Fed survey shows US recession may be over

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investorzzo's picture
investorzzo
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Fed survey shows US recession may be over

All they say they need is for the consumer to spend, spend, spend? Wasn't that the problem that created this mess............

http://finance.yahoo.com/news/Fed-survey-shows-US-recession-apf-59507939...

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Re: Fed survey shows US recession may be over

Yep. In our Keynesian consumer paradise, thrift is a vice, not a virtue. When consumers go from living beyond their means (thus keeping the Ponzi debtberg growing like a healthy young volcano) to actually saving, the lost spending comes out of the hide of top-line GDP.

In effect, your thoughtless saving cost your neighbor her job. How could you?

Fortunately, Big Gov stepped in, borrowed and printed a year's worth of purchasing power from the future, and brought it forward to the present.

Naturally the economy has bounced -- how could it not? -- but the misty future is correspondingly less bright. Or maybe I'm just sitting here in a brown cloud ... Frown

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Re: Fed survey shows US recession may be over

How many recessions were we in? It seems that every week we get that message! lol

cannotaffordit's picture
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Re: Fed survey shows US recession may be over

Here's what I can't really understand.

In the local paper of my town (75,000) I'm reading that the stock market is up, home foreclosures are down, unemployment is easing although there are still a lot of folks out of jobs) housing sales are on the rise again, home prices are increasing again and most folks are feeling much more positive about the economy - even saying they think the worst if over and things will get better, slowly perhaps, but better.

I have been so focused on what is wrong, can anyone explain this phenomena?  (I live in far NW  of USA)

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Re: Fed survey shows US recession may be over

Ben,

I live in D/FW area of Texas and we have fared much better than a lot of areas...so far.  However,  Dallas and Fort Worth are battling huge budget deficits and are cutting city services.  How are sales tax revenues in your area?

Even though I live in a relatively insulated area with respect to the "recession" I see things changing and I work on keeping the bigger picture in mind.  I see more and more locals losing jobs and I think we are all ultimately in for a rougher time than it appears currently.  I look around me and see PLENTY of brand new strip office space sitting empty while just down the street work is almost complete on a new 3 story shopping structure that is tens of thousands of square feet.  Who will go in there? 

I say we are the relative calm before the next storm here in Texas.

 

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cannotaffordit
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Re: IRONY - Fed survey shows US recession may be over

WOW!  Talk about irony.  Not 10 minutes after my previous post, a friend called me to say that he had been laid off from his professional job this morning, for lack of business. (He is a top draftsman/designer for an architectural firm and has been there for 10 years).   For this guy, and his family, the recession is not over, it is worsening.

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cannotaffordit
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Re: Fed survey shows US recession may be over

Mark,

Thanks for the reply.  I think you may very well be right about "we're in a relative calm before the next storm."  (BTW, we moved from D/FW area, to NW, in 2000 to escape the heat.)  Hope all is well with you and yours down that way.

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Re: IRONY - Fed survey shows US recession may be over
RetiredBen wrote:

WOW!  Talk about irony.  Not 10 minutes after my previous post, a friend called me to say that he had been laid off from his professional job this morning, for lack of business. (He is a top draftsman/designer for an architectural firm and has been there for 10 years).   For this guy, and his family, the recession is not over, it is worsening.

The architectural field can be a lagging indicator in a real estate recession. At the moment, with overcapacity in commercial real estate, demand for design services is down. Government infrastructure projects may provide some countercyclical stimulus. But it takes time to go through the planning stages, secure the funds grants, and turn on the tap for design and construction management services.

When I was working in a business which supplied the construction industry, I remember being told in 1993 (two years after the 1990-91 recession officially ended), "There's nothing out there -- the new Denver airport is the only major project underway in the whole country." That was an exaggeration, of course. But it was true that the architectural and construction field was slow in ramping back up to speed, compared to other sectors of the economy which recovered earlier.

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Re: IRONY - Fed survey shows US recession may be over

 

Explaining the "rebounding" housing market:

September 10 2009: Sooner or later it becomes your life

 


Home prices in the US could fall by another 25 percent because of high unemployment and another leg down will come for stocks, banking analyst Meredith Whitney told CNBC Thursday. "No bank underwrote a loan with 10 percent unemployment on the horizon," Whitney said. "I think there is no doubt that home prices will go down dramatically from here, it's just a question of when." Local governments and states are chronically under-funded and "most states are under water," adding to the problem of low private consumption, she said.

"If you look at the drivers for unemployment I don't see that reversing very soon," Whitney said. If consumers were to decide to spend, "that would be a game-changer," but it would be an unnatural thing to do in a recession, she said. "A lot of themes are constant, which is the US consumer and the small business doesn't have any credit, credit is still contracting," Whitney said.

Consumer debt and consumer credit have dropped according to the latest figures which also show that people have been spending more from their debit cards than from their credit cards. "Obviously that doesn't bode well for spending," Whitney said. She said another leg down was coming for stocks but that Goldman Sachs still has "gas in the tank" and she kept her 'buy' on its stock. "Goldman is taking a lot of the place that Lehman left," she said.

