Are we actually slipping into a depression?

We have been in a depression since 2007, no?

Had Bernanke not saved the financial system, we really would be in a Depression. So much for that discussion, Doug.

eco nomics wrote:

Interesting discussion..

http://www.caseyresearch.com/articles/doug-casey-its-dead-man-walking-economy

Lets wake up and smell the coffee. I think it's now pretty clear we are now in the throes of the greatest economic recovery since The Great Depression.

There IS a depression, but that is for the political viewpoints of those like the OP who were responsible got the "50 year mess" that Obama inherited.

With the scale of employment growth being demonstrated weekly, the truth about the expansion can no longer be debated with a straight face. Even in republican candidates like Romney are no longer talking about "turning the economy around." And those who were talking about a "double dip recession" just a few weeks or months ago are being exposed for what they are: Clueless.

I will be bumping this for you in 2 years coach D

coach d wrote:

With the scale of employment growth being demonstrated weekly, the truth about the expansion can no longer be debated with a straight face. Even in republican candidates like Romney are no longer talking about "turning the economy around." And those who were talking about a "double dip recession" just a few weeks or months ago are being exposed for what they are: Clueless.

Doug:...that's making the mistake of taking the government at its word on employment figures. As we've discussed before, if you look at John Williams' Shadow Stats, which show various economic figures as the US government itself used to calculate them, unemployment has actually reached Great Depression levels.

The US government is dishonestly fudging the figures as badly as the Argentine government – which is, justifiably, viewed as an economic laughingstock in most parts of the world. One reason things are going to get much worse in the US is that many of those with economic decision-making power think Cristina Fernandez Kirchner is a genius. A little while ago, there was an editorial in the New York Times – the mouthpiece for the establishment – written by someone named Ian Mount. Get a load of this. I've got it in front of me.

If you can believe it, the author actually says: "Argentina has regained prosperity thanks to smart economic measures." The Argentine government "intervened to keep the value of its currency low, which boosts local industry by making Argentina's exports cheaper abroad while keeping foreign imports expensive. Argentina offers valuable lessons … government spending to promote local industry, pro-job infrastructure programs and unemployment benefits does not turn a country into a kind of Soviet parody."

Well, no, I guess it turns it into something the US can ape. He goes on: "Argentina is hardly a perfect parallel for the United States. But the stark difference between its austere policies and low growth of the late 1990s and the pro-government, high-growth 2000s offers a test case for how to get an economy moving again. Washington would do well to pay attention."

The guy has obviously never been here, though he admits that "Argentina is far from perfect." His modest concession is that the taxes to imports and exports have "scared away some foreign investment, while high spending has pushed inflation well over 20 percent. And it would be laughable to suggest that the United States follow its lead and default on its debt."

When I first read the article, I thought I was reading a parody in The Onion. I love Argentina and spend a lot of time down here. It's a fantastic place to live – but not because of the government's economic policies. Its only competition in state stupidity is Brazil, which regularly destroys its currency.

Fortunately, though, the Argentine government is quite incompetent at people control, unlike the US. It leaves you alone. And there's a reasonable chance the next president down here won't be actively stupid, which isn't asking much. But it's amazing that the NYT can advocate Argentine government policy as something the US should follow. A collapse of the US economy would be vastly worse than that of the Argentine economy – the US dollar is the world's currency.

Here in Argentina they're used to it and prepared for it to a good degree. Very unlike in the US.

The OP didn't ask if we are in a depression, just whether we are slipping into one. Its a very reasonable question even if you may disagree.

People don't seem to fathom that we are still running up trillion dollar deficits and the federal reserve continues to do radical stuff. They continue to set interest rates at or near zero for the long term. Quantitative Easing has only recently ended and it seems markets are still expecting more at some point. The government is effectively extorting people to spend their short term savings because inflation is now running out ahead of any interest they can earn in a bank. For all that, growth is amazingly mediocre. Its actually stunning how low inflation is in this environment. That should tell you there continues to be a relentless and massive deflationary force in this economy. And deflation + a lot of debt = depression.

