QFE
Dad in NY wrote:
I think the worst is yet to come.
Compare how many jobs are being created in the private sector versus those created in the public sector. Not enough growth in the private sector, and there isn't going to be if the expansion of the federal government continues.
Capitalism creates growth, socialism, no matter how noble its goals, creates debt.
Well, I'm much less confident in the economy, and my income is unchanged for the past 3 years, so I have lost approx 3.5% per year to inflation during that time, so I'm personally worse off. Here are some major concerns I have.
The unemployment *rate* might have improved, but no net creation of jobs has been seen. People just gave up or have a part time job that brings in enough for them to not be considered unemployed.
In order to maintain our current 9.7% rate, we need to have a net creation of 150k jobs per month. I do not see that happening.
Only 60% of May 2009 college graduates have found full time employment. They are not counted in unemployment as they have never been counted in the job force. That is the real scary number people don't talk about.
To get under 6% unemployment, we need to have a net creation of over 300k jobs per month for 18 months. Can you name an 18 month period at any point in our history we have ever has job growth like that?
What happens when the government ends the extended unemployment benefits? Then we really get to see just how bad our economy is.
Ed
In general, people well feels worst about half way through the 'recovery'. The term 'recession' refers to the downward part of the cycle. When this phase ends, people are at the bottom, not at the end of the recessionary cycle. Even after recovery, re-employment lags and the rate of growth in jobs is not enough to diminish the jobless rate for a while (since there typically is an increase in the job-age population and since those that were on the verge of retiring often keep working for a while because savings and investments have declined). Through the first part of the recovery, net savings/debt is a big problems for those unemployed and underemployed. Depleted savings leads to having to cash in assets at reduced value and moving to less costly housing. Things are going to feel their worst for many people.
On the other hand, when asset values recover, which tends to happen relatively early in the cycle, those with good, stable 'safe' jobs may even be in a better position because there is often a softness in prices (big discounts that are probably not fully picked up in the price indexes) to make their real income higher than before and their assets are worth enough to feel ok (I am sort of in that boat).
In this RECESSION (big enough to warrant caps), the drop in asset values was quite pronounced by 'modern' standards. If you compare the drop-off of jobs, GDP, and asset values in this recession, they outstrip the other recessions we remember. However, if you compare them with the cycles of the Great Depression (i.e., in the first half of the 20th Century, these changes are SMALLER than essentially all of them (not just smaller than the Great Depression). Of course, Keynesian economics was developed at this 'switch point'. They also learned from their repeated mistakes in monetary policy as well as started to understand which elements of fiscal policy were mistakes. The best student of the Depression is ---- Ben Bernanke. In my view, rather than complaining that this economic team has seen unemployment of 10%, they should be giving high marks for not being 12% or even 15%.
um....yeah. try 1983-84 or 1997-99
EdP wrote:
To get under 6% unemployment, we need to have a net creation of over 300k jobs per month for 18 months. Can you name an 18 month period at any point in our history we have ever has job growth like that?
Ed
6.3 million unemployed longer than 6 month
15 million officially unemployed
100,000 new worker entering the job market yearly
job growth nil or worse
near future will surely see unemployed middle class workers slip into lowerclass in great numbers
looks like clear sailing to recovery
oranges wrote:
um....yeah. try 1983-84 or 1997-99
Between 1981-1984 5.2 million jobs were created. My example of 18 months of 300k net job jains is a total of 5.4 million jobs. 5.2 million jobs/4 years = 108k net jobs per month. Remember we need 150k/month to maintain 9.7% unemployment.
1997-2000 saw 11.5 million jobs created, or 239k/month net jobs. This is very close but your example still comes up short. We need more than 300k though, and there is no time in history that we have sustained growth that large for an extended period.
Another scary thing to consider is that we have no industry or sector that is capable of that growth in the US right now. Manufacturing is not done in the US. IT jobs are increasingly going overseas. There is not enough opportunity in the service sector to create 10 million jobs.
Ed
What difference does it make how We feel?
The POWERS THAT BE just consider us cannon fodder anyway.
Explain WHY an Average American should not be filled with rage?
Those Wall Street cheats should be in jail. "Binding legal contract" my ass.
EdP wrote:
In order to maintain our current 9.7% rate, we need to have a net creation of 150k jobs per month. I do not see that happening.
Ed
and this 150k/month is to employ new market entrants only, and implies 3% GDP growth (most optimistic estimates are 2% thru 2014).
So M6 unemployment - including discouraged and underemployed - will grow. Grow....not shrink....in this "recovery"
look at "calculated risk" chart of unemployment from peak
http://tinyurl.com/ya5o2vwThis is a huge hole. In every other recession, we would have been back to "full" employment by now. This is not the case in the US by a long shot.
