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RE: Is the Economy Really Recovering? - 10/21/2009 7:39:40 PM
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GroupW
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quote:
ORIGINAL: iluvatar
quote:
ORIGINAL: GroupW
Morgan Stanley records a profit - "back in black", to quote the famous stock analyst Ozzy Osbourne.
That was AC/DC. 
Dang.
I will never, ever be able to be cool.
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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? - 10/21/2009 7:45:27 PM
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GroupW
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Sad thing is that I can blow it on AC/DC vs Ozzy but still remember Brooksley Born was CFTC head, explain what a "payer swaption" is and how to use it, and use the words "credit default swap" correctly in a sentence.
If it weren't for the fact that geeks have relatively decent career prospects, I never ever would have had a date or been able to get married.
BT
_____________________________
“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? - 10/21/2009 9:28:04 PM
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relady
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quote:
When I was in college, they taught that 6% unemployment was considered full employment. Same here, and I took economics in the early 90s.
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RE: Is the Economy Really Recovering? - 10/23/2009 8:26:05 PM
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gone2pot
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Go here (IE works best for this site) and the debate is over. It is virtually impossible to ever recover from the real time, factual data seen on the link. And as you watch, remember the "solution" from both Democrats and Republicans is to make sure the red data continues to get bigger.
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RE: Is the Economy Really Recovering? - 10/24/2009 1:20:08 AM
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HighPlainsDrifter
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I don't believe we're in any real or lasting recovery. In my capacity, I have access to a lot of financial opinions across the country, from folks at the "decision-maker" level and optimism isn't high. Personally, I think we're in the calm before the real storm hits.
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RE: Is the Economy Really Recovering? - 10/24/2009 11:42:32 AM
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GroupW
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Hey HPD! Hope all is still well. Things seem to be stable over here. Not good, but stable. That's at least an improvement. Looks like we should be able to get another 250 milion or so to manage which will be enough to pay overhead plus some partner profit.
The data aren't going your way on this at the moment. Inventory to sales ratios are getting down to the point where businesses are going to HAVE to start gearing back up. Industrial production is up, personal income is up slightly, and retail sales are up. Existing home sales were up(biased by the tax credit of course - will be interesting to see how far it falls when the credit expires in Nov). Inventory of unsold homes is down to a 2 year low. Home prices are either rising or at a minum falling at a slower pace. Home prices are approaching the prices they should have been at before the 1999-2006 flood of cheap money. We are pretty close to the longer term trend value there.
Of course, the big issue is overall debt loads but while there are reasons to expect that to be a definite drag on growth, there aren't reasons to think that that alone is sufficient to tip us into the mythical double dip recession. We worry about that at every recessionary bottom but have never actually seen one.
Like I noted earlier, the vast majority of economists are now calling for growth in the prior or current quarter.
I think your pessimism is normal - people almost always miss the actual turning point in the economy.
Hope all remains well. Good to heat from you again.
BT
_____________________________
“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? - 10/24/2009 11:45:41 AM
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GroupW
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HPD - got a good piece on this yesterday from a Deutsche Bank economist. PM me an email address and I can send it to you. There is also a good piece that was done in September by an economist named Mussa. Former world bank dude with a lot of snap.
_____________________________
“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? - 11/2/2009 11:12:01 AM
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GroupW
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Just a quick note - there's a lot of press that got released over the past week reporting that the recession is over. While I am quite optimistic that things are on the mend, those reports were a bit ahead of themselves. Calling an end to a recession usually requires more than just one quarter of economic growth.
Also, while GDP grew at roughly a 3.5% rate, a fair bit of that was due to a) cash for clunkers, b) home buyer tax credit, c) the stimulus package, d) inventory adjustments
If you take those four things out of the equation, GDP grew by about 0.4%. Still good news given where we were last quarter, but not at the euphoric level that the media was blasting around. To me, calling an end to the recession based on one quarters worth of very noisy data is a bit risky - it builds expectations a bit too early. Employment is still going to lag for a while. When we economist types say the recession has ended, we mean that GDP growth has begun. What most people hear, however, is that unemployment should be coming back down. That's unfortunately not going to be the case for several months yet.
Further updates: Excerpt from a report I received today, along more positive lines of thought....
The ISM survey advanced 2.7 points in October to 55.7, the highest reading since April 2006 when it registered a 56.0 reading. The increase in the ISM was led by production (63.3 October vs. 55.7 previously), employment (53.1 vs. 46.2) and inventories (46.9 vs. 42.5); new orders slipped but remain elevated (58.5 vs. 60.8); supplier deliveries were down but only slightly (56.9 vs. 58.0). Generally speaking, the level of the October ISM, if held for the quarter, is consistent with 4% current quarter real GDP growth. This is corroborated by the mix in the report, as it is clear to us that an inventory restocking is underway. The ISM inventory subcomponent is up 12.5 points over the last two months, the largest two-month increase since October 1980. The need to rebuild inventories will lift production and in turn employment. An eventual rise in employment will power income higher, which in turn will sustain stronger consumer spending. We are also seeing some evidence that fiscal stimulus is showing up in the data. Construction spending increased 0.8% in September?the first gain in five months. The series was paced by a 3.9% increase in residential investment. Public investment advanced 1.3% as both federal (+0.7%) and state/local (+1.4%) rose in the month. The gain in September residential construction was buttressed by the October pending home sales data, which showed a 6.1% increase following a 6.4% gain previously. This provides further evidence the residential real estate market has bottomed and turned the corner to the upside.
_____________________________
“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? - 11/2/2009 11:43:26 AM
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davemiller7
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Wouldn't it be nice if government and the media would be honest and report the news as it really is, explain it if necessary, not spin it to make conditions seem different than they really are?
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The Prayer of Protection
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The power of God protects me,
The presence of God watches over me.
Wherever I am, God
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RE: Is the Economy Really Recovering? - 11/2/2009 12:27:53 PM
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GroupW
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Sure would be. But do you think people have the patience to actually listen and understand it?
The news itself was positive enough, given the current context of REALLY bad news. There wasn't a need to try to make it more than it was.
Overall, the economic news coming out is a patchwork of good/medium/bad. More good or medium than bad. About what you should expect at this point in the cycle. I think people need to understand that mediocre performance without many new jobs this early in a recovery is normal. Maybe people wouldn't be as freaked out & willing to believe the next hairbrained news story.
_____________________________
“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? - 11/2/2009 12:55:09 PM
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davemiller7
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I try to listen, but I don't understand a lot of financial type info. I'm sure it makes sense to financial types. Somewhere along the line, I missed the terminology, etc. connected with financial matters. Therefore, I rely on what others say and there seems to be quite a bit of contradiction and disinformation out there.
For instance, if the economy is recovering so nicely, why did Obama convene the White House Economic Recovery Advisory Board again?
_____________________________
"Here I stand. I can do no other. God help me. Amen." - Martin Luther
The Prayer of Protection
The light of God surrounds me,
The love of God enfolds me,
The power of God protects me,
The presence of God watches over me.
Wherever I am, God
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RE: Is the Economy Really Recovering? - 11/2/2009 1:20:04 PM
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GroupW
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quote:
ORIGINAL: davemiller7
I try to listen, but I don't understand a lot of financial type info. I'm sure it makes sense to financial types. Somewhere along the line, I missed the terminology, etc. connected with financial matters. Therefore, I rely on what others say and there seems to be quite a bit of contradiction and disinformation out there.
For instance, if the economy is recovering so nicely, why did Obama convene the White House Economic Recovery Advisory Board again?
On the first one, feel free to PM me if there's something you want to understand better. I can usually translate econo-speak into english fairly well.
On the second, it looks like he's prepping for the next phase of the cycle - debt reduction. What's supposed to happen in a recession is that people go unemployed, and the government spends a fair bit of cash to soften the blow and do some extra spending on projects that have been waiting in the wings but haven't been funded yet. Then, when things improve, we back off those spending items and pay down any debt that was incurred in the process.
It looks like the ERAB was reconvened with two goals in mind - 1) make sure that the incipient recovery adds as many jobs as we can, and 2) begin the conversation of how we accomplish #1 while also figuring out how we're going to pay down all this debt.
_____________________________
“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? - 11/2/2009 2:44:18 PM
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allisonbrett
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Recovering? Not according to my business. We're having to face closing if things to change drastically within a couple weeks.
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A work in progress so please be patient, God is still working on me. Ouch, it sure is painful!
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RE: Is the Economy Really Recovering? - 11/2/2009 3:19:31 PM
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GroupW
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Sorry to hear that. What line of business?
_____________________________
“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? - 11/3/2009 11:02:40 AM
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GroupW
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More favorable data out today:
http://news.briefing.com/GeneralContent/Investor/Active/ArticlePopup/ArticlePopup.aspx?ArticleId=NS20091103104358HeadlineHits
Inventory to sales ratio continues to fall, which argues for some economic growth coming from inventory replenishment later this year.
Factory orders up 0.9% vs 0.8% expected. Excluding volatile transportation up 0.8%, so in line with expectations on that measure.
Estimates of new orders were too low - new orders for durable goods grew by 1.4% vs. 1.0% expected. That bodes well for Q4 manufacturing as well.
Best indicator is that the trends for new orders and actual shipments are finally converging, so the declines in GDP we've seen due to manufacturers cutting back on production in response to declines in new orders should be trailing off.
_____________________________
“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? - 11/3/2009 11:16:28 PM
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humbleinspirit
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I was wondering if someone could explain something for me? I read today that Obama says that we are going to continue to see job losses for weeks and months to come, even though the recession has bottomed out. My question is, if the recession has bottomed out then why will there still be more job losses 
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RE: Is the Economy Really Recovering? - 11/4/2009 10:10:09 AM
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GroupW
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quote:
ORIGINAL: humbleinspirit
I was wondering if someone could explain something for me? I read today that Obama says that we are going to continue to see job losses for weeks and months to come, even though the recession has bottomed out. My question is, if the recession has bottomed out then why will there still be more job losses
Excellent question, and one that I get a lot.
When we say the recession has bottomed out, what we're really saying is the our Gross Domestic Product (the value of goods & services produced in this country) has stopped falling. This appears to be true. Personal income (in aggregate) has risen slightly, industrial production is rising, people appear to be spending a bit more, and new orders for durable goods are on the increase.
If you look at all those things combined, it's fair to conclude that our economy is growing again.
The problem in the short run - and this is VERY, VERY typical in the early stages of recovery - is that we use the same number of people to produce the increased level of goods and services. So, the value of goods and services produced here goes up (i.e. "GDP Growth" and a "bottoming out") but total employment doesn't change or may even decline for a time.
In essence, businesses typically wait for a bit to make sure that the change in the economy is going to be stable for a bit before they go out and hire.
Usually, a change in joblessness is the LAST thing to happen in a recovery, so what you're seeing is pretty normal.
We are however seeing some employment changes. New layoff notices per Challenger, Gray & Christmas are down about 50% from this time last year. That's huge - the first step in creating new jobs is to stop losing the ones we have. New jobless claims are trending downward, and the increase in the unemployment rate has slowed remarkably.
Propaganda has very little to do with it - it's just the numbers. Nearly everything I've referenced above is privately created measures of economic performance that aren't based on government figures.
_____________________________
“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? - 11/4/2009 11:01:40 AM
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davemiller7
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While you are much better versed on economics than I, it still seems that all is not as bright as some are portraying it to be.
quote:
Consumer spending fell in September while incomes remained flat, fueling concerns that the recovery could lose steam in the absence of government stimulus outlays.