People warn about inflation. But we have already had the inflation. Its called the past 40 years.

I would suggest that if you look at the latest economic trends, we're emerging from a recession.

The closest we got to a depression was during the collapse of the housing bubble and the subsequent banking crisis. But that was well contained, unlike in 1929.

The inflation rate is at a healthy 3%. Unemployment is falling. International trade continues to be healthy. Industrial production is up 12% over the last 2 years. We haven't seen dozens of large companies go bankrupt.

All of those would be symptoms of depression.

Public sentiment tends to lag behind economic trends.

a depression is a period of time in which the average standard of living declines significantly.

So this is saying that the growth is all going to the people at the top and the average person is slipping backwards in what they can get from their earnings.

I can see a point there.

But at the same most people have a computer and a high def TV and almost everyone has a cell phone, most have a smart phone.

The standard of living seems higher than a decade ago.

There doesn't seem to be any trends leaning toward depression.

Any bubbles that we are missing that are about to burst on the free market?

Interesting discussion

The collapse of 2008, had it been allowed to proceed naturally, would have actually improved the long-term outlook for the economy. When incompetent companies (and competent companies who do business in non-viable sectors) are allowed to fail, their resources are liberated and put to better use elsewhere, which is the basis of a true recovery. The government's policy of resisting recession by means of deficit spending has created a massive misallocation of resources in the form of a giant debt bubble that WILL eventually burst, and when that happens, the U.S. economy will finally hit bottom.

eco nomics wrote:

Interesting discussion..

http://www.caseyresearch.com/articles/doug-casey-its-dead-man-walking-economy

Times are great for me. Just bought my 5th home for flipping.

Shadow Stats is complete BS. Official US data is sound. The government collects data the way we it does, and reports it the way it does for a very specific (non-corrupt) reason. The US economy is very different than what it used to be. People spend less money on food, clothing, etc. and more on health care, education, etc. than ever before. That means we have to weigh our indexes differently to calculate price fluctuations.

Looking at unemployment statistics is the same thing. First of all, the wider unemployment figure is falling faster than the headline figure. Second of all, it makes no sense to include part-time and temporary workers in the unemployment number. Third of all, the main reason labor force participation is falling is because more people are returning to college or pursuing more education than ever before. They're not just dropping out of the labor force to live on food stamps, they're actually becoming more productive and the country will get a boost in the near future from the sudden influx of human capital.

Argentina is blatantly misreporting their consumer price increases. No one expect the hard-core fringe libertarians suspect the US to be doing anything as devious. Don't be so quick to accuse the government of corruption before you really understand the issue.

i <3 boobs and donuts wrote:

The collapse of 2008, had it been allowed to proceed naturally, would have actually improved the long-term outlook for the economy. When incompetent companies (and competent companies who do business in non-viable sectors) are allowed to fail, their resources are liberated and put to better use elsewhere, which is the basis of a true recovery. The government's policy of resisting recession by means of deficit spending has created a massive misallocation of resources in the form of a giant debt bubble that WILL eventually burst, and when that happens, the U.S. economy will finally hit bottom.

The reason you are wrong is because prices are sticky, and housing prices are stickier than anything. The economy could not possibly have recovered by now had the government done nothing because housing prices could not have adjusted fast enough to clear the market and prevent a downward spiral.

I just presented you the latest economic trends. Yes, the basic numbers of GDP and inflation doesn't look bad. But its taken massive deficits and radical FED policies just to get to those very mediocre numbers. And so this where we are now. These are the boom times. Now what happens when the economy goes south again?

Randy Oldman wrote:

I would suggest that if you look at the latest economic trends, we're emerging from a recession.

The closest we got to a depression was during the collapse of the housing bubble and the subsