"Recession"

[Porsche-O-Phile]

Originally Posted by turbo6bar

Also, homeowner's equity is at an all-time record low. How that is possible after this mother of a housing boom, I really don't know.

URY914, pump and dump. Repeat after me. Pump and dump.

You forgot the GREEN

[WI wide body]

Originally Posted by legion

We may well be. No one knows right now.

Even so, we would just be in the first quarter of GDP contraction--still not a recession.

Maybe you need to get out in the real world a tad more often. So if a family can't pay it's bills or one of the members losses their job (it's now a given in our false economy that both members work) or one or both of them is forced to accept a lower paying job...they can simple dial up the "We have not had two quarters of GDP contraction" number and all will be made well again?

I guess it's how you look at any kind of an economic fallback...if it didn't affect me then it might not even had happened!

[Moneyguy1]

What is the old joke?

Your neighbor loses his job: Recession

You lose your job: Depression

[the]

Originally Posted by legion

Yep, we haven't posted a single quarter decline in GDP yet. No recession.

People have become so accustomed to a good economy, they think anything less than windfall profits is a recession.

"Odds are, U.S. is in a recession

MarketWatch Databased News - January 18, 2008 9:14PM EST

WASHINGTON (MarketWatch) -- It's much too soon for an official judgment on whether the U.S. economy has fallen into a recession, but early indications show that a recession may have already begun.

Of the five monthly economic indicators used to judge whether the U.S. economy has fallen into a recession, three are declining and one other is flattening out. Three of the five numbers peaked in September. Only one has grown with any vigor over the past few months, but it's starting to look weaker.

Calling a recession is as much art as science.

The numbers now in hand are preliminary, subject to large revisions. What now seems very weak could be revised to show significant growth. That's why the academics who decide whether we've been in a recession wait a long time before making a judgment.

In some cases, the most recent data are more than two months old, a frustrating delay for those who want to know what's happening right now. What now looks like a peak in activity could turn out to be a local peak or a false top, with the economy regaining strength in the next few months.

"There are a lot of local peaks that don't mean anything," said Chris Varvares, president of Macroeconomic Advisers, an economic forecasting firm.

The evidence currently available is by no means definitive about a recession, but it is not encouraging.

There's no easy formula for analyzing the five indicators and only a fool would try to do it in real time.

So here goes.

The street definition of a recession as two consecutive quarters of declining gross domestic product is not quite right. Most recessions have met that definition, but the economic historians who have the task of making these judgments have a more nuanced view that takes monthly data into account.

According to the business cycle dating committee of the National Bureau of Economic Research, "a recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales." Note that none of the housing indicators are part of the analysis.

Payrolls and income

The NBER's single most important monthly number for determining a recession is also the most important for the market: nonfarm payrolls, which are barely growing.

Payrolls have increased for 52 consecutive months, but hiring has slowed sharply over the past year. Payrolls rose just 18,000 in December and have risen at an annual rate of 0.9% in the past three months. Job growth that slow has typically been a recession-warning sign.

As weak as they are, the payroll numbers have likely been overstated. In two weeks, the government will release its annual benchmark revision to 2007 payrolls. Based on a preliminary estimate, the revision is likely to show payrolls were overstated by about 25,000 per month. If the preliminary estimate of the benchmark is right, December's gains could be revised completely away.

Other labor market indicators have also been weak, although they are not officially part of the NBER's tool kit. Employment measured by the household survey is up just 262,000 in the past year, or 22,000 per month.

Conclusion: Payrolls are flattening out.

Income growth

The second most important monthly indicator is real income growth excluding transfer payments. Real incomes peaked in September and have risen at an annual rate of 0.1% over the three months ending in November. The figures are adjusted for inflation. Incomes are closely related to job and wage growth, but also reflect income from small businesses, rental properties, savings and investment.

Real incomes represent the current resources available to consumers. Consumer spending can also be supported by rising wealth. Although net worth is not an official recessionary indicator, the declines in home prices and stock prices in the past few months are probably reducing household wealth for the first time since 2002.

Conclusion: Incomes and wealth are falling.

Output and sales

The manufacturing sector is highly cyclical, often leading the nation into recession. Consumers and businesses buy fewer durable goods when times are bad, but purchases rebound when the first signs of recovery appear.

Industrial production is the broadest measurement of the health of the factory sector. Industrial output was flat in December after peaking in July and in September. Output fell at an annual rate of 0.9% in the fourth quarter, despite strong export growth.

Conclusion: Industrial production is falling.

Sales

Real business sales have been healthy, but are showing early signs of slipping. Unfortunately, the data on inflation-adjusted sales are published with a long lag; the most current data are for October. Sales rose at an annual rate of 4.7% in the three months ending in October.

