Posted on 07/09/2010 6:33:52 AM PDT by SeekAndFind
We have entered another period similar to late 2007 and 2008, when the economic establishment had a rosy view of the economy, but a number of indicators were flashing warning signs that a major downturn was coming. Neither the Federal Reserve, the IMF, nor Wall Street correctly predicted a recession would begin in December 2007. None of these august bodies even realized the greatest economic downturn since the Depression was taking place even months after it had begun. Bullishness once again reigns supreme among the economic elites as one indicator after another is signaling trouble ahead.
Here are 10 reasons to think that there will be a recession soon:
1. The ECRI weekly leading indicators have dropped to minus 7.7%. There has been no case since its existence when a recession didn't take place if this indicator fell to minus 10%. This doesn't mean that it has to fall that low, a recession is still very likely if it even gets close. Falling below zero and staying in that range for any period of time also signals a recession. In 2007, the recession began three months after this indicator turned negative.
2. Global shipping has experienced a collapse in the last six weeks. The Baltic Dry Shipping Index has fallen from 4209 on May 26th to 2018 in early July, a drop of over 50%. The BDI is now as low as it was in May 2009. Its high in 2008 was 11,793.
3. Interest rates on U.S. treasuries have been falling rapidly and this indicates a weakening economy. The yield on the two-year note even hit an all-time low recently, dropping below its rate during the Credit Crisis in late 2008 when the global economy was in free fall.
4. The stock market is turning down and the Dow Industrials and S&P 500 have both given bear market trading signals. The small cap Russell 2000 has already experienced a bear market loss. The stock market peaked only two months before the 2007 recession began.
5. U.S. Consumer confidence took a nosedive in June, falling 10 points to 52.9. A reading of 90 or above indicates a healthy confidence level. Confidence hasn't gotten anywhere near that level during the recovery. Prior to the Credit Crisis, consumer spending was responsible for 72% of GDP. The consumer is the 800-pound gorilla that determines the fate of the economy.
6. The jobs picture hasn't improved and isn't likely to get better for a long time. Weekly unemployment claims were 454,00 this week. Anything around or above 400,000 indicates a recessionary environment. Claims have not even gotten that low at any point during the recovery. Surveys indicate that job offers for 2010 graduating students are few and far between. Long-term unemployment is far higher than it has been in any post-War recession.
7. Housing, the epicenter of the Credit Crisis, is getting worse. New Homes sales fell to an all-time low recently.
8. Government stimulus is declining and turning into retrenchment globally. The 2009 U.S. stimulus package's impact on the economy peaked this spring and spending will run out by the end of this year. It is highly unlikely a new stimulus package will appear in 2011. Government spending didn't just stimulate the recovery, government spending WAS the recovery. Without it, there will be a sharp drop in economic activity.
9. Taxes are increasing globally and higher taxes are a drag on economic growth. In the U.S., the Bush tax cuts expire at the end of the year. In the UK, capital gains are going up from 18% to 28% and the VAT is being raised from 17.5% to 20.0%. In Japan, there is a proposal to double the national sales tax from 5% to 10%. In the EU, countries are trying to outdo each other in imposing new and higher taxes.
10. The eurozone debt crisis is not yet resolved, but has been temporarily postponed. Greece could still default and problems are likely to continue in Portugal, Spain, Ireland and Italy. These can continue to negatively impact the global economy for a long time to come.
We’ve been in a recession since 08, and I don’t see how it could possibly not get worse in the coming year or two.
since the left redefined recession in 2007 to mean low economic growth, we are still in recession. The classic (and legitimate) definition of recession is 2 or more consecutive quarters of GDP decline. We are not in a recession. Either way Obama is looking bad. If we return to negative growth, he wears that albatross around his neck. If we are in a recession going on three years, he looks totally incompetent overseeing an endless decline.
If anyone thinks we came out of the “Recession of 08”, they need to have a conversation with the long term unemployed that aren’t even reflected in the government figures.
“The ECRI weekly leading indicators have dropped to minus 7.7%. ...”
This analysis is alarmist by ERCI’s own web page!
http://www.businesscycle.com/news/press/1890/
ERCI’s observation today is “the U.S. economy is just slowing down, not falling back into recession.”
I believe the GDP is growing about as much as I believe Barney Frank was correct back in 2003 when he said “These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis.”
RE: ECRI
I’ve often heard this outfit being quoted by businessmen, pundits and talk show host as if they are accurate prognosticators of the direction of the economy.
Larry Kudlow refers to them, so does Bloomberg’s media.
My question is — how accurate/how good is ECRI ?
Hey give OBOZO some time. It takes time to destroy the best country ever. He can not do it overnight.
I was watching Fox last night and heard an Obama spokesman say that the Obama administration inherited the "Bush mess" and it's going to take a long time to "undo eight years of failed policies". I wonder just how long it will be before these bozos wake up and admit its THEIR policies that have worsened things...and it's going to get worse after he let's the Bush tax cuts expire.
Recessions only happen when the GOP is in the White House. When the D’s are in, it’s always about recovery.....
