he still doesn't. His warning of more than 10% tells me it may be pretty soon over 10%, or he is trying to make anything less than that a great success story.

"President Obama Predicts Unemployment Will Hit 10% This Year"

http://blogs.abcnews.com/politicalpunch/2009/06/president-obama-predicts-unemployment-will-hit-10-this-year.html

http://michaelscomments.files.wordpress.com/2009/06/stimulus-vs-unemployment-may-corrected.gif?w=460&h=280

http://market-ticker.denninger.net/archives/1101-EMPIRICAL-PROOF-Obama-Stimulus-FAIL.html

1 Reply

Okie-A great chart--When I look at the chart and try to extrapolate the dotted red lines, I see that it is possible that Unemployment will be ABOVE 10% in November 2010. Of course, this is when the mid-term elections will take place.

It would appear that the US voters who are more sensitive to job losses than to almost any other criterion, may not be too happy about the high unemployment figures around November 2010.

Of course, a 10% or better Unemployment rate translates to a REAL unemployment rate of about 16% since people who have run out of benefits and are still not yet working and those who are working only part time and need full time work are not included in the 10% figure.

For more details on this see, U-6 category under the Bureau of Labor Statistics.

0 Replies

@okie,

"SF Fed warns jobless rate could peak near 11 pct"

http://www.reuters.com/article/bondsNews/idUSN0832136320090608

0 Replies

I haven't been keeping up with the discussion on this thread so I apologize if there's already been a discussion of the purported second wave of the housing crisis (a link to that discussion is appreciated), but here's my question...

A year ago Bank Suisse published a graph of the mortgage reset rates for various mortgage products.

http://www.ezimages.net/upload/5MIN/MonthlyMortgage.gif

Last month they published an updated graph (format change) that indicates the second wave will be worse than originally thought. I found the graphs and a discussion here from which I quote

Quote:

Now, they’ve done you no favors with this whole color scheme/format change, so here’s the meat of the updated chart: Credit Suisse added an “unsecurtized ARM” category to the coming wave of resets, a move that bumps monthly loan resets up $2-5 billion. Monthly resets are now larger across the board.

What’s more, the “second wave” crisis that was thought to be over in late 2011 is now crashing down well into 2012. According to the group, the swell of option and unsecuritized ARM resets will not only be bigger than the subprime fiasco, but now it’s forecast to last twice as long. Hmmm…

http://www.ezimages.net/upload/5MIN/MonthlyMortgage2.gif

What are your thoughts on the second wave?

2 Replies

@JPB,

Quote:

What are your thoughts on the second wave?

that is why obama tried to facilitate the rewriting of mortgages, the problem is that this plan has been in action for many months but is going nowhere fast. Between this and the continued job losses, and the defaults caused by the newly unemployed who no longer can meet their mortgage, housing prices are unlikely to stop dropping till sometime late in 2010.

The bank positions will continue to weaken, though the commercial property loan defaults are likely to be a bigger problem for them.

1 Reply

@hawkeye10,

I agree with your assessment about the job loss relationship to continued defaults on mortgages, but disagree about the banks profitability for the future.

It's true that we haven't seen the economic bottom yet, but there are signs of a slow-down in job losses, and a somewhat stabilizing of business profitability. What I'd like to also see is a stabilizing of tax revenues.

Companies that have taken a long-term strategy on this economic downturn will survive to reinvigorate the economy.

I still see the glass as half full.

2 Replies

@cicerone imposter,

cicerone imposter wrote:

... but there are signs of a slow-down in job losses, ...

But the people that have lost their jobs are taking record times to find another job, thats a statistic not often cited. The unemployed is not as much a revolving door as it has been, so if you lose your job, your chances of finding another job is more grim than ever.

1 Reply

@okie,

Not to mention that the longer one is out of work, the less desirable he becomes. Most skills tend to atrophy when not used. That is not good news for recent college grads, either.

0 Replies

@cicerone imposter,

Quote:

I agree with your assessment about the job loss relationship to continued defaults on mortgages, but disagree about the banks profitability for the future.

I see no evidence that retail especially has downsized to fit the new reality of less consumption. I think that we have a lot of restaurants and stores that are around the break even point but are not making significant profits. These companies are going to cut outlets as soon as they can get out of their leases, or else they will push the issue by going into bankruptcy. I think that we are going to look at a lot of years of commercial real estate facing bad loans as the owners fail to find tenets. I expect the the housing loan situation will stabilize within 18 months, but that the commercial property mortgage situation will stay bad for many years, which is why I think that the commercial side is more of a threat to banks than the housing market problems are going forward.

Quote:

I still see the glass as half full.

Yes, I realize that you want to solve our economic problems with the power of positive thinking. Psychology is molded by conditions, the conditions have permanently changed, and I don't sense that you adapted to the new reality yet. Your head is still in the world as it was, and is no longer. It would be nice if you could stick to facts and evidence and stop giving lectures about how we need to think positive and watch what we say. Tell it like it is man.

2 Replies

@hawkeye10,

Quote:

Tell it like it is man.

Okay? How many job losses are there in the sector that eats the budget?