The most recent sales data aren't comforting. Retail sales fell 0.4% in December in nominal terms before adjusting for the 0.3% rise in consumer prices. Nominal sales for wholesalers and manufacturers were very strong in November, before accounting for the 3.2% rise in wholesale inflation.

Conclusion: Real business sales have been growing, but the data are old.

GDP

The government publishes its GDP figures on a quarterly basis only. The first estimate for the fourth quarter will be released on Jan. 30. Economists are forecasting annualized growth of about 1%.

A top economics firm, Macroeconomics Advisers, publishes a monthly GDP figure that the NBER uses as its fifth monthly indicator. The Macroeconomics Economics GDP is extremely volatile month-to-month. It rose in November, but didn't regain the peak set in September. December's data are not yet available. Varvares, the president of the firm, says the monthly GDP figures are consistent with his firm's forecast for 1.3% annualized growth in the quarterly GDP.

Conclusion: Inconclusive.

Not a pretty picture. But economic downturns never are."

[Rick Lee]

Originally Posted by jyl

Heard from a large bank, individuals' revolving lines of credit up significantly. Revolvers are personal lines of credit. Usually high-income consumers have these. Why are they tapping their LOCs? Alarming.

One of my best friends fits this profile to a tee. He's been unemployed since about June, but W2'ed about $300k for 2006 and lots more in 2005. Pissed most of it away in titty bars and making his new house fancy. Just had to bring $60k to the table to sell that house a few weeks ago and needed an LOC for it. He's burned through almost everything and is now down to his 401k and little else. His wife just went back to work and is making $48k now. They're in for quite a lifestyle change. He was my boss in subprime.

[jyl]

Originally Posted by Rick Lee

One of my best friends fits this profile to a tee. He's been unemployed since about June, but W2'ed about $300k for 2006 and lots more in 2005. Pissed most of it away in titty bars and making his new house fancy. Just had to bring $60k to the table to sell that house a few weeks ago and needed an LOC for it. He's burned through almost everything and is now down to his 401k and little else. His wife just went back to work and is making $48k now. They're in for quite a lifestyle change. He was my boss in subprime.

So there are more and more like him - high income households who are in trouble. Alarming indeed.

About a year ago, the retailers with low and moderate income customers were feeling pain. These are, for example, Family Dollar FDO Christopher & Banks CBK JC Penny JCP.

Then retailers with higher income customers began feeling pain. Like Abercrombie & Fitch ANF Nordstroms JWN Coach COH.

Now genuine luxury retailers are feeling it. Tiffany TIF had a bad holiday - their flagship store in Manhattan did well from all the European tourists with euros, but sales to Americans in that store was down YOY, their other New York-area stores had down sales, their stores elsewhere in the US were down.

American Express AXP is seeing rising delinquency rates, their customers are typically more affluent too.

Bad stuff.

[Porsche-O-Phile]

I'm honestly amazed at how idiots like this could delude themselves into thinking that this was (1) normal and (2) sustainable. I mean, if someone wanted to ride the gravy train for a while and make some money, fine. I get that. But to assume it was going to go on indefinitely and adopt a lifestyle that counted on it continuing in perpetuity? Absolute idiocy. The hallmark of the truly deluded and/or retarded.

I can respect someone seeing the opportunity, capitalizing on it, making their bucks and then getting the hell out back to a "normal" existence with a pile of cash in the bank to show for it. I have NO respect for someone who actually thought that 600 s.f. schit-shacks in ghettos were really truly worth $600k. And that people working part-time at Taco Bell were qualified to own them.

Idiots.

Absolute idiots.

[Rick Lee]

Originally Posted by Porsche-O-Phile

I'm honestly amazed at how idiots like this could delude themselves into thinking that this was (1) normal and (2) sustainable. I mean, if someone wanted to ride the gravy train for a while and make some money, fine. I get that. But to assume it was going to go on indefinitely and adopt a lifestyle that counted on it continuing in perpetuity? Absolute idiocy. The hallmark of the truly deluded and/or retarded.

FWIW, my friend totally agrees with this and tells me every time we talk that he brought all this on himself. Problem for him now looking at other sales jobs is that no one wants him because of how much he made before. They figure he'll never be happy making less and so will job hop. But he knows he'll never make that kind of money again.

[RWebb]

Like they say, you never you're in one until you're already in it.

But we could say we're in a "sluggishession"....

[hytem]

Contrary to media hype which is collapsing the stock market , there is no hard evidence of a recession yet. I do think the Fed has to lower interest rates for business growth and the real estate market.
The things to watch are the price of oil and the weak value of the dollar. If the Chinese revalue the RMB, we will be in real trouble with consumer prices here. They are doing us a big favor holding the line. Probably our biggest closet ally, along with the Saudis (LOL).