You did catch the -8.5% YoY in this post which is photoguy bad..and that was in October. It has gotten much worse the last 2 months. We can go round and round on this forever. Let’s check back in a year and we’ll see if things are improving or getting worse and how much GDP we’ve dropped. My bet is -7-10% from the end of Q3 2008 and with the Option Arm/Alt A reset coming at the end of this year and 2010 we MAY bottom in the middle of 2010. This will not be a V shaped recession. L shaped at best, depression becoming highly likely.
Yep, you’re right about that. We can go round and round.
No I don’t expect 7 to 10% decline in GDP from Q3 2008, but even if we had that, it would have to drop still further to be a depression. Mortgage reset may not amount to much since interest rates are so low. That is an over used stat. Lenders are not going to demand that borrowers who are struggling to make payments as it is pay higher interest rates just because that’s the deal they negotiated. And people are refinancing like crazy right now. I’ve got a fixed, and even I’ve been considering it.
If you have cash sitting around, now is the time to invest in heavily discounted property. If you have good credit, I’d even take advantage of the low interest rates. You’ll end up ahead of the poor schmuck who screwed his credit up during the bubble. I’ve been looking for the right distressed property for some time. Unfortunately, my wife has very particular tastes, so I’m having difficulty finding one she likes in the price range I’m looking at.
I will grant you that groceries have been hurt by more than I would have expected. I’m not sure why that is. My first guess would be that a lot of illegal immigrants have moved back to Mexico. Immigrants probably spend most of their income on groceries. But even that seems somewhat hard to believe.
It may be that the problem is not at the consumer level, but at the store owner level. The disruption in the real estate and financial markets might be pressuring their bottom lines, and forcing them to reduce their purchases of inventory.
Whatever it is, though, the market will adjust. That’s the genius of free markets, and the reason that political processes are vastly inferior when it comes to making economic decisions.