Fed Sees Economy Getting Worse

NEW YORK (CNNMoney.com) -- Some members of the Federal Reserve are worried about the possibility of a "severe and protracted downturn" in the U.S. economy, according to the minutes of the central bank's latest minutes released Tuesday.

The minutes show that some Fed policymakers are concerned that the problems in the "housing sector had deepened and that considerable uncertainty surrounded the outlook for housing."

The Fed cut its key federal funds rate by three-quarters of a point at the March 18 meeting, its sixth rate cut since September. The Fed has been cutting rates in an effort to keep the U.S. economy from falling into recession following the meltdown of the subprime mortgage market and resulting credit crunch.

But Fed Chairman Ben Bernanke told Congress last week that a "recession is possible," although he said he believed the economy is still growing slowly.

Despite the growing belief that the economy is already in recession, the presidents of the Dallas and Philadelphia Federal Reserve Banks voted against cutting rates as aggressively, a rare amount of dissent on the central bank.

ahem... nice one

a billion $ contract over 13 years - that’s below 80 million per year.

That’s not even 4000$ revenue per co-worker of perot.

Is that something that influences your reception of the US economy ? With luck it will just influence your job security a bit.

I don’t know how agreements on payment were made but 13 years is a long time...

If you corrected yearly payment with inflation in the last year the revenue will have decreased in value on what 20 million $ are worth - that’s 800 bucks per coworker and year - revenue not earnings.

And BTW investment banking is missing a trillion dollars at the moment - not because some lefty media says so.

Because taxing the way out will not be an option in election years they will stick it to the dollar - like they did with iraq.

So don’t expect the revenue from that contract in year 13 to buy your personal purse more then a coffe at your vending machine.

http://www.perotsystems.com/investors/

(Key)
http://www.perotsystems.com/investors/4Q_2007_Financial_Summary.pdf?ts=1023345691

http://ww3.ics.adp.com/streetlink_data/dirPER/annual/HTML2/default.htm

In Germany where investors don't even have “access” to the information as in the US, I am much more careful. Typically there the banks have direct liaisons with certain large firms but the individual investor does not have as detailed insight into the financial situation of a firm. We have many accounts, to include Lufthansa, the VA, VW, Boeing, Vanguard, and many others. The fact is, we're making record profits, we're landing long term contracts that are worth a billion plus right now, and the doom and gloomers simply overlook these minor details. You're an idiot with an agenda. The typical German with a precious schadenfreude for the US so he can rationalize his do nothing and "sozial staat."

Are you one of those Germans that reminisces how great it is back home but has a job in the US?

Actually all one needs to do is look at the Reagan tax cuts for the correlation between discretionary spending and economic growth. When the tax cuts were implemented discretionary income rose dramatically. While everyone focuses on the increased tax revenue from the tax cuts, they tend to bypass the middle step in the equation which is that a greater percentage of individual and business income was available for purchases beyond necessities. Businesses took actions which allowed them to expand or improve their production. Individuals made purchases to improve quality of life. Additional funds were saved/invested, which allowed, among other things, banks to increase lending which, again, was used for discretionary purchases by businesses and individuals. Look at your own quote: "Higher prices of “core products” do not comprise a recession under any measure. If I used to spend $150 a month on gasoline and now I’m spending $300 per month, that extra $150 has to come from somewhere. Maybe I reduce my spending on movies, ballgames, cable TV, etc. by $150 . . . but my miniscule contribution to the nation’s GDP hasn’t changed at all." That is an example of exactly why the arbitrary definition of recession fails. If, for example, all consumers are spending the same amount of money, but spending it on fewer goods and services, the result will be economic contraction, regardless of what the GDP figure tells us. Your total spending has not changed, but the number of jobs supported by said spending has declined. The end result of this pattern is economic contraction. This contraction, at best, will not be reflected in GDP for some time. If it is occurring concurrently with an inflation in necessities (non-discretionary spending) the impact on how GDP is measured will be minimized. However there is no denying that economic activity by most other measures, and in large sectors of the economy, is declining. One other important thing to remember is that the "2 consecutive quarters with negative GDP" is not, in fact, universally accepted. It is certainly the most quoted definition, but even among those who insist a recession must be reflected by 6 straight months of economic decline, there are many economists who will argue that it can be a negative trend in any of a basket of economic measures, including, for example, employment. My argument here is simple: I take issue with common wisdom as to how we decide we are in a recession because I do not trust the quality of the data, and even if one does trust said data it is trailing data, and results in a declaration of a recession that had begun prior to said declaration and, in the case of the 1988 recession that was largely responsible for Clinton's first election, was likely over, or close to being over, by the time said indicators even indicated said recession had begun.