I guess the Matrix keeps a few script writers remuneratively employed anyway. Does this writer get paid? Does he get paid more than an E-5 in Afghanistan? Do WSJ, or NYT, editors get paid more than Ford engineers? Do Goldman-Sachs executives get laid off? Did George Soros ever join the Monastery? Did NASA ever really land on the Moon?
Throw the Illegals out. Harvest the internal energy resources of the nation, fossil, nuclear, and renewable. Reinvigorate the Moon and Mars initiatives. Stabilize the population. Reclaim sustainable agriculture nationally. Cut corporate and individual taxes. Return Heatlthcare, and all consumption to competitive personal responsibility. Bury the Leftists. And HEY! once again prosperity for all responsible US citizens.
RE: “undo eight years of failed policies”
Bush inherited a recession himself. Remember, when he took over the DOT COM bubble just busted and recession was underway ( Bush and Cheney were saying that at the BEGINNING of 2001 and Dems were accusing them of “talking down the economy” <-— EXACT PHRASE ).
Then 9/11 struck which excacerbated the recession.
Did Bush whine and blame Clinton for what he inherited ?
NOPE. He put in a tax incentive package that LOWERED all kinds of taxes. Within a year, the GDP grew and unemployment dropped so much that by 2005, we had close to FULL EMPLOYMENT ( between 4.5% to 5% ).
Here’s the other thing -— Budget deficit as a percentage of GDP was a mere 2.52% in 2005, 1.85% in 2006 and 1.14% in 2007 ( Note : The Dem Congress started its session in 2007 ).
After that, Budget Deficit as a percentage of GDP grew from
3.18% in 2008 to now a near Greece-like 10.64%.
Here’s the other thing -— AS THE TAX CUTS CONTINUED, GOVERNMENT REVENUE — GREW ( yes I said, GREW ).
The one unfortunate thing Bush did not do was REIN IN SPENDING. He was a big spender like any Democrat. But heck, if Bush was a big spender, Obama QUINTUPLED his spending.
US budget deficit was :
158 B in 2002
378 B in 2003
413 B in 2004
318 B in 2005
248 B in 2006
The Democratic Congress took over and started session in 2007. Guess what our budget deficit is now ?
Answer : Close to $1.5 TRILLION !! You can’t make this up folks — OBAMA QUINTUPLED OUR BUDGET DEFICIT, DOUBLED OUR UNEMPLOYMENT and Exacerbated our debt as percentage of GDP close to 10 times !!
Next year, the tax cuts Bush put in place in 2003 to counter the recession then EXPIRES !! Businesses and Tax payers will see a HUGE TAX increase on the horizon (not to mention HUGE SPENDING ON HEALTHCARE and other nonsense like Cap and Trade ).
THOSE ARE HISTORICAL FIGURES OBAMA CANNOT DENY ( well he can only if he talks to people who refuse to see reality ).
Unless Americans wake up and KNOW the truth regarding the fiscal lies Obama has been telling, this nation is doomed.
“how accurate/how good is ECRI”
I have been following Economic Cycle Research Institute and their Managing Director, Lakshman Achuthan for close to a decade. He and his organization are EXCELLENT! They predicted the seriousness of the 2008-2009 recession well in advance and, most remarkably, claim that their economic indicators have never given a false reading of future economic trends over the many decades ECRI has been doing this (Note: an economic forecast does not forecast the stock market necessarily). You can subscribe to a premium service they have or just track their continuous appearances on business programs and abundant quotes in reputable business journals for free at:
http://www.businesscycle.com/news/press/
“Well, he did promise change”
Yes, I see more people than ever now asking for change (in their cup on a street corner)!
Perhaps we’ll know for sure in a couple of months.
The US economy is sort of like a car that took the wrong exit, and they know it. But instead of turning around they keep driving “just to see what happens”. That’s sort of how I see things happening. And, during the drive, they discuss how more “regulations” would have prevented this from happening.
Regulations don’t fix anything.
Also, get prepared for tax hikes. In January the Bush tax cuts put in place in 2002 expire, and there is going to be a split between the American people.
On one side you are going to have responsible freedom loving advocates.
On the other side you are going to have, well, how can I put this.... “Totalitarian Communist control freaks.” And that includes more than half the Congress and Senate.
I know it’s difficult to believe, but even if you believe in the income tax, it’s just one plank from the major planks of the book the Communist Manifesto. So is a Central Bank. So is a National Education System (no child left behind). So are many things. If income tax was gone, the government would still have the same amount of revenue as in the year 2000. Also, all income tax does is pay interest to private banks that create money out of nothing. So, when the banks get those big bonus checks, it’s your income tax that is paying it. There’s another word for this. Corporate Fascism. That’s when government and big business work together to do whatever the heck they want.
None of this existed before the Central Bank of 1913. That was when one income for a family was enough. Education was awesome in the United States. buildings were going up everywhere.
But banks weren’t “making enough money”. So they changed it. Now when banks screw up, they bail themselves out from the Central Bank, and then make the people pay for it through inflation and higher taxes.
And that’s what they government will sell you as “prosperity” and “working together”. All the while they meet in secret every summer at major resorts in their private jets.
For me I’m moving my money to a local Credit Union. and save as much as I can. I’ll Downsize everything so that should this end up like the Great Depression, I can pick up the pieces in 5 - 10 years.
This book has been in my personal library for almost 20 years.
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