0 Replies

I am sure Hawkeye 10 is familiar with the U-6 section of the Unemployment Report from the Bureau of Employment Statistics.

The U-6 sections considers not only the persons actually receiving Unemployment checks but it also considers those who formerly received unemployment checks and are still out of work--discouraged.
The U-6 also logs in the people working part time who need and want full time employment.

When these two factors are added to the Unemployment Statistics, the percentage of Unemployed is closer to 16%.

0 Replies

Spendius wrote:

Okay? How many job losses are there in the sector that eats the budget?
end of quote
There must be thousands. Obama has taken a boatload of his cronies from the Chicago ghetto with him to DC.

The payroll never stops for the :paper shufflers in DC.

1 Reply

@genoves,

Don't forget the fossil hunters genoves. And the ones who are going to tell us what happened just after the Big Bang. (When they've fixed the connections which were welded together the last time they threw the switch.) Then there's the "mutton dressed up as lamb" industry. And the "how to make saturated fat fatten up the medical profession" operatives.

"The riot squad are restless, they need somewhere to go."

Old fashioned Bob Dylan.

I've got Lionel Trilling's famous book on liberals on my "soon to read" list. I'm guessing from what I've read about it that it contains wonders which even I have never thought of.

1 Reply

@hawkeye10,

hawkeye, Banks have already reduced commercial property developments, and we see some in our area that was completely stopped no matter what stage of development the construction was in. What surprises me more is the fact that housing developments are still active in our area.

When I say I see the glass as half full, I'm not trying to preach to anybody about the positive or negative outlook of our economy. I've already stated that it'll take about five years before we see any turn-around. You shouldn't put words in my mouth or ideas that I haven't spoken.

What makes you think I haven't adopted to today's reality? My reality is much different than many; we have enough savings to live our standard since I've retired over ten years ago. I also realize that thousands are still losing their jobs every day, and I really feel for those people - especially people with families to support; been there, done that.

Keep your imagined criticisms about what I think and feel; you don't know me.

0 Replies

@spendius,

Oh yes, Spendius-"The big bang", Concomitant with this idea is "string theory" which.of course, posits innumerable "bits" of substance much smaller than the nucleus of an atom. We are asked to take all of this on faith. What happens to matter when it is drawn into a "black hole"? Is matter indestructable or is it not?

I am in awe at these lay preachers from the Scientific Academy who tell us that we must "beleive"

Really!!!!

1 Reply

@JPB,

JPB wrote:

I haven't been keeping up with the discussion on this thread so I apologize if there's already been a discussion of the purported second wave of the housing crisis (a link to that discussion is appreciated), but here's my question...

A year ago Bank Suisse published a graph of the mortgage reset rates for various mortgage products.

Last month they published an updated graph (format change) that indicates the second wave will be worse than originally thought. I found the graphs and a discussion here from which I quote

Quote:
Now, they’ve done you no favors with this whole color scheme/format change, so here’s the meat of the updated chart: Credit Suisse added an “unsecurtized ARM” category to the coming wave of resets, a move that bumps monthly loan resets up $2-5 billion. Monthly resets are now larger across the board.

What’s more, the “second wave” crisis that was thought to be over in late 2011 is now crashing down well into 2012. According to the group, the swell of option and unsecuritized ARM resets will not only be bigger than the subprime fiasco, but now it’s forecast to last twice as long. Hmmm…

What are your thoughts on the second wave?

Hi, JPB. Welcome back. We did talk about the "2nd wave" a number of pages ago. I wouldn't bother searching for that discussion. I think we all read charts similar to the ones you posted and agreed that there is a time-bomb out there, regardless of what the main stream media reports. Did you see that housing starts were up? Go figure.
Other issues discussed here recently:
--Credit card delinquencies are up to something like 13% of outstanding balances. Johnboy's credit card company (Advanta) folds;
--Several of the big banks passed the recent "Stress Test" and are reporting profits or reduced losses ONLY because they are seriously "underfunding" their loan loss reserves;
--The commercial real estate market is next. Many retailers held on but are now running on empty. Hawkeye has been talking some about that.

We have also been talking about inflation or the lack thereof and jobs or the lack thereof.
For the most part the discussion has been civil.

0 Replies

@genoves,

Quote:

I am in awe at these lay preachers from the Scientific Academy who tell us that we must "beleive"

Really!!!!

It must be the quasi-religious reverent tones they use in the voice-overs and the Christian music soundtracks. It can get through one's defences if one isn't careful.

0 Replies

Quote:

On Wednesday, President Obama unveiled what he described as “a sweeping overhaul of the financial regulatory system, a transformation on a scale not seen since the reforms that followed the Great Depression.”

In terms of the sheer number of proposals, outlined in an 88-page document the administration released on Tuesday, that is undoubtedly true. But in terms of the scope and breadth of the Obama plan " and more important, in terms of its overall effect on Wall Street’s modus operandi " it’s not even close to what Roosevelt accomplished during the Great Depression.

http://www.nytimes.com/2009/06/18/business/18nocera.html?hp

NOT. GOOD. ENOUGH.

1 Reply

Where is the US economy headed?

Related Topics

Quick Links

My Account

able2know