Why The Depression Is Ongoing

[Karmadillo]

http://www.zerohedge.com/article/david-rosenberg-part-1-why-depression-ongoing

There are classic signs indeed that the recession in the U.S. ended last summer — output, sales, etc. But the depression is ongoing and the reason we say that is because real personal income, excluding handouts from the government, has barely budged. In fact, real organic personal income is nearly $500 billion lower now than it was at the peak 16 months ago and this has never occurred before coming out of any technical recession. It is a depression, as the chart below attests — that is the trendline for real household incomes, until the government comes in to top them off with handouts, subsidies and extended jobless benefits. The share of U.S. personal income being derived from Uncle Sam’s generosity has risen above 18% for the first time ever.



Real consumer spending is up $200 billion over the past 16 months and everyone believes we have a sustainable recovery even though organic income is down almost $500 billion. Think about that for a second because once the stimulus wears off, and with a 10% deficit-to-GDP ratio and concerns surfacing everywhere about sovereign credit risks, there is little out there to support future growth in consumption.

Some are clinging to the notion that employment growth will accelerate. From our lens, once you remove all the assumptions the Bureau of Labor Statistics uses in its monthly data, there is little growth in the nonfarm payroll data. And, the Household survey is much too volatile and too small a sample size to rely on, even if all of a sudden it has become a focal point for the bulls (who conveniently were ignoring it as the recession began).

The ADP private payroll survey is showing marginal employment growth with none in the small business sector at all. And jobless claims, as we saw yesterday, have basically stopped falling; however, at still around the 440k level, they are not consistent at all with sustainable job creation. After plunging from 600k in June 2009, to 440k, as of January 2010, claims have basically stopped declining. That is a problem.

To reiterate: outside of the lagged impact of all the government stimulus and the arithmetic impact of inventory accumulation, the economy is not growing. The National Federation of Independent Business small business survey is showing that economic growth is stagnant at best. Even if you take the government data at face value, the past four quarters have averaged a mere 1.38% in terms of real final sales, which goes down as one of the very weakest post-recession trajectories in recorded history. We know it’s a tough pill to swallow, but we are sure that mostly everyone will get over it.

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[Mari333]

1. well,as long as those jobs keep getting shipped out for slave labour

and unions are broken up, and corporations continue to reap profits off of people by paying them unlivable wages, this will continue ad nauseum.

add to that 2 occupations that are like black holes sucking the money out of the country and you have the perfect storm of a bankrupt country going nowhere.

[OHdem10]

2. Right on point! Proof positive that all the job losses have not been

the result of the Financial Crisis, but many are the
result of a Globalization Crisis. Poorly managed Trade
Policies are just as much a culprit as the Banksters.

Sh----Shush, do not speak of this too loudly--you will
upset the "Free-Traders". Personally, I am looking for
some "Fair Traders" to try to fix this mess.

[Mari333]

3. Reagan started it, Clinton enabled it, and Bush kept it going

Obama has a chance to change it, but with the DLC corporate politicians in charge, I dont see change.

NAFTA needs to end, yesterday. Huge tariffs need to be placed on goods from outsourced corporations.
and the top 1 percent need to pay taxes out the ass.

[CrispyQ]

7. While I agree completely with your last paragraph, I don't see that happening,

at least not in my lifetime! TPTB have effectively plotted the working & lower classes against each other over social issues such as abortion, gay rights & similar issues. Too many in our 'class' have been successfully brainwashed against unions. We have no solidarity. How bad will it have to get before the workers of the world wake up & realize they've been used? When will we unite?

~sigh

[Mari333]

8. I dont know. reading labour history, it has to get pretty bad

before people wake up. wish I knew.

[Selatius]

4. We should still be happy though. Our corporate lords received fantastic bonuses last year.

We should be thankful that they're doing well. Hopefully, they will throw us a few scraps. I'm so hungry. :sarcasm:

[L0oniX]

5. ...and of course it all trickles down ...like piss down a leg.

[Donnachaidh]

6. the only thing trickling down IS piss - the contempt of the wealthy class

And the *I wanna BE wealthy* faction laps it up like pudding. And turn government officials into Tiger Beat covers..... :puke:

Doubleplusgood comrade.