Your feeling on the economy vs. one year ago

I'm an IT contractor. I feel marginally better... but worse than my 2009 expectations. 12-18 months ago I thought, by now, things would be pretty stable and there'd be a normal level of work to be had. It's nowhere close to that. The market for new IT development projects is not appreciably better than it was 14 months ago when it really hit bottom. Yes, there is work to be had, but I know almost no one taking job/contracts doing the type of work they are really aiming to do. The smart and determined are getting by and doing what it takes.

All that said... I am confident things will incrementally improve and the pace of improvement will probably tick up later in the year. The world is not ending -- we just had a recession/crisis and have lived through a year of significant political uncertainty. The crisis has eased and the political environment is calming down in the sense that 2010 is an election year. And, at the end of the day, you can't keep good people down and I think there are a lot of hard-working people figuring it out right now.

Longer-term my optimism is directly tied to government spending. Yes, deficits matter but, really, the amount of government money spent per person has got to come back down. When I look at the bailouts and stimulus and the way the auto industry was "saved" I think the prospect of this happening is somewhat dim. But things may change... and sometimes some illustrative failures are necessary for that sort of change to happen. Our entire political class has essentially failed us over the past 25 years. There are some glimmers of hope in this regard, on both ends of the political spectrum. And in some places this type of thinking seems to have momentum. We'll see. Odds are 2010 produces merely "change" of the traditional political see-saw variety, and in the subsequent years it remains to be seen if anything lasting comes of it.

Go to bed and get up and run and go to work and do what it takes and don't complain too much.

"The world is not ending"

Of course the world is not ending, but you have been duped into thinking there is a recovery just around the corner. Look towards Mexico for comparable standards of living ten years out. If you think printing up tens of trillions of dollars out of thin air to temporarily mask our problems will save us, you are in for a rude surprise.

Just as a general observation, and NOT addressed to any particular posts on this thread:

People tend to forget how scary things were a year ago. I remember looking at the March 9, 2009, issue of Barron's, and seeing the lowest bullish AAII percentage (a contrary sentiment indicator, at least for me) that I had ever observed. I ripped out that page from the magazine to save it for posterity, and immediately increased my allocation to stocks. It turned out to be the lowest point for U.S. stocks in a number of years. But stocks were low for a good reason -- the economy was teetering on a knife edge. High-grade corporate bonds were selling like junk, and junk was selling like Weimar Republic notes. I wouldn't say that I was pessimistic, but there was serious doubt about whether the financial system would stabilize any time soon. There were plenty of people pointing out how bad things had gotten in the Great Depression, suggesting that we still had further to fall.

I don't see any of that now. Sure, there is a huge national debt to service, a huge budget deficit, and huge entitlement obligations that are looming, but that's nothing new. A year ago, we scarcely had the luxury to complain about such things.

As for the so-called "real economy," it justs takes a long time to turn things around and to re-allocate goods and services. I understand, of course, that that's cold comfort to the chronically unemployed and underemployed.

The Fed, St, County, Local gov't should curtail retirement programs to what the rest of the public gets. No more free medical care for life, military retirement after 20 years, etc. The exact details would have to be worked out. The target would be to cut current retiree costs by 66% and future retirement costs by 90%. Government workers just have to face the fact that they will have to work until they are at least 70 years old like the rest of us have to now that the bubble has burst.

IT may never return. The Open Source Revolution is over 50 years old and has made this possible as Linux/Unix is over 95% of the world wide installed IT server base now. We don't need to pay the high costs of US based IT workers. Not with India, China, Pakistan, Russia, Israel and other developing countries in the discount IT job pool. It simply does not make business sense to hire US workers any longer. CTOs are increasingly shopping overseas for IT workers.

Can we please stop speaking of waiting for a housing "recovery"?

Recovery implies a return to normalcy, or true value, as it were.

The late 1990s through 2006 saw the most laughable, unsustainable bubble of all time. Those were FANTASY days. That was la-la land and everyone was playing with funny money and thinking they were rich. We are living through the necessary correction, but if anything, it hasn't been severe enough. We haven't felt the true PAIN yet.

There won't be any "recovery" to a place that never truly existed in the first place. People leveraged deep into the fantasy, and many got burned, but not enough to cleanse the garbage from the system.

My father bought his current house in 1993 for 250k. In 2006, it was valued at 1.1m.