The Commerce Department reported Friday that consumer spending fell 0.5% in September. The decline was largely attributed to reduced car sales a month after the "cash for clunkers" program ended. Spending on durable goods such as cars and other products designed to last more than three years fell 7%, more than erasing gains from a month earlier.
http://online.wsj.com/article/SB125690429096718435.html
The rate of unemployment may be slowing, but it is still going in the wrong direction. I also don't think that statistics take into account those who have exhausted their unemployment benefits or those who have simply given up looking for work. Many are also working at part-time low paying jobs, just to have a paycheck of some amount.
quote:
Nonfarm payroll employment continued to decline in September (-263,000), and the unemployment rate (9.8 percent) continued to trend up, the U.S. Bureau of Labor Statistics reported today.
http://www.bls.gov/news.release/empsit.nr0.htm
While we may be beginning to reach the bottom of the recession, I (personally) don't think we are in recovery yet.
_____________________________
"Here I stand. I can do no other. God help me. Amen." - Martin Luther
The Prayer of Protection
The light of God surrounds me,
The love of God enfolds me,
The power of God protects me,
The presence of God watches over me.
Wherever I am, God
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RE: Is the Economy Really Recovering? - 11/4/2009 12:02:00 PM
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GroupW
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I'm basically an optimist at heart.
However, I think people need to keep in mind that at the bottom of a recession, two things are normal.
First, it's fairly rare for people to actuay believe the economy is recovering until long after the economy has actually turned. In a sense, your response to my optimism is exactly what people should expect at the bottom.
Second, it's normal for the employment picture to appear fairly bleak for a number of months after GDP has turned toward growth.
At some point, you have to put emotion and fear aside and just look at what the data are telling you. At thus point, the lion's share of the data is pointing up. Many of the data series that continue to point down are the lagging indicators that are supposed to be pointing down at this point in the cycle, like employment.
BT
FYI- I've put my money where my mouth is and went ultra-aggressive buying leveraged equities in March along with high risk mortgage bonds. So far, it's working for 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? - 11/4/2009 12:06:20 PM
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GroupW
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Fun quote from today's paper (NYT) - timely for this discussion:
"In the fall of 1982, with a long recession ending but the unemployment rate heading toward 10 percent, The New York Times ran an article titled “The Recovery That Won’t Start.”
It quoted prominent economists who worried that “the recovery may amount to nothing more than a few quarters of paltry growth — and possibly not even that.” The economists, the article noted, had “growing doubts about whether the mechanisms of economic recovery will — or can — operate as they have in other postwar business cycles.”
Over the next two years, the American economy grew at a blistering annual rate of more than 6 percent."
_____________________________
“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? - 11/4/2009 1:08:10 PM
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mapachito13
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I still think that we are on the downward slide. My clients have seen a drop in orders to the tune of 25-40% a level they didn't see in any previous recessions. If it weren't bad enough the water authority is screwing up the agricultural business in the San Joaquin valley creating massive unemployment and driving up the cost of food for the rest of the nation.
Fish or jobs? To me, this is a no-brainer!
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RE: Is the Economy Really Recovering? - 11/4/2009 1:26:40 PM
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GroupW
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CA may well be continuing to decline. No doubt it's worse there. Nationally however, orders are increasing.
In most years, living in CA is thought to be a good thing.
It hasn't been true however in the past 3 or so. You folks have been hammered pretty hard. It may take a bit longer to see any light at the end of any tunnels.
_____________________________
“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? - 11/4/2009 1:48:42 PM
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Tarox
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quote:
ORIGINAL: GroupW
At some point, you have to put emotion and fear aside and just look at what the data are telling you. At thus point, the lion's share of the data is pointing up. Many of the data series that continue to point down are the lagging indicators that are supposed to be pointing down at this point in the cycle, like employment.
I don't know how to tell you this, but you forgot to blame something on Obama. Data pointing to a recovery is only good if you can somehow show that something bad is Obama's fault.
and... he's uh.. the super devil.... (hey guys am i doing this right?)
I agree with you, the economy's going good places. (shoot! I blew it)
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