Accurate Economic Indicators
“I don’t think we’re headed to recession. But no question, we’re in a slowdown.”
Shit. We’re headed into a recession. And it’s gonna happen fast.
15 Responses to “Accurate Economic Indicators”
“I don’t think we’re headed to recession. But no question, we’re in a slowdown.”
Shit. We’re headed into a recession. And it’s gonna happen fast.
February 29th, 2008 at 8:59 am
Looks like your Bush Jr. Filter is working perfectly.
February 29th, 2008 at 11:10 am
When asked about $4 gas during the coming summer driving season:
“That’s interesting. I hadn’t heard that. … I know it’s high now.”
AWESOME RESPONSE by the President of the United States.
February 29th, 2008 at 11:52 am
Actually a recession is defined as two consecutive quarters with negetive growth. It’s possible we may not actually be in one. Unlikely, but possible. Since there was positive ( but very low ) growth last quarter, we would have to suffer negetive growth in this and the next. With the resillience of the american economy and the economic stimulus that congress is working on, we might not see actual recession.
I was surprised when I heard the definition, a real recession would be a VERY BAD THING.
February 29th, 2008 at 12:00 pm
I like to buy finance sector stocks. Then I can explain at length exactly why I am losing money, instead of just watching the ticker indicate a swan dive while a rotating question mark is over my head.
A comment from NPR radio–a recession is when you know someone that loses a job, a depression is when you lose your job.
Watch for the old men with canes. They will come out at the real estate and equity market bottom and start buying.
February 29th, 2008 at 12:21 pm
I think it’s just that journalists are very mean people.
J1: Do you think we’re in a recession?
J2: I don’t know, but you know what would be funny?
J1: What?
J2: Let’s ask the President!
February 29th, 2008 at 7:32 pm
I know plenty of people who have lost jobs and are currently out of work in the construction biz over this housing clusterfuck. It’s worse in Nevada than any other State.
Bush makes me laugh because he’s so out of touch with reality. I wish he’d go far far way to never return. I can’t stand him, or McCain. 8 more years in Iraq? Maybe I’ll move to Iceland or something. The US dollar will end up crashing if McCain the war monger wins the general election, and unfortunately I don’t have a pile of gold buried in my backyard. Or we can keep letting China and filthy rich Saudi princes buy key US financial interests. Everything will be fine as long as we keep “attacking” Al Qaeda in Iraq and keeps Americans safe!… Right…..
I also think the stimulus package is a fucking joke. :p /rants away
March 1st, 2008 at 4:54 pm
I’m still waiting for that perfect sit-com moment where president Bush turns on [generic news show], and in astonishment utters: “Who’s running this country?!” Just to have that random guy in the corner, who has sort of given up and is just pretending to read that folder that’s been staring at him from his desk for the past six months, go: “I don’t even know anymore.”
In all honesty though, not knowing the financial definition of a “recession”, this made me laugh so hard.
March 1st, 2008 at 11:02 pm
Sweetmeat, I just need to ask about the term “Negative Growth”. This isn’t a jab at you since I know it’s used elsewhere…but what the fuck is that? You don’t grow negatively. You either grow, or you shrink. You sure as hell don’t shrink positively…unless you’re positive that you’re shrinking. I have a feeling that phrase is inspired by the movie “Men in Tights”…you know, when the Sheriff of Rottingham is ask to tell the king the bad news in a good way so it doesn’t seem as bad.
March 3rd, 2008 at 8:38 am
AmasonK: You are correct, negetive growth = shrink. So the economy has to “shrink” for two consecutive quarters. I’m a biologist, I don’t know all the factors that go into measuring the economys girth, nor am I going to define “quarter” here. I hope that helps.
March 3rd, 2008 at 8:48 am
Wikipedia has a nice definition of recession.
Also, I believe that the term negative growth was started by a pharma.
March 4th, 2008 at 1:45 pm
Sweatmeat wrote:
Interesting. I never really thought about it, but I always thought about economic growth, when I anthropomorphized it, in a vertical sense, like height or whatever. I suppose though, as my friends in college pointed out, the truest way to, ah, measure is volume (via displacement) since it incorporates both length and girth. I tried to make that as vague as possible so it’s safe for work, but just to be clear: if you read that as dirty, you did it right.
March 11th, 2008 at 10:01 am
Buying crap is what makes the economy expand.
The energy crisis is really what’s driving this recession. As fuel prices increase, it increases the cost of EVERYTHING else - groceries, shampoo, tires, electricity, everything. That means less money available to buy crap.
Buying crap is what makes the economy expand.
I’ve been a Democrat my entire life. But the most eloquent campaign position piece I’ve read is this one, about the importance of American energy independence. I highly recommend it.
http://www.johnmccain.com/Informing/News/Speeches/13bc1d97-4ca5-49dd-9805-1297872571ed.htm
March 11th, 2008 at 10:09 am
Axe, I’ll try to make time to read the article a bit later, but just wanted to address your main point that the energy crisis is driving the recession.
I’m not an economist, but I do drive by a WalMart every morning and afternoon, and that lot is always full. (so…you know…that makes me an expert of course.
) I see pretty full lots at my local Circuit City and Coscto too. Are people really buying less crap? I actually kinda hope so, but I don’t see it.
March 11th, 2008 at 4:20 pm
People don’t have to buy a whole lot less crap for it to have a major effect on the economy. In fact, regardless of gas prices, people often make more trips to the store (especially for stuff like groceries) when they feel scared/anxious about the economy, because it “feels safer” to buy less stuff in any given trip. But then you run out of milk and go again.
Although the energy stuff has a huge effect on the economy under any circumstance, in this case, I’m gonna have to disagree w/ Axe about the cause of the current slowdown/possible recession. The real estate crisis is really at the heart of most of the bad mojo hitting the fan at the moment. It’s exacerbated by energy issues, but, currently, the price of gas notwithstanding, we’re not paying a whole lot more for energy (as a percentage of GDP or household expenses) than we did two years ago when the economy was going gangbusters.
Every 10-20 years, some clever dick financing nimrod figures out some new way to basically make money off of an economic process as opposed to good, ol’ fashioned selling stuff and doing stuff (goods and services). There’s a basic rule among good, conservative banks that what you want to do is keep running on 15% vig. You give customers less than that on various products, make a bit more than that on your long term investments… go home.
So… Starting back before the Great Depression, you end up with folks who figure out a way to make more money on some version of “the float.” In the 80’s it was junk bonds. In the 90’s it was derivatives. Now it’s bad mortgage risk all pooled into investment categories. Meh. The supposition being, “As long as real estate prices keep going up, most of these bad mortgages will be worth more than the owed principle, and so we’re ok!” Meh-to-the-meh. If it had been done at a fairly small level, no big deal. Real estate always goes up and down, a few investors take a bath. But some (and by “some” we mean hundreds of thousands) of these loans went into investment portfolios of big banks. Oops. You were gambling with… the retirement investments of a couple million Boomers? Whoops!
Short version of future: if the real estate market comes back, even a little bit, this spring/summer, we probably will come out of the (this) recession, because the really bad mortgages are already boinked, and we’ve just now started into a decline based on those effects. If it goes further, and we can’t get things moving a bit… more recession.
My vote: stop spending money on Iraq and do a Manhattan Project style, government funded (or at least encouraged) drive towards clean energy solutions. Long term, the country who figures that out will win.
March 12th, 2008 at 6:53 am
I’m guilty of gross simplification - the energy crisis is only part of the issue as you mentioned.
Is it really true that we’re spending about the same for energy today that we did two years ago? Oil is $108 a barrel today; 3/06 it was about $62 a barrel . Given our oil imports of about 10m barrels a day (http://www.eia.doe.gov/basics/quickoil.html), roughly half of which is OPEC oil, for every dollar that oil increases, it removes about $3.65bb a year from our economy ($10m * 365) and sends it to OPEC. So compared to two years ago, we’ve lost about ($46 * $3.65b) $167 BILLION DOLLARS from our economy. Just vanished.
Suddenly, the $120 billion stimulus package doesn’t seem so stimulating, does it?
Oil is only one piece of the overall energy puzzle, but as oil increases, all other energy prices do, too, so while it’s a crude analysis (haha, good one Axe), it’s close enough for purposes of this discussion. Plus, the $167b doesn’t count the whole energy sector. It’s more money out of the economy across the board.
Subprime crisis is another part of the problem, but not just for the reasons that Andy mentioned. The real killer of the subprime crisis is that Americans were fueling the economy through refinancing their homes. Check this graph out that shows U.S. GDP over the last several years once you take mortgage equity dollars out of our GDP production.
http://bigpicture.typepad.com/comments/2005/12/chart_of_the_we.html
For apples-to-apples comparison, mortgage equity withdrawal accounted for $110 billion dollars in ‘06. Much of this is no longer possible because home equity will drop about 30% from the peak, meaning there isn’t any more money to take out. So now economy is out roughly $270 billion dollars, or about 2% of the total GDP of $14 trillion. Those two things alone account for half of our typical GDP expansion of 4%.
Damn Andy, me and you should write a paper or something.