Preaching to the choir bro. Yet, everyone's still drinking the Fed's Kool-aid. And to think I almost managed to stay away from this thread, with all its irrelevance, megalomaniacal footprints, inevitable demagoguery, and factual inaccuracies. Oh well. This wasn't your father's recession by a long shot. In fact, I wouldn't really classify this as a recession at all. That's not what this was or is.
I wonder how the town of New Orleans feels relative to this time last year. And what of next year when they have to unload so many of their free agents and reload?
I finally figured it out
100yrs ago, people thought gold was a form of specie.
Now....it is USD. China brags about holding US$2trn. Ok....US$2trn of WHAT? ....the new gold...
The last Treasury auction saw 100% hit on indirect bids.
...rates.....are.....going....up!
and if that happens, all these housing affordability measures go out the window.
... which matters not, because the artificial narrowing of agency spreads isn't doing jack-squat anyway, besides misallocating [c]capital[/c] capital. And, yet, the risk trade lives on, and I wouldn't be surprised to see us keep looking for new highs again before the reconciliation.
Couldn't help but notice the headline story in today's WSJ:
Lending Falls at Epic Pace
U.S. banks posted last year their sharpest decline in lending since 1942, suggesting that the industry's continued slide is making it harder for the economy to recover....
Besides registering their biggest full-year decline in total loans outstanding in 67 years, U.S. banks set a number of grim milestones. According to the FDIC, the number of U.S. banks at risk of failing hit a 16-year high at 702. More than 5% of all loans were at least three months past due, the highest level recorded in the 26 years the data have been collected. And the problems are expected to last through 2010.
FDIC Chairman Sheila Bair said that banks are "bumping along the bottom of the credit cycle," and that the number of bank failures in 2010 will likely eclipse the 140 recorded last year...
Most surveys suggest a combination of factors is at play. A January survey by the Federal Reserve of senior loan officers showed banks have slowed their efforts to tighten lending standards, but have not backed off the more stringent loan terms they put in place over the past two years. The same report, however, also showed that demand for loans from businesses and consumers continues to fall.
http://online.wsj.com/article/SB20001424052748704188104575083332005461558.html
Things are kind of f'd up right now, and will be for quite some time. I'd say we should get used to 10% unemployment. Especially with the potentially huge problem with commercial mortgages now coming into play:
One issue complicating banks' ability to lend is the looming problem of troubled commercial-real-estate loans. The FDIC's Mr. Brown said these loans take longer than residential mortgages to go bad, dragging out the hit to a bank's balance sheet.
I think that the largest problem with our economy is that we no longer make much. We export less and less and we bring in more and more. We have become completely dependent on every other country. Until we stop thinking that we are so great and everyone deserves to make 20 dollars an hour we will struggle.
i didn't say 1981-84 try using 1983-84.dec 82 - 88,756,000 total non farm payrollsdec 84 - 96,087,000 total non farm payrollsthat's 7,331,000 new jobs in 24 months or ~ 305,000 per month
EdP wrote:
oranges wrote:um....yeah. try 1983-84 or 1997-99
Between 1981-1984 5.2 million jobs were created. My example of 18 months of 300k net job jains is a total of 5.4 million jobs. 5.2 million jobs/4 years = 108k net jobs per month. Remember we need 150k/month to maintain 9.7% unemployment.
1997-2000 saw 11.5 million jobs created, or 239k/month net jobs. This is very close but your example still comes up short. We need more than 300k though, and there is no time in history that we have sustained growth that large for an extended period.
Another scary thing to consider is that we have no industry or sector that is capable of that growth in the US right now. Manufacturing is not done in the US. IT jobs are increasingly going overseas. There is not enough opportunity in the service sector to create 10 million jobs.
Ed
Sagarin wrote:
... which matters not, because the artificial narrowing of agency spreads isn't doing jack-squat anyway, besides misallocating [c]capital[/c] capital. And, yet, the risk trade lives on, and I wouldn't be surprised to see us keep looking for new highs again before the reconciliation.
What's your current and long term investment strategy given your outlook on the economy? I'd also be interested your investment / career advice for those new to the job market or still in the early years of their career.
Still not great here:
http://news.bbc.co.uk/1/hi/business/8538080.stm
Lloyds £6.3bn Loss
http://news.bbc.co.uk/1/hi/business/8534694.stm
RBC £3.6bn Loss
Still paying out the bonuses though
But look economy up 0.3%!!!
http://news.bbc.co.uk/1/hi/business/8538293.stm
I bet it took a long time to get those figures to read + rather than -
Check on the unemployment rates.I might be wrong but I believe a year ago they were still below 10% and have gone up since.