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RE: Is the Economy Really Recovering? - 10/15/2009 10:44:26 AM
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relady
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quote:
Also, large sections of the housing market are actually recovering as we speak. Not that there aren't headwinds, but the free fall in residential 1-4 family housing is largely done (unless you live in Las Vegas or certain parts of CA & FL) My company's home closings in in September were up 30% over September of last year. Don't know whether that will hold or not, but it is welcome news. And FWIW, GroupW, I consider your opinions to be highly well-informed and reasoned and do give them a lot of credibility. Thank you for being one of the very few voices of reason on these boards! 
BTW, just curious GroupW, what is your opinion (if you have one) of Dylan Ratigan and his level of knowledge ?
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RE: Is the Economy Really Recovering? - 10/15/2009 10:48:36 AM
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GroupW
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quote:
ORIGINAL: letusreason
"America has never faced a recession with housing price declines. The LEI totally ignores wealth because it has never been an issue."
Technically, 99% true. We actually have faced recessions with housing price declines locally (TX, MA, CA in the early/mid 80's, late 80's/early 90's). Those declines typically were in the 40% range, just a bit worse then where we are today. We know those markets took 5-10 years to recover. People's spending however didn't seem to be as impacted by changes in household net worth driven by real estate holdings. While increases in home prices can drive temporary spending via increased leverage, those increases are indeed temporary and spending eventually reverts back to trend. Declines in home prices, however, don't necessarily reduce spending in the same way that increases in home prices increase spending.
When home prices increase, you have the option to borrow. When home prices decrease, noone comes knocking on your door asking you to pay back your mortgage faster. It's kind of a one-way option - homeowners can get cash when prices increase, but don't necessarily lose cash when home prices decline.
Edit: this would be entirely different if mortgages were "marked to market" type debt like many corporate debt agreements. In that case, you would get spendable cash when prices go up, and lose cash when prices go down. In that case, consumer spending would by bi-directional and symmetrical with home prices. Fortunately for me, the banks give me a free option - I can spend above trend when prices go up and spend at or near trend when they don't.
< Message edited by GroupW -- 10/15/2009 11:02:30 AM >
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“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: Is the Economy Really Recovering? - 10/15/2009 10:50:23 AM
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GroupW
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quote:
ORIGINAL: relady
BTW, just curious GroupW, what is your opinion (if you have one) of Dylan Ratigan and his level of knowledge ?
Thanks for the compliment! I'm not really familiar with this fellow. Can you educate me?
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: Is the Economy Really Recovering? - 10/15/2009 10:55:03 AM
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GroupW
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quote:
ORIGINAL: letusreason
fair enough and magnanimous of you to admit but you still did not accept the challenge of backing your oppinion up with a set of hard line predictors from the past indicating that this scenario is exactly like the past recoveries.
You claim that evidence stating it is different as wreckless and yet you provide no evidence of your own indicating how similar it is to others or how it is EXACTLY the same.
I figure the vast majority of the time, when someone says "this time is different", that given the frequency with which that standpoint has led to disaster, the burden of proof resides with the person saying that this time really is different.
Every expansion and every recession has had some unique feature to it that causes people to say "this time is different". It just hasn't panned out that way. Beyond pointing out all the various & sundry data series that are pointing upwards when they should be pointing downwards if this time really was different, I'm not sure what else I can do.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: Is the Economy Really Recovering? - 10/15/2009 10:59:00 AM
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relady
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quote:
Thanks for the compliment! I'm not really familiar with this fellow. Can you educate me? You're welcome.  Ratigan is a guy who used to head up a show my husband loves, called Fast Money. Now he has a show on MSNBC in the mornings, called the Morning Meeting. Other than that I really don't know much about him. He does seem to know his way around the financial industry.
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RE: Is the Economy Really Recovering? - 10/15/2009 11:02:48 AM
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letusreason
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quote:
ORIGINAL: relady
quote:
Also, large sections of the housing market are actually recovering as we speak. Not that there aren't headwinds, but the free fall in residential 1-4 family housing is largely done (unless you live in Las Vegas or certain parts of CA & FL) My company's home closings in in September were up 30% over September of last year. Don't know whether that will hold or not, but it is welcome news. And FWIW, GroupW, I consider your opinions to be highly well-informed and reasoned and do give them a lot of credibility. Thank you for being one of the very few voices of reason on these boards!
BTW, just curious GroupW, what is your opinion (if you have one) of Dylan Ratigan and his level of knowledge ?
Economists expected a gain of 2.1% for August and got -2.7% for all four regions.
If this holds for September your idiocentric news won't be worth much to the rest of the country although it be happy times for your world if you buck the national decline.
And if you read the article I posted about no end in site to the foreclosures, it stated that Banks will be extrememly slow to getting repossesed homes back to the market.
So leading indicators championed by GroupW will be a slow and distant recover future (perhaps 2013) at best if it doesn't slide into another deeper recession that is due to there being no jobs being created by the stimulus.
Without job creation, leading indicators are squat.
< Message edited by letusreason -- 10/15/2009 11:09:34 AM >
_____________________________
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All the ways of a man are clean in his own sight, But the LORD weighs the motives.
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RE: Is the Economy Really Recovering? - 10/15/2009 11:05:01 AM
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GroupW
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letusreason-
If you want some additional evidence on the asymmetry of consumer responses to changes in household wealth, you could look at the tech bubble / 2001 recession which was practically a non-event. There was a tremendous loss of financial wealth (which tends to have greater impacts than losses of less liquid real estate wealth). The resulting recession was barely noticeable and nearly didn't qualify as a recession (some economists don't consider it to be one).
This bubble has generated a far greater loss of wealth, but it is not the liquid sort. People seem to view losses of financial asset wealth (which is liquid and spendable) differently than losses of real estate wealth (which is less liquid and less spendable).
Again - we agree that the overleveraging in this economy will be a drag on the economy for years. I don't mean to be a Pollyanna here. It's just that the world as we know it is not ending.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: Is the Economy Really Recovering? - 10/15/2009 11:05:17 AM
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ourgreatestSource
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As I am not into politics and not embracing no Democratics or Republicans regular mantra ..I do care about working people and those struggling for real.. of course I too have my struggles am stuck because cannot sell my commercial property, yet..it sucks. Anyways..
GW...and about the unemployed? How all these people are going to find jobs that do not exist anymore? How new jobs are going to be created? What new sectors might have good chances to grow and need working force on it?
Are those people unemployed being trained for something else while they wait for a job?
And about those who only are working part time and lower paying job they used to because there is nothing else and they have bills to pay and are into survival mode? Are they being trained to better their working skills when the economy recover for them to get a new job in another sector?
How jobs are going to be created? Which sectors are goring to substitute the ones that are gone and closed their doors?
LOL..I have many questions, hope you understand and answer them. Thanks! 
"Employers cut more jobs than forecast last month and the unemployment rate rose to a 26-year high, calling into question the sustainability of the economic recovery.
The unemployment rate rose to 9.8 percent, the highest since 1983, from 9.7 percent in August, the Labor Department said today in Washington. Payrolls fell by 263,000, following a revised 201,000 decline the prior month that was more/less than previously reported.
Federal Reserve Chairman Ben S. Bernanke yesterday said the expansion may not be strong enough to “substantially” bring down unemployment, indicating the central bank will be slow to drain the trillions of dollars it’s pumped into the economy. UAL Corp. is among companies still cutting jobs on concern spending will fade as government stimulus wanes.
Revisions subtracted 13,000 from payroll figures previously reported for August and July.
Payrolls were forecast to drop 175,000 in September after a 216,000 decline initially reported for August, according to the median of 84 economists surveyed by Bloomberg News. Estimates ranged from decreases of 260,000 to 100,000. Job losses peaked at 741,000 in January, the most since 1949."
http://www.tradingeconomics.com/Economics/Unemployment-Rate.aspx?Symbol=USD
_____________________________
"Whoever has no rule over his own spirit Is like a city broken down, without walls." Prov. 25:28
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RE: Is the Economy Really Recovering? - 10/15/2009 11:11:00 AM
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GroupW
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quote:
ORIGINAL: letusreason
Economists expected a gain of 2.1% for August and got -2.7% for all four regions.
If you're talking about retail sales, your figures aren't correct.
The prior month (not expectations as you write) was +2.7%.
Actually, folks expected (per Bloomberg) a loss of -2.1% and got a loss of -1.5%, better than expected by +0.6%
Keep in mind that the prior month was skewed by cash for clunkers. Excluding autos, the prior month was +1.1% and the consensus expectation was +0.3% growth. We actually got +0.5%, better than expected by +0.2%
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: Is the Economy Really Recovering? - 10/15/2009 11:13:09 AM
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letusreason
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quote:
ORIGINAL: GroupW
letusreason-
If you want some additional evidence on the asymmetry of consumer responses to changes in household wealth, you could look at the tech bubble / 2001 recession which was practically a non-event. There was a tremendous loss of financial wealth (which tends to have greater impacts than losses of less liquid real estate wealth). The resulting recession was barely noticeable and nearly didn't qualify as a recession (some economists don't consider it to be one).
This bubble has generated a far greater loss of wealth, but it is not the liquid sort. People seem to view losses of financial asset wealth (which is liquid and spendable) differently than losses of real estate wealth (which is less liquid and less spendable).
Again - we agree that the overleveraging in this economy will be a drag on the economy for years. I don't mean to be a Pollyanna here. It's just that the world as we know it is not ending.
Good point!
AND the difference between the two is that this decline in wealth is different in that how it affects consumer spending is not well known!
And they are responsible for up to 2/3 to 3/4 of the U.S. GDP (9-12 tirllion)
And this consumer pullback is responsible for the weaking dollar effect.
So you constantly using the "leading economic indicators" as things to bank on as showing signs of improvement is very misleading and is sort of "Pollyannaish".
< Message edited by letusreason -- 10/15/2009 11:19:45 AM >
_____________________________
Proverbs 16:2
All the ways of a man are clean in his own sight, But the LORD weighs the motives.
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RE: Is the Economy Really Recovering? - 10/15/2009 11:20:41 AM
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letusreason
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And since you mentioned the tech bubble as a comarison....
http://www.flickr.com/photos/msaleem/3047661276/sizes/o/
its worse, again, because it affects the average american's (consumer) decrease in wealth and not just tech companys' equity.
_____________________________
Proverbs 16:2
All the ways of a man are clean in his own sight, But the LORD weighs the motives.
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RE: Is the Economy Really Recovering? - 10/15/2009 11:22:30 AM
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letusreason
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quote:
ORIGINAL: GroupW
quote:
ORIGINAL: letusreason
Economists expected a gain of 2.1% for August and got -2.7% for all four regions.
If you're talking about retail sales, your figures aren't correct.
The prior month (not expectations as you write) was +2.7%.
Actually, folks expected (per Bloomberg) a loss of -2.1% and got a loss of -1.5%, better than expected by +0.6%
Keep in mind that the prior month was skewed by cash for clunkers. Excluding autos, the prior month was +1.1% and the consensus expectation was +0.3% growth. We actually got +0.5%, better than expected by +0.2%
No, i was categorically responding to home sales (closings) which was Reladys main point.
_____________________________
Proverbs 16:2
All the ways of a man are clean in his own sight, But the LORD weighs the motives.
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RE: Is the Economy Really Recovering? - 10/15/2009 11:23:30 AM
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GroupW
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From: Up in the hills of Colorado (very BIG hills...)
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quote:
ORIGINAL: letusreason
quote:
ORIGINAL: GroupW
quote:
ORIGINAL: letusreason
Economists expected a gain of 2.1% for August and got -2.7% for all four regions.
If you're talking about retail sales, your figures aren't correct.
The prior month (not expectations as you write) was +2.7%.
Actually, folks expected (per Bloomberg) a loss of -2.1% and got a loss of -1.5%, better than expected by +0.6%
Keep in mind that the prior month was skewed by cash for clunkers. Excluding autos, the prior month was +1.1% and the consensus expectation was +0.3% growth. We actually got +0.5%, better than expected by +0.2%
No, i was categorically responding to home sales (closings) which was Reladys main point.
Got it. The numbers were just oddly similar to retail sales. Sorry.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: Is the Economy Really Recovering? - 10/15/2009 11:24:34 AM
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GroupW
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quote:
ORIGINAL: tinydancer2
GW...and about the unemployed? How all these people are going to find jobs that do not exist anymore? How new jobs are going to be created? What new sectors might have good chances to grow and need working force on it?
Are those people unemployed being trained for something else while they wait for a job?
And about those who only are working part time and lower paying job they used to because there is nothing else and they have bills to pay and are into survival mode? Are they being trained to better their working skills when the economy recover for them to get a new job in another sector?
How jobs are going to be created? Which sectors are goring to substitute the ones that are gone and closed their doors?
LOL..I have many questions, hope you understand and answer them. Thanks!
"Employers cut more jobs than forecast last month and the unemployment rate rose to a 26-year high, calling into question the sustainability of the economic recovery.
The unemployment rate rose to 9.8 percent, the highest since 1983, from 9.7 percent in August, the Labor Department said today in Washington. Payrolls fell by 263,000, following a revised 201,000 decline the prior month that was more/less than previously reported.
Federal Reserve Chairman Ben S. Bernanke yesterday said the expansion may not be strong enough to “substantially” bring down unemployment, indicating the central bank will be slow to drain the trillions of dollars it’s pumped into the economy. UAL Corp. is among companies still cutting jobs on concern spending will fade as government stimulus wanes.
