Posted on 03/08/2010 7:31:26 AM PST by SeattleBruce
By Irwin Kellner, MarketWatch PORT WASHINGTON, N.Y. (MarketWatch) -- The fledgling economic recovery appears to be running out of gas.
The fuel for this or any other recovery has to come from the consumer. Purchases of goods and services by people like you and me account for about 70% of gross domestic product, so without our help a recovery could not last too long.
Guess what? This is exactly what seems to be happening. Retailers report that, for the most part, shoppers are few and far between.
The recent run of economic data is most compelling. Just about all of the reports paint a picture of an economy slowing -- and sharply, at that.
Here are just a few:
Both consumer confidence and sentiment have fallen unexpectedly.
After-tax personal incomes adjusted for inflation have flattened.
Sales of both new and existing homes took a surprising stumble.
Orders for most durable goods are down.
Manufacturing has slowed.
Jobless claims are up.
Fourth-quarter GDP growth came largely from a slower pace of inventory liquidation, not from an increase in consumer spending.
And, as a matter of fact, consumer spending weakened last quarter.
Understand that the changes in the data above were not insignificant:
Consumer confidence fell to a 27-year low.
New-home sales fell to record lows, and they are likely to fall even further, since mortgage applications are down to 13-year lows.
(Excerpt) Read more at marketwatch.com ...
Thank you, nobama. Your socialist/marxist policies are advancing as planned. Thank you for trying to ruin the United States. (sarc)
You would never make in the Obama admin. They are going to blame it on the heat. Duh! :)
There's only one solution. Higher taxes and more deficit spending. /sarcasm
The propane I paid $325 for last time was $385 now.
My dental cleaning used to cost $95 then it went to
$115 and is now $130. Still, Obama says there’s no
inflation so I guess we got that going for us.
“That doesn’t make sense. How can a slower pace of inventory liquidation increase GDP? And if consumer spending didn’t increase GDP, then who spent? Government?”
Well, for lack of time, and a better source, go here:
http://en.wikipedia.org/wiki/Gross_domestic_product
See the distinction between ‘product’ and ‘expenditure’ measure of GDP. From the standpoint of product approach, all production counted into inventory - the ‘slower pace of inventory liquidation’ - would accrue to a higher GDP. Now, that that’s been achieved, unless that higher inventory is consumed and needs to be replenished again, it’s a one time effect.
As to your second question - yes, government is spending, but consumer spending has much more impact (the article writer maintains a 70% impact) on the US economy. Which is why this ‘recovery’ is so phony. Or just downright non-existant.
“You would never make in the Obama admin. They are going to blame it on the heat. Duh! :)”
You sir, are the one sorely lacking in MAO-bama street cred, I’m afraid. They’ll blame it on global climate change...;)
We’re much more likely to have 7% unemployment in July than 12%. The Feds will be hiring 1.5 million people (3 times the number hired in 2000!) for the census, and all of them will be employed in July.
Temporary jobs, and almost all of them will be gone by the September jobs reports, which come out right the month before the November election...
I saw unexpectedly in there!
Everyone Drink!
bump
As an example, a 5% y/y rate of inventory liquidation would decrease GDP by 5% (using a simple 1-for-1 inventory to GDP effect.) A 1% rate would decrease GDP by 1%, so moving from a 5% liquidation rate to a 1% rate has the effect of raising GDP by 4%.
Silly boy, it's George Bush's fault. 20 years from from now the Rats will be blaming George Bush.
Why is this unexpected? Are these idiots really this ignorant of the effect of uncertainty on economic decisions? With Cap & Trade and the Health Care Bill still up in the air, people are going to hold off on spending now lest that money be needed for tax increases in the not to distant future.
You can’t have double digit unemployement for this long and expect the economy to get better. Until the Marxixts in the WH are ejected there is no reasson to expect things to change soon.
Every thing Onada is doing is an economy breaker. To wit: Stimulous fraud, tax and trade, tax policy, housing policy, unemployment policy and Onadacare. The fact is, Marxists have never run healthy economies. The Chinese economy is only doing as well as it is because they made themselves take a healthy dose of capitalism.
Not going to buy a damn thing til the Kenyan Catastrophe is out of our White House!
You laugh, but as the weather clears, there *should* be some positive employment news in March. Because, logically, if employers were going to hire (let's say) 100K people in Feb, but couldn't because of the storms.....well, those jobs still need to be filled.
So, they'll be filled by March, I'd assume. That's how I always do business. Assuming that the positions existed in the first place.
And, of course, I'm sure that if this bump up doesn't materialize, then the MSM will dutifully report it, right? :-)
As an example, a 5% y/y rate of inventory liquidation would decrease GDP by 5% (using a simple 1-for-1 inventory to GDP effect.) A 1% rate would decrease GDP by 1%, so moving from a 5% liquidation rate to a 1% rate has the effect of raising GDP by 4%.
Neat trick, but dishonest as all get-out. If I remember correctly, E - I + G + C = GDP
We're not producing 4% more; we're consuming and/or net-exporting 4% less.
Barry, The Historic Black President, will NEVER be impeached. However, due to Hussein’s meteoric moves towards Marxism and the mass destruction of capitalist system here in The United States of America, the chances of another black individual winning the presidency in the near future are very slim...TO NONE!
Nice going!
but Christina Romer said it was all good again....what you mean?
“Yet our dear leaders seem deaf and dumb to economics and economic reality.”
I must disagree. The politicians that run this country are succeeding at destroying our rights and the capitalist systems that made this country great.
The politicians know exactly what they are doing.
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