But banks are not going to see their earnings rise too much from now on, she warned. "Banks are taking advantage of what the government is doing by artificially inflating asset prices so they can ride a steep yield curve and they're going to have a third quarter that reflects that," Whitney said. Their shares are unlikely to be uplifted by these results as it happened in mid-July, because then they were under-valued, she added.

Treasury says millions more foreclosures coming

Rebounding stock market?

Gaming the Market
by Doug Short

Easing Job Loss?

US Job Openings Fell to Record Low in July

No Growth in Private Sector in 10 Years... Manufacturing in Almost 70 Years

How Bad Will Unemployment Get, And What Can We Do About It?
By George Washington

A year after financial crisis, the consumer economy is dead

Max Keiser: US is on the slippery slope to economic collapse

When the absolute number of people not working, underworking, working full time but getting paid less than a year ago, reaches numbers as large as now being experienced AND each month the grim total goes up, an Anticipation Effect becomes potent.

This is the fear amongst many who still have jobs or are still running their own businesses,as proprietors or partners, that in the next few weeks or months they too will either become unemployed or underemployed or see a notable drop in total income or have to further curtail business operations or shut down altogether.
This Effect creates its own depressant: people and businesses reduce spending and investing as part of an anticipatory survival strategy, start hoarding cash or paying down debt if they can and losing confidence.

We do not know how large the Anticipation Effect is but it is , I suggest, material. The combination of cash hoarding(reduced money velocity) and erosion of confidence based on fear may well have a large negative multiplier. This means that millions of households and scores of thousands of small businesses will NOT spend pre-recovery as they normally might but will wait for personal income and revenue (not Govt or Media or stock market driven) confirmation of better times. The increased spending will be post-recovery. The very act of waiting in fear will, of course, prevent the recovery that the Govt and Wall St assure us is already here.


negator's picture
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Re: Fed survey shows US recession may be over

. . . you require more vespene gas.

 

 

 

 

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xraymike79
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Re: Fed survey shows US recession may be over

INSIDER SELLING CONTINUES TO SOAR, BUYING LOW

10 September 2009 by TPC

Insider selling for the latest two week period totaled $254MM while insider buying totaled $163MM.  The headline figure is misleading, however, as $150MM of the buying comes from one purchase by Enterprise Products billionaire Chairman, Dan Duncan.   Minus the Duncan purchase, the selling to buying ratio remains at an extraordinarily high level of nearly 20:1.  All in all, corporate insiders continue to exhibit very little confidence in their own shares via the use of their personal dollars.

http://pragcap.com/insider-selling-continues-to-soar-buying-low

Damnthematrix's picture
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Re: Fed survey shows US recession may be over


Quote of the Day
"You can't print gold." - Anonymous

machinehead's picture
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Re: Fed survey shows US recession may be over

Love that Dow vs. gold chart. It was a winning trade over the past 10 years. But if you examine the two legs separately, gold did the heavy lifting. The long gold leg gained a compounded average of 14.7% annually, while the S&P 500 lost a compounded average of -0.8% annually. This would have produced a small gain if you were short.

However, 10-year periods with negative total returns for stocks are rare. Economic growth and inflation produce a positive bias in stock total returns. Even though stocks aren't particularly cheap, I estimate they will return about 6% compounded annually over the next decade, consisting of 2% dividends and 4% price appreciation. In other words, I wouldn't short stocks except on a cyclical basis (during bear markets only).

Long gold looks good for the next decade. Bonds are the current Bubble asset, more so than stocks. But as with stocks, it's uneconomical to short bonds for long periods, since the need to pay the coupon makes shorting too costly. For instance, if bond prices go down 4% next year, but you pay a 4% coupon while short, your return is 0%.

If there were a way to short the principal price of long-term bonds without paying the coupon, I would nominate "long gold / short bond price" as the trade of the next decade. This is a purely theoretical trade, since I know of no way to actually implement the short leg of it.

Yes, interest rates are gonna scream, and bonds are gonna come a cropper. And guess what -- one institutional survey shows that panicked nonprofits upped their allocation to bonds by 10 percent last year. Poor babies ... Cry

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Re: Vespene Gas

Ha... nice Starcraft reference.  I remember in the game as the gas starts running out you'd just take over someone else's territory to replenish your supply to keep the war machine going.... I wonder what the odds are that nations in the real world follow the same pattern when oil gets scarce.  Don't want to be in the path when the "Zergling swarms" are released on certain oil-rich nations...

- Nickbert

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DrKrbyLuv
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Re: Fed survey shows US recession may be over

I've just conducted my own survey and have concluded that the non-Federal Reserve may soon be over.  Their contract canceled after 96 years of poor performance.  And fraud, extortion and racketeering charges will be filed.

Larry

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