Revisions subtracted 13,000 from payroll figures previously reported for August and July.
Payrolls were forecast to drop 175,000 in September after a 216,000 decline initially reported for August, according to the median of 84 economists surveyed by Bloomberg News. Estimates ranged from decreases of 260,000 to 100,000. Job losses peaked at 741,000 in January, the most since 1949."
http://www.tradingeconomics.com/Economics/Unemployment-Rate.aspx?Symbol=USD
Good questions. There's one myth about economics that people don't pay attention to. Generally, economists when they talk about jobs and growth only talk about aggregate levels. We generally don't talk about impacts to real, individual people.
The unfortunate fact is that a lot of those jobs are (as you say) gone forever. Some people never get re-hired. Some people never find an equivalent job. Some (actually most) never get retrained. For the most part, growth comes from those who can find equivalent work doing so, those that can't falling out of the labor force, and the slack made up by new entrants with new skills.
I'm personally not smart enough to know where those new jobs will come from. I wish I was.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: Is the Economy Really Recovering? - 10/15/2009 11:26:37 AM
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GroupW
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quote:
ORIGINAL: letusreason
And since you mentioned the tech bubble as a comarison....
http://www.flickr.com/photos/msaleem/3047661276/sizes/o/
its worse, again, because it affects the average american's (consumer) decrease in wealth and not just tech companys' equity.
The tech bubble did indeed decrease consumer wealth. I wasn't talking about the tech company's net equity (although generally that amounts to the same thing. After all, particularly for public companies in the end guess who owns the net equity!)
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: Is the Economy Really Recovering? - 10/15/2009 11:30:25 AM
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GroupW
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quote:
ORIGINAL: letusreason
So you constantly using the "leading economic indicators" as things to bank on as showing signs of improvement is very misleading and is sort of "Pollyannaish".
I don't know if that's so Pollyannish. If all the various leading indicators were pointing in different directions, I'd agree, but for the most part they are all pointing up and have been fairly reliable over time. The weight of the statistical evidence falls on my side as do the more experienced economists.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: Is the Economy Really Recovering? - 10/15/2009 11:39:22 AM
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GroupW
Posts: 2533
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quote:
ORIGINAL: letusreason
Economists expected a gain of 2.1% for August and got -2.7% for all four regions.
If this holds for September your idiocentric news won't be worth much to the rest of the country although it be happy times for your world if you buck the national decline.
Of course, you could also look at pending home sales.
Last month, pending home sales increased 6.4% vs. 3.2% in the prior month.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: Is the Economy Really Recovering? - 10/15/2009 11:40:38 AM
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GroupW
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quote:
ORIGINAL: relady
quote:
Thanks for the compliment! I'm not really familiar with this fellow. Can you educate me? You're welcome. Ratigan is a guy who used to head up a show my husband loves, called Fast Money. Now he has a show on MSNBC in the mornings, called the Morning Meeting. Other than that I really don't know much about him. He does seem to know his way around the financial industry.
I'll try to check that out.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: Is the Economy Really Recovering? - 10/15/2009 11:52:26 AM
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GroupW
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More data ...
The Empire State general business conditions index rose to 34.57 in October report vs. 18.88 in September. Consensus expectation was for a slight decline.
Yet another data "surprise" on the postive side.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: Is the Economy Really Recovering? - 10/15/2009 11:58:11 AM
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GroupW
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For those insisting on looking at lagging indicators, new jobless claims declined again to 514k from 521k in the prior week. Still too many but headed in the right direction and at a reasonable speed.
No question the improvement in the jobs picture is occuring at a slower pace than the declines we saw earlier this year, but I think that's consistent with the headwinds that everyone on this thread is concerned about. Steep in, and shallower out, seems to be a reasonable path for the economy to take.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: Is the Economy Really Recovering? - 10/15/2009 1:08:30 PM
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ourgreatestSource
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quote:
Good questions. There's one myth about economics that people don't pay attention to. Generally, economists when they talk about jobs and growth only talk about aggregate levels. We generally don't talk about impacts to real, individual people.
The unfortunate fact is that a lot of those jobs are (as you say) gone forever. Some people never get re-hired. Some people never find an equivalent job. Some (actually most) never get retrained. For the most part, growth comes from those who can find equivalent work doing so, those that can't falling out of the labor force, and the slack made up by new entrants with new skills.
I'm personally not smart enough to know where those new jobs will come from. I wish I was.
Thanks, GW. Who are the profissionals responsable for make predictions regarding where the strenght is arising, growing regarding next sectors people will be absorved as workers and having jobs?
There is no provision when a whole sector that was strong before and the country known for it strenght.. go down the hill..?
What makes me ask another question, between the rich nations, the ones group 8 economies in the world.. which are the nations who do really have a steady plan and "exemplar treatment" and plans for their working forces? Those who are the ones where their workers are better taken into consideration, in the sense those societies make predictions expecting the worse in bad times and reggard their working force with dignity and respect as the People, doers, movers of their countries?
I trully do not get it having no plan into place..as how so many high trained workers as some industries have and they went bankrupcy and their workers all not useful to any other industry anymore? How can a society put aside, plain putting to waste, good quality workers and still call themselves wealthy nations??? Wealthy of what, really?
To me who do not know much about stuff, it looks like its just like a game, those on top are all players, missing the marks.. what is really a bad situation because it is not a time out, but real, serious business time about present aiming to the future.
_____________________________
"Whoever has no rule over his own spirit Is like a city broken down, without walls." Prov. 25:28
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RE: Is the Economy Really Recovering? - 10/15/2009 1:23:27 PM
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GroupW
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In this country, we tend not to want the government trying to pick the next winner. Generally, businesses themselves do a pretty good job of taking care of that. It's fiendishly tough to figure out where the new job growth will eventually come from. After all, who would have ever predicted that Google, Yahoo, and Ebay or Amazon would be employing this many people?
Realistically, no country does this well. The key is making sure education is cheap and effective, capital costs are low, and people are incented to form new business initiatives. We here in the US do that about as well as anyone - yes, even with Obama sitting in the White House. (Bracing for the inevitable onslaught of objections here. Please, oh please can we avoid that for just a little bit?)
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: Is the Economy Really Recovering? - 10/15/2009 1:38:04 PM
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ourgreatestSource
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quote:
ORIGINAL: GroupW
In this country, we tend not to want the government trying to pick the next winner. Generally, businesses themselves do a pretty good job of taking care of that. It's fiendishly tough to figure out where the new job growth will eventually come from. After all, who would have ever predicted that Google, Yahoo, and Ebay or Amazon would be employing this many people?
Realistically, no country does this well. The key is making sure education is cheap and effective, capital costs are low, and people are incented to form new business initiatives. We here in the US do that about as well as anyone - yes, even with Obama sitting in the White House. (Bracing for the inevitable onslaught of objections here. Please, oh please can we avoid that for just a little bit?)
I was thinking something like wealth nations do not let their working force go to waste and try keep them busy with meanful activities until things gets better. Wealth nations in my head having structure, good plans and organization, keep focus and many etcs..when people receive unemployment checks they would/should (imo) receive a coupon for 2h trainning course in a Tech College or other institution in their areas for keeping updated or having a chance to start new area of skills.
As we always receiving coupons for products and discounsts for many different business..people receiving unemployment benefits would sure receive classes free coupons from participating educational establishments in their communities, at least in my head that would help improve emotional overhall person feels when are out of job and feeling worthless, stress out, depressed etc etc people would have a sense that while no job yet they would be trainning and going to classes etc at least 2hours a week.
< Message edited by tinydancer2 -- 10/15/2009 1:44:08 PM >
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"Whoever has no rule over his own spirit Is like a city broken down, without walls." Prov. 25:28
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RE: Is the Economy Really Recovering? - 10/15/2009 1:42:14 PM
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GroupW
Posts: 2533
Joined: 11/16/2007
From: Up in the hills of Colorado (very BIG hills...)
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Basically, providing unemployment benefits, keeping education cheap, and making new businesses easy to form accomplishes exactly what you say wealthy nations should do.
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RE: Is the Economy Really Recovering? - 10/15/2009 1:53:28 PM
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relady
Posts: 688
Joined: 4/11/2005
From: Greater St. Louis Metro
Status: offline
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quote:
your idiocentric news Did you intend to insult me or was that accidental?? I was just stating what my company did last month over last year. I think the figures for St. Louis overall are that sales are down about 6%. It's slow overall, but there are still areas of St. Louis where we are seeing multiple contracts at full price or higher. It's a weird market.
quote:
no end in site to the foreclosures, it stated that Banks will be extrememly slow to getting repossesed homes back to the market. Our REO specialist is one of my best friends so I keep up with this as well. Her business has been up and down all year, depending on the banks. Let me tell you, a lot of them don't have a clue, either. They can be very slow in getting foreclosed properties to the market...but to those of us in the business that's the normal process for them. It's not at all unusual to see a house that's foreclosed on take 6 months or longer before it hits the market. OTOH, some banks get them right back out there. Just depends on the bank.
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