The notion that discretionary spending is the key to economic growth is a classic Keynesian "demand-side" approach to economics -- and one that doesn't have a very good track record at all.

The most successful parts of Reagan's tax cut program were those that were specifically "supply-side" in nature. An income tax cut is not a supply-side measure at all, but a capital gains tax cut is. The strong growth in the Reagan years can be largely traced to the 1981 reduction in the top capital gains tax rate to 20%, while a large measure of the economic troubles in 1987 and later in 1991 can be directly attributed to the restoration of the higher capital gains tax rates in the 1986 tax reform and George H. W. Bush's infamous tax hikes in 1990.

While everyone focuses on the increased tax revenue from the tax cuts, they tend to bypass the middle step in the equation which is that a greater percentage of individual and business income was available for purchases beyond necessities.

I'm not sure this is true at all -- especially when you consider that imports have constituted a larger and larger portion of our discretionary spending over time.

Businesses took actions which allowed them to expand or improve their production. Individuals made purchases to improve quality of life. Additional funds were saved/invested, which allowed, among other things, banks to increase lending which, again, was used for discretionary purchases by businesses and individuals. Look at your own quote: "Higher prices of “core products” do not comprise a recession under any measure. If I used to spend $150 a month on gasoline and now I’m spending $300 per month, that extra $150 has to come from somewhere. Maybe I reduce my spending on movies, ballgames, cable TV, etc. by $150 . . . but my miniscule contribution to the nation’s GDP hasn’t changed at all." That is an example of exactly why the arbitrary definition of recession fails. If, for example, all consumers are spending the same amount of money, but spending it on fewer goods and services, the result will be economic contraction, regardless of what the GDP figure tells us. Your total spending has not changed, but the number of jobs supported by said spending has declined. The end result of this pattern is economic contraction. This contraction, at best, will not be reflected in GDP for some time.

OK, let's think about this using my $150 vs. $300 example. Who is to say that the number of people employed by the $150 I used to spend on extraneous things is greater than the number of people employed by the extra $150 I now spend on gasoline -- especially when you consider all of the additional activity in the oil exploration/extraction industries in the U.S. today compared to ten years ago?

However there is no denying that economic activity by most other measures, and in large sectors of the economy, is declining. One other important thing to remember is that the "2 consecutive quarters with negative GDP" is not, in fact, universally accepted. It is certainly the most quoted definition, but even among those who insist a recession must be reflected by 6 straight months of economic decline, there are many economists who will argue that it can be a negative trend in any of a basket of economic measures, including, for example, employment. My argument here is simple: I take issue with common wisdom as to how we decide we are in a recession because I do not trust the quality of the data . . .

That may all be true, but by that same logic I could make the case that GDP numbers in their entirety are completely misleading. Earlier in your post you suggested that much of the growth in the last 25 years could be traced to U.S. tax policies that gave people more discretionary income. I contend that the single biggest factor in our growing economy over that period has been the dramatic increase in people in the workforce -- including a dramatic increase in two-income families, more seniors working after retirement, etc.

By that same token, I'd say much of the "growth" we've seen in the last 25 years has been nothing more than what I call the "monetization of services" in our economy -- i.e., the fact that entire industries have sprung up in recent decades around things that people used to do on their own but now pay others to do for them (I'll cite landscaping and day care as two perfect examples).

In Germany where investors don't even have “access” to the information as in the US. HAHAHAHAAAHHAHA sorry my tears are rolling down my face ... in the US the investors get better informations... now that was a good one. Well certainly in a way you are correct - you get better informations in terms like 'all you here will be that it's triple A grade investment and there's nothing better' You got to forgive me, but you are the funiest clown in this blog by far. Every utter failure seems like a bright and guiding star to you. You got to know, that I wasn't dancing on the ruins of that crisis of yours. In fact it's hard for me to see a great nation fade like that. I'd have loved to see how you guys stood up against china. I guess this race is over.

Now I see you are working for a company doing great busyness with the chicoms. (Will your companies president go and stand next to the Chinese premier during opening ceremonies ?)

I pointed out that a small contract doesn't give you the hint of the well-beeings or the failure of the US economy.

Also the Federal Reserve isn't left media, some fair contract to one sound enterprise isn't going to pay the trillions missing and my colleagues with US contracts damn the day they signed them because they just got their income cut by 50% due to the dollar crash.

That crisis isn't a favor done to your nation - obviously not.

You have adapted very well to the system of abundad positive informations:

‘We have won a Billion Contract’ wow - in reality you got to divide it by 13 substract 13 years of inflation and cut of the uncertainty of 13 years continuous services.

Lol you'll never get what was sold in the US.

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