Who says we're not headed for a recession?

[Purveyor]

By Dr. Irwin Kellner, MarketWatch

HEMPSTEAD, N.Y. (MarketWatch) -- If it walks like a duck and quacks like a duck, it must be a duck. Same goes for the economy.

The gross domestic product may be rising, but from all appearances, the economy seems to be in a funk.

Both anecdotal and statistical evidence suggest that the slowdown that's been in evidence for more than a year (see last week's column) could worse before it gets better. See earlier column here.

--
People living in the "real" world think things just don't seem to be right. While the University of Michigan's index of consumer sentiment rose to 88.7 in early May from 87.1 in April, it's still well below readings in the 90s posted every month from last October through this February.

Blame it on four factors that affect everyone's lives: food, energy, health care and housing.
I wrote back on April 17 that while the pundits may be fond of removing food and energy from the price indexes to uncover what they believe is the "core," or underlying, rate of inflation, consumers, as the headline said: "...feel all inflation, not just the core number."

---eoe---

http://www.marketwatch.com/news/story/says-were-not-headed-recession/story.aspx?guid=%7B133F9673-3DAC-4F02-A25B-2F5B1FD631F3%7D

[StarryNite]

1. I don't believe it.

Things are going swimmingly. :sarcasm:

[no_hypocrisy]

2. The economy has to slow down if your wages are stagnant and your disposable

income is paying down debt versus circulating in the economy via new purchases. A lot of people can no longer rely on credit. Because the economy needs a certain amount of consumer activity in order to be viable, this is not good news at all.

[onehandle]

3. Who says we ever left Bush's 2001 pre-9/11 recession?

I think the bushies just change the numbers to hide just how bad things are for non-billionaires.

[meegbear]

7. Exactly!

We've been in one for the past 6+ years.

[whistle]

4. How about an economic collapse, a meltdown and runaway inflation

...all set up by Bush's failed policies

[pampango]

12. I'll see your economic collapse, a meltdown and runaway inflation

and raise with Armageddon. (I'm holding back on invasion of Iran, Condi or Jeb for pResident, and fascist dictatorship in case there are future raises.)

I am getting into winning these contests of who can predict the most dire future for everyone. (The beauty of it is that you can play regularly for years and it always feels like the first time.) Let's just hope that it happens soon, not after January 2009.

[whistle]

17. If you win on Armageddon, then of course that would be game over

...Economic meltdown would be a new dark age with starvation, disease pestilence and perhaps an 85% plus die off of the world human population leaving only about 750 to 925 million humans scattered around the earth surviving as best they can with most of the technology and knowledge lost.

[pampango]

18. Dang, you win. I shouldn't have saved my chips on the earlier

round. Not that I could have bluffed you out of this game. I can't compete with an 85% die off of the human population.

[whistle]

20. Thanks, consider the entire green revolution from the 1940's and 1950s

....that produced the world surplus of food allowing the world population to nearly triple over those 65 years, that gain would virtually be lost in less than a generation. So there would be mass starvation, wars, epidemics and all that would follow. I would rest much easier if I knew this prediction was totally without foundation, but I'm afraid the process has already begun.:scared: :cry:

[IChing]

5. Almost posted this myself...we are also having real estate prices falling

which was once a hedge against inflationary trends

[NightWatcher]

6. what said it to me was when Walmart sales were down

a couple of months ago, the same store sales numbers were down more than 3% from the same time last year. This was the first time in more than 30 years that this had happened to wallyworld.

When middle Amerika can no longer afford to charge useless, plastic crap and junk food, we are in deep shit.

[A HERETIC I AM]

24. Ummm....It could also mean that Wal-Mart has saturated the market

and their growth is over.
http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=wmt&time=8&freq=1

as opposed to Target;
(type "TGT" in the symbol box on that page for Target's stock performance. Change the 1 year to 5 year for a better idea of how both companies have been doing)

Wal-Marts sales arent really a very good economic indicator these days.

[Deja Q]

8. Don't worry, the Indians and Chinese middle classes will take up our slack...

And the banks will find new people to give credit cards to.

There's no problem.

[EstimatedProphet]

9. Dumbass bigwig fuckwits are going to force another Great Depression

Just like they did in the 20's. Their greed knows no bounds, and it will crush the economy.

[Deja Q]

10. With no jobs, people will have nowhere to drive to.

That'll help the gas problem. And global warming.
:shrug:

[EstimatedProphet]

14. It'll help overpopulation too, with everyone starving.

[EV_Ares]

11. You got it right Purveyor; Wall Street and the big funds keep trying

to convince everyone how wonderful the economy is.

Nobody disagrees that the economy is great for them.

However, for the working man and women, not so great.

Like you said, housing, food, gas, health care, college tuition if you are trying to put your kid through school, how could it be great.

[CK_John]

13. More like a profit induced depression. n/t

[gravity]

15. I say we're not, and have my money riding on it

That biggest concern right now is gas prices, which is negatively affecting the economy right now, but that could be a short term problem as more refineries get up in running.

Inflation isn't that big of a problem, since it is around 2-3% which is low relatively speaking. Countries like Venezuela have 30% inflation rates so it can be a lot worst.

But I can't predict the future, so only time will tell who is really right.

[CK_John]

26. Gas prices will have to hit $6 before it will affect the economy. n/t

[gravity]

28. They are already affecting the economy now

The question is how long they will remain up, and what point will it cause a recession

[roamer65]

16. The Federal Reserve will eventually have to cut interest rates...

in response to the housing market collapse. That cutting of rates will reduce the rate differential between China, Europe, Canada and the US. It will set off a US$ currency crisis like we have never seen before. We are in the calm before the big storm right now.

[nadinbrzezinski]

19. I'll use the D word, DEPRESION

[lovuian]

27. I agree

these are the robber baron days and roaring 20's heading for the fall

[TahitiNut]

21. Times haven't been 'better' for corporations since 1929.

The Bureau of Economic Analysis (BEA) is the "Holy Grail" for such data ... and it's clear. Corporate profits compared to employee compensation hasn't been 'better' in 75 years. Ain't that grand?




It's often claimed that increased pay for employees (like them "guest workers") just raises prices to 'us' consumers (and we sure don't want that, do we?) ... but macro economics apparently teaches us that it the market that sets prices and employee compensation merely affects profits.

But that doesn't make sense, does it? After all, aren't we told by the 'trickle down' folk that when the corporation makes more money then the employees benefit? Golly! We sure hear that when we're working in the corporate world. It must be true. After all, they wouldn't lie to us, would they? So, we should see employees get paid more whenever profits increase ... unless they've been lying to us.

So ... let's see.



Well, doggone it! They lie! Fancy that!

[WI_DEM]

22. If we are in a recession going into the '08 election that should be the final nail in the coffin for

the GOP, but with elections these days you can't really tell.

[earth mom]

23. You can see it on eBay. The place is like a ghost town.

Lots of people sell on eBay to supplement their income and I'm seeing lots of stuff go without bids, which is NOT how it used to be. :(

[Elwood P Dowd]

25. Tell me about it.

Last month they had one of their specials where each listing only cost 20 cents. I put about 15 items up for bid and only sold 3-4. One of the problems is the cost of postage and freight. It cost about ten bucks just to mail a small package that might not even bring ten bucks in the auction.