Did his middle class salary increase 4.4x in those 13 years? Uh... no. If anything, his inflation-adjusted purchasing power declined. We used to marvel at his sudden "fortune", but we were level headed and knew it was a bubble. He sometimes wishes he had sold high and rented.

Meanwhile, all around us, soccer moms were driving new Escalades, leased with money they refinanced from their bloated McMansions! Detect the problem?

What you see now, and will see going forward, is simply the raping and pillaging of the middle class by the investment class, and I do not believe this will change without violent revolt. A high general quality of life for a nation depends on a robust, prosperous middle class, but the numbers simply don't add up in America any more. The middle cannot endure thievery from the elite while simultaneously supporting the frighteningly expanding loser (walmart trash/meth/latino) class and looming tidal wave of boomer SS/Medicare.

This is the result when a people becomes fat, stupid, and lazy: they get what they deserve. We have allowed ourselves to become ruled by a corporatocracy that keeps profits private and makes debts public. Unless the people stand up for themselves, our future will look much like current Brazil: the top 1% live in luxurious, gated, militarized enclaves, and the rest of the country slums it up.

This is a great post. Nice job brother. In Feb. and March 2009, people were talking of a stock market that would plummet to near zero. People here threw out stuff like the Dow was going to go to 3700 or that they were going to wait until it got to 5800 to buy back in...well, guess that guy's still waiting. Of course the classic response was that it would take 20 years for the Dow to get back to 10,000. Yeah right.

My question wasn't, "Do you think we're around the corner form great prosperity." It was, "Do you think the economy is better today than it was a year ago?"

Flagpole wrote:

My question wasn't, "Do you think we're around the corner form great prosperity." It was, "Do you think the economy is better today than it was a year ago?"

the PERCEPTION is that the economy is in better shape now vs 12 months ago.

However, the real numbers tell a very different story....

People are much less likely to panic now. They are now numbed to the slow grind of underemployment and reduced expectations.

15 months ago, it was a surprise. Now, its not news. So another 100-150 banks/yr can go under and another 5mm families can lose their homes in the coming ARM reset wave, and people won't flip out.

Curtail Govt retirements wrote:

The Fed, St, County, Local gov't should curtail retirement programs to what the rest of the public gets. No more free medical care for life, military retirement after 20 years, etc. The exact details would have to be worked out. The target would be to cut current retiree costs by 66% and future retirement costs by 90%. Government workers just have to face the fact that they will have to work until they are at least 70 years old like the rest of us have to now that the bubble has burst.

This is a huge spending problem that is not discussed enough. Government workers at many different levels get Cadillac pensions and health care. I worked for the government for a bit, and it was plush. These guys could retire by their early 50s, and with over a year in unused sick days. Sure, having nice benefits is great, but not when people without such great benefits have to pay for it through their taxes. There needs to be some accountability. And in the particular government agency that I worked in, the guys on permanent contracts had to make an effort to lose their jobs if they ever felt like being out of work. These guys did nothing half the day, and nobody gave a shit. They liked working for the government because they didn't have to work, not because they liked the job or agency. Of course, my experience might not be representative of all government agencies, but it sure gave them a bad rep in my mind.

"W" as in double dip. Brace yourselves!

Off the Grid wrote:

the PERCEPTION is that the economy is in better shape now vs 12 months ago.

However, the real numbers tell a very different story....

People are much less likely to panic now. They are now numbed to the slow grind of underemployment and reduced expectations.

15 months ago, it was a surprise. Now, its not news. So another 100-150 banks/yr can go under and another 5mm families can lose their homes in the coming ARM reset wave, and people won't flip out.

Ok. Interesting point.

roland wrote:

Can we please stop speaking of waiting for a housing "recovery"?

Recovery implies a return to normalcy, or true value, as it were.

The late 1990s through 2006 saw the most laughable, unsustainable bubble of all time. Those were FANTASY days.

I never said anything about a housing recovery. I don't look at housing in that way and couldn't care less if home values EVER get back to where they were in 2006. You can discuss housing though and still be positive yet NOT use the word "recovery". Empty homes are not good. Filled homes feeds the economy as the owners buy stuff for it to fill it and maintain it. People should never have been taking money out of their homes to pay for other things, and I don't want it to go back to those days.

I HOPE the home prices stay super low...at least for another couple years. I'm considering buying a second home in Arizona, and right now in that state, you can get a steal of a deal. I'd like to wait for another couple years before I do it, but by then the prices may have gone back up.

