Cut in Household Spending Points to Recession

Roubini : The Risk of recession is now at 60 percent

'Nouriel Roubini : first of all we have reached the stall speed in the economy not just the US but also in the Eurozone the UK the most advanced economies , so we see a probability of 60 percent recession next year , and unfortunately we are running out of policy tools , every country is doing fiscal austerity and there is going to be a fiscal drag the ability to back stop the bank is now impossible because of political constrains insolvency , cannot anymore bailout their own distressed banks because they are distressed themselves , everybody would like a weaker currency but in an equilibrium if a currency is weak the others has to be stronger and there going to be more monetary easing more quantitative easing by the FEd and other central banks but the credit channel is broken'

http://nourielroubini.blogspot.com/...ed:+NourielRoubiniBlog+(Nouriel+Roubini+Blog)

 

Roubini was predicting slowdowns or recessions in 2004, 2005, 2006, 2007, 2008, 2009, 2010, and now 2011.

He's right sometimes.

 

One can almost hear the glee when you post these predictions of bad times for Americans. What is with that?

 

U.S Employment Stagnated in August

'Employment in the U.S. unexpectedly stagnated in August, increasing pressure on Federal Reserve Chairman Ben S. Bernanke and President Barack Obama to spur an economy that’s barely growing two years into the recovery.
Payrolls were unchanged, the weakest reading since September 2010, the Labor Department said today in Washington. The median forecast in a Bloomberg News survey called for a gain of 68,000. The figures included a 48,000 drop in the information industry, mostly reflecting a strike at Verizon Communications Inc. (VZ) The jobless rate held at 9.1 percent.
“This is further evidence that the economy is very close to stalling if not having stalled,” said Nariman Behravesh, chief economist at IHS in Lexington, Massachusetts,...

...“We’re calling for a mild recession at this point,” said Julia Coronado, chief economist for North America at BNP Paribas in New York. “We’ll see QE3 definitely,” she said'

http://www.bloomberg.com/news/2011-...stagnated-in-august-jobless-rate-at-9-1-.html

 

Not unexpected with the shattered confidence that came with the Republican Tea Party debt ceiling fiasco.

 

Consumer Prices, Jobless Claims Exceed Forecasts

'The cost of living in the U.S. climbed more than forecast and unemployment claims rose, battering the confidence of Americans squeezed by stagnant wages and higher prices of food, housing and energy.
The consumer-price index increased 0.4 percent in August, and jobless claims climbed by 11,000 to 428,000 in the week ended Sept. 10, Labor Department figures showed today in Washington. The Bloomberg Consumer Comfort Index held last week at the second-lowest level of 2011 as the most households in three years said it was a bad time to spend.'

http://www.bloomberg.com/news/2011-...n-u-s-increase-0-4-core-gauge-rises-0-2-.html

 

Just as everyone with a clear economic head knew...you print too much money and you get inflation.
0.4% per month equals 4.8% per year.

And it's probably just going to keep - overall - getting worse.

The inflation rate is already triple what it was a year ago and more then double what it was in January.

http://www.usinflationcalculator.com/inflation/historical-inflation-rates/


Can anyone spell 'stagflation'.


What Does Stagflation Mean?
A condition of slow economic growth and relatively high unemployment - a time of stagnation - accompanied by a rise in prices, or inflation.

Read more: http://www.investopedia.com/terms/s/stagflation.asp#ixzz1Y2jzppDD

 

2-3 years of 4-6% inflation would help. Increases in wages and house values would make these overloaded mortgages more manageable. Wouldn't help banks but they can deal with it.

 

What are you talking about?

The inflation rate is the CPI.

And the CPI (Consumer Price Index) has NOTHING to do with wages or real estate values.

'The CPI does not include investment items, such as stocks, bonds, real estate, and life insurance. (These items relate to savings and not to day-to-day consumption expenses.)'

http://www.bls.gov/cpi/cpifaq.htm#Question_7

 

Inflation in the economy eventually is reflected in prices in all goods, including labor and real estate.

 

U.S. Household Worth Declines by $149 Billion

'Household wealth in the U.S. dropped in the second quarter for the first time in a year, hurt by falling share prices and declining home values.
Net worth for households and non-profit groups decreased by $149 billion, a 1 percent drop at an annual pace, to $58.5 trillion, the Federal Reserve said today in its flow of funds report from Washington. It rose at a 7.4 percent rate in the previous three months. Housing wealth decreased for a fourth consecutive quarter from April to June.
A loss of $947 billion in real estate assets over the past year was compounded by a drop in the Standard & Poor’s 500 Index last quarter, the first decline in a year. The erosion in wealth, which remains below pre-recession levels, and a stagnant job market may prompt Americans to keep trimming debt and rebuild savings, limiting the spending that accounts for 70 percent of the economy.
“Households’ ability to spend is being constrained,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia. “Consumers are just tired to death of seeing the value of their homes fall.” The decline in wealth “provides the argument for long-term stagnation in consumer spending.”...'

http://www.bloomberg.com/news/2011-...-s-fell-by-149-billion-in-second-quarter.html

 

4,000 tickets go unsold to the annual in-state UK/UofL football rivalry `cause people ain't got the money to spend...

... this is normally a sold-out game...

... Granny says its a sign of the financial collapse of the end times like Rev. Jack an' Rexella Van Impe been talkin' about.

 

Dow Posts Biggest Two-Day Slump Since 2008

'U.S. stocks tumbled, giving the Dow Jones Industrial Average its biggest two-day slump since December 2008, amid investors’ concern that policy makers are running out of tools to avoid another global economic recession....

...Stock futures extended losses after a Labor Department report showed that more Americans than forecast filed first-time claims for unemployment insurance payments last week. Meanwhile, U.S. consumer confidence dropped last week to the weakest point since the recession ended in June 2009, Bloomberg data show.'

http://www.bloomberg.com/news/2011-...lobal-financial-system-risks-are-growing.html

 

Could it be both teams are really crappy?

 

LOL -- on top of a brutal day on the Dow, you have to spin the news even worse that it is?

You forgot to mention that unemployment claims decreased by 9000 last week, the first decrease we've seen since the Republican Tea Party debt ceiling fiasco in late July.

If you were interested in a "fair and balanced" presentation of the economic news, in addition to the fact that initial unemployment claims fell, you would also have noted these:

Existing-home sales rise, beating forecast

The 7.7 percent increase left purchases at a 5.03 million annual rate, or a five-month high, the National Association of Realtors said.

http://www.boston.com/realestate/news/articles/2011/09/22/sales_of_existing_homes_rise_in_august/

Leading Economic Indicators in U.S. Rose 0.3% in August

The index of U.S. leading economic indicators increased more than forecast in August, easing concern the economy is headed for recession.

http://www.businessweek.com/news/20...mic-indicators-in-u-s-rose-0-3-in-august.html

Another interesting little factoid: Gallup has unemployment at 8.6%, tying the lowest level since it started tracking unemployment in Jan 2010, 1.1 percentage points lower that it was a year ago.

Many conservatives here have cited the Gallup unemployment poll, some arguing it is a more trustworthy measure that BLS statistics.

http://www.gallup.com/poll/125639/Gallup-Daily-Workforce.aspx

 

Edit: My comment about Gallup is not accurate. Gallup unemployment had hit 8.4% in June.

 

Oh look...Iriemon got a job on the Titanic.

He is rearranging the deck chairs while telling everyone, 'all is well'.


No offense Iriemon...but you are living in a dream world if you cannot see the disaster that is coming.

 

There is no doubt lots to be concerned about -- the 20 point drop in confidence experienced in late July chief among them.

 

Dow Falls Most Since October 2008

'U.S. stocks fell this week, sending the Dow Jones Industrial Average to the biggest loss since 2008, as the Federal Reserve said risks to the economy have increased and concern grew that policy makers will fail to spur growth.'

http://www.bloomberg.com/news/2011-...october-2008-on-economic-growth-concerns.html

 

watch the price of copper...it is collaping, and bond prices are rising.....classic recession signs.

However....no yield inversion.....hard to say at this point but these are dangerous times!

 

there is a real risk that as the DOW keeps falling the hedge funds will get margin calls....this will result in even further losses on the markets and also the banks are vulnerable to heavy losses!

 

New Homes Sales Fall to Six-Month Low, Prices Decline

'Purchases of new houses in the U.S. declined in August to a six-month low as the biggest drop in prices in two years failed to lure buyers away from even less expensive distressed properties.
Sales, tabulated when contracts are signed, dropped 2.3 percent to a 295,000 annual pace, figures from the Commerce Department showed today in Washington. The median estimate of 73 economists in a Bloomberg News survey called for a decline to 293,000. The median price slumped 7.7 percent from August 2010, the steepest 12-month drop since July 2009.'

http://www.bloomberg.com/news/2011-...mes-decreased-to-six-month-low-in-august.html

 

part of the reason for operation twist was to drive down mortgage rates in order to move housing inventory...its going to backfire of course!

 

Of course.

 

I don't follow the sales of wall street talking heads much: I learned a long time ago that good sales moves the market. I just watch to see how many fish they catch and what it realy means. Fact is economic Growth in the USA has a fraction of 1% in the past 12 years. Market Growth is different and has no bearing on the economy.

They USA has been in the doldrums for many years, and because monopolies are capitalizing on the Taxpayer and government directly, it leads me to believe, there are no capitalistic opportunities abroad, and other countries have closed the doors on the USA's corporation intrusion on their soil.

But this doen't mean they will not be buying John Deer, Cat and Mac. It only means that, they will not allow the USA to influence their political policies to allow the USA to be the middle man in all the operations of buisness, but just the supply side.