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HomeOur Ongoing Recession
Posted by Larry Doyle on August 31st, 2010 5:56 AM |
I have informed more people than I care to count that I do not believe we are going to have an economic double dip. Am I turning positive on the economy? Do I see blue skies and fair winds on our economic horizon? No, regrettably not. The reason I do not believe we will have an economic double dip is very simply I do not believe that our “real” economy, not the government sponsored version, ever really came out of the initial recession.
People may care to debate or challenge me on my premise, but my ’sense on cents’ leads me to believe that we have been experiencing one long and ongoing recession. I definitely sense that more people are now coming to accept this reality as well. This ‘walking pneumonia’ economic syndrome is captured in a recent commentary by Rick Davis of Consumer Metrics Institute,
The “Great Recession” that began in 2008 has had many nuances, but among the most important are that many of the observed changes in consumer behavior have begun to linger, much as the recession itself now appears to have done. If a new consumer thrift paradigm becomes endemic — either because of natural demographic processes or scarred generational memories of upside-down loans — the lingering recession might well end up being measured in years, not quarters as commonly expected. (more…)
Ben Bernanke’s “Hail Mary”
Posted by Larry Doyle on August 29th, 2010 11:12 AM |
Hail Mary passes are typically thrown late in a game in an attempt to clutch victory from the jaws of defeat. Ben Bernanke’s statement at the Fed’s Jackson Hole conference this past week is an indication that he is getting ready to throw his “Hail Mary.” The problem that I see, though, is that our ‘game’ is only somewhere in the second quarter.
Have you ever witnessed a football game where one team literally has to scrap its game plan because it finds itself in such a huge hole in the first quarter? That, my friends, is analogous to the state of the U.S. economy going into 2008. While we could debate whether the calls made by our coaching staff in Washington have helped or hurt our recovery, the fact is Ben and his fellow coaches have thrown everything and the kitchen sink at the economy and the results are anything but robust.
For a review of the game to date and the uncertain prognosis going forward, The New York Times’ Peter Goodman provides a wealth of ’sense on cents’ in his fabulous and comprehensive commentary, (more…)
Consumption Takes Another Leg Down
Posted by Larry Doyle on August 23rd, 2010 7:56 AM |
Do you increasingly feel that you are not receiving the full story in terms of our overall economy? Do you feel as if the ‘political class’ in Washington is speaking a different language than the ‘working class’ in the rest of the country? Do you scratch your head as to why economic releases are often immediately panned and quickly thereafter revised? (Case in point, the initial release of 2nd quarter GDP on July 30th was quickly thereafter projected to be halved.) For all of the above reasons, more and more Americans are relying on independent economic research and analysis. Two of my favorites in this camp (aside from Sense on Cents, of course!!) are John Williams of Shadow Government Statistics and Rick Davis of Consumer Metrics Institute.
I recently highlighted Williams’ work in writing, What Is the Real Rate of Unemployment in the United States? In that commentary, I referenced Williams as he had stated:
That began a lengthy process of exploring the history and nature of economic reporting and in interviewing key people involved in the process from the early days of government reporting through the present.
For a number of years I conducted surveys among business economists as to the quality of government statistics (the vast majority thought it was pretty bad), and my results led to front page stories in the New York Times and Investors Business Daily, considerable coverage in the broadcast media and a joint meeting with representatives of all the government’s statistical agencies. Despite minor changes to the system, government reporting has deteriorated sharply in the last decade or so. (LD’s emphasis) (more…)
Observations on My Afternoon in New York City
Posted by Larry Doyle on August 19th, 2010 12:14 PM |
I spent yesterday afternoon in New York City meeting with a variety of people. Without violating any confidences, there were a number of common themes that came from all my conversations. The themes included:
1. The financial system remains very fragile.
2. The economy remains in very tough shape.
3. Trading volumes in both equity and fixed income markets remain depressed. Equity volumes from just this past May are down by over 30%. I have heard of summer doldrums, but these figures are a lot more than that.
4. Investors do not want to sell what they currently own because they do not know what they might purchase to replace it. Investors do not want to allocate more capital because they are concerned about market valuations in general. (more…)
What is The Real Rate of Unemployment in the United States?
Posted by Larry Doyle on August 13th, 2010 8:06 AM |
Just what is the true rate of unemployment in our country? Our headline U-3 rate is currently 9.5%. Our U-6 rate, more broadly defined, is 16.5%.
Many people are aware of the differences between U-3 and U-6; however, renowned economist John Williams takes our analysis to an entirely new level. Williams is far ahead of the curve in his work.
William is likely not a regular on the Washington cocktail circuit. Why’s that? He goes far deeper in his work and exposes inconsistencies, if not worse, in government statistics. Let’s learn more about Williams and his work at Shadow Government Statistics:>>>> (more…)
How Long Will ‘Walking Pneumonia’ Economy Last?
Posted by Larry Doyle on July 20th, 2010 6:28 AM |
I have told many people that I equate our current economic situation to a serious case of ‘walking pneumonia.’ If you have suffered from that dreadful malady, as I have, you can appreciate my sentiments. While we are going to live, and will move on from our current condition, the question everybody wants to know is how long will this sluggish, sickening episode last?
I wish I was so prescient as to be able to pinpoint the month and year when our economy may return to real vitality. I am neither that smart nor that egotistical. I do strongly believe, though, that we are looking at a number of years of continued underperformance. (more…)
Consumer Metrics Institute: Double Dip Mild, but Prolonged
Posted by Larry Doyle on May 27th, 2010 6:54 AM |
Is the economy slipping into a double dip or has it already slipped and we just need to wait a few months for the mainstream media to hopefully report on it?
Clearly, our domestic and global economies are very fluid and subject to serious fluctuations given the massive amount of government intervention, but where can we go to receive a real-time look at the economy?
Let’s review the work of Sense on Cents Hall of Famer Rick Davis of Consumer Metrics Institute. Recall that Rick and his colleagues capture and review a wealth of consumer retail data across ten sectors of our economy on a ‘real time’ basis. While analysts are downstream assessing developments with production, Rick and team are way upstream assessing what the consumers are doing NOW. Current consumer activity is highly correlated with GDP out 17-18 weeks. Yes, we are getting a sneak peek at next quarter’s GDP now. Amazing stuff.
What does Rick see and what does he project? Let’s navigate. (more…)
What Happened to Focus on Jobs?
Posted by Larry Doyle on March 16th, 2010 9:38 AM |
If America and Americans are not at work, then how can we truly expect any other initiatives and undertakings to gain a foothold? There is nothing that generates more personal and collective confidence than a job. In fact, I would go even further and state that a job not only generates personal confidence for individuals, but ultimately a job very often defines a person’s self-worth.
Then why is it that the topic of jobs is not the OVERWHELMING focus in Washington eight days a week? While President Obama elevated the focus on job growth in his State of the Union speech, the topic seems to receive front page coverage only on the first Friday of the month when unemployment statistics are released. (more…)
March 14, 2010: Economic/Market Week in Review
Posted by Larry Doyle on March 14th, 2010 9:31 AM |
No rest for the weary given the slew of developments on Wall Street, in Washington, and around the world. That said, are the markets getting tired or are they preparing to receive another jolt of government caffeine?
Welcome to our Sense on Cents Week in Review where I provide a streamlined recap of the major economic data and news, along with month-to-date market returns.
ECONOMIC DATA
Overall, we did not receive a lot of economic news this week but what we did receive was decidedly mixed (although that is not exactly how it was presented). Let’s navigate.
1. Jobless Claims: remained stubbornly high at 460k jobs. Congress extended unemployment benefits until year end as the long-term unemployed remain at extremely high levels. This structural unemployment receives little media attention, but is THE critical issue in our economy. (more…)
Duke/CFO Survey: Good News and Bad News
Posted by Larry Doyle on March 4th, 2010 10:01 AM |
What can we learn from those who sign the checks at over a thousand companies around our country? Let’s review a synopsis of a recently released Duke University CFO Survey. This analysis, On the Mend, is presented by CFO Magazine:
At last, some good news. For the first time in more than a year, finance chiefs expect double-digit growth in earnings and significant growth in capital spending over the next 12 months, according to the Duke University/CFOMagazine Global Business Outlook Survey for the first quarter of 2010. Finance chiefs are also loosening the reins on technology spending, research and development spending, and marketing and advertising spending.
The welcome news doesn’t come without a few troubling reservations, however. (more…)