Mechanics are improved:

USG now owns several banks. 15 months ago, banks were not lending to each other (let alone businesses). So now USG can prod them into keeping the short term money markets moving.

The risk of this sort of catastrophic failure is greatly reduced. So the odds of complete failure (a non-trivial possibility Q1 '09) are very low indeed. On that count, things are significantly improved.

The term housing recovery is used by economists to refer to the point at which housing prices stabilize without government support. When that happens, people will stop walking away from their homes, foreclosures will subside, and credit will flow again.

I think it will happen in 2011. When it does, everything else will get much better: unemployment, profits, tax revenues, deficits, stock markets, etc.

I have been pleasantly surprised by how strong the recovery has been. The pain has been and continues to be severe for a lot of unfortunate people. Innocent victims abound. But people who think we are as bad or worse off than we were a year ago either don't understand how bad things were or have very short memories.

Don't care about housing? How about consumer confidence?

NEW YORK (Reuters) - Consumer confidence fell in February to the lowest in 10 months, as consumers' short-term outlook for the jobs market worsened, according to a private report released on Tuesday.

The Conference Board, an industry group, said its index of consumer attitudes fell to 46.0 in February from a revised 56.5 in the prior month. February's reading is the lowest since April, 2009.

The median of forecasts from analysts polled by Reuters was for a February reading of 55.0.

The expectations index fell to 63.8 from 77.3.

The present situation index dropped to 19.4 from 25.2 in January, the worst since February 1983.

"Concerns about current business conditions and the job market pushed the Present Situation Index down to its lowest level in 27 years," said Lynn Franco, director of The Conference Board Consumer Research Center.

"Consumers also remain extremely pessimistic about their income prospects," Franco added.

Consumers' labor market assessment worsened. The "jobs hard to get" index rose to 47.7 percent from 46.5 percent, while the "jobs plentiful" index fell to 3.6 percent in February from 4.4 percent in January.

(Reporting by John Parry and Wanfeng Zhou; Editing by Chizu Nomiyama)

I am a life long republican and I hope that Obama is one and done. However, I am way better off today than I was a year ago.

My father always told me that when things are improving, there will always be the 35% that is still upset with the current system. I am ashamed to say that my fellow republicans are right there right now.

The market had to come up a bit in the last year. The damage though will be done for many years to come. Unless we can reverse everything the Liberals do years down the road. By the way , 3 different air strikes killed 75 citizens in Afganistan in last 2 months. NOT A WORD FROM YOU LIBERAL FREAKS ABOUT HOW OBAMA IS KILLING PEOPLE ALL OVER THE WORLD. IF BUSH WAS IN OH MY GOD IT WOULD BE MURDER EVERYWHERE. Obama its ok. 74,000 troops sent in last year. Nothing not a peep. 1000 troops killed, not a peep, when Bush was in we heard the entire history of every man killed all over the TV nationally. Now its all quiet.

Hasto*(&!! wrote:

The market had to come up a bit in the last year. The damage though will be done for many years to come. Unless we can reverse everything the Liberals do years down the road. By the way , 3 different air strikes killed 75 citizens in Afganistan in last 2 months. NOT A WORD FROM YOU LIBERAL FREAKS ABOUT HOW OBAMA IS KILLING PEOPLE ALL OVER THE WORLD. IF BUSH WAS IN OH MY GOD IT WOULD BE MURDER EVERYWHERE. Obama its ok. 74,000 troops sent in last year. Nothing not a peep. 1000 troops killed, not a peep, when Bush was in we heard the entire history of every man killed all over the TV nationally. Now its all quiet.

Obama lied and people died

That is a tough job that few would be able to do. McCain would be in the same position and an entirely different set of people would be complaining if he was in office. Arguing about why so and so is a shitty president is pointless. The middle class is getting screwed no matter.

The banking system and mortgage lending business were a mess. Look up the community reinvestment act. Its pretty much BS and bad business.

We can put Obama at fault because is he is the top dog and said he said he would fix it but give him some more time. 1 year is not enough when every single D-bag in congress is trying to grab a slice of the pie.

Since we are all amateur economists what are the solutions?

For one I think back to the Pickens Plan and how much wealth will leave the country by 2020. I think the country needs energy independence and needs to build 6 or 7 nuclear power plants in the next 5 years. The application process takes a long time and this things need to be put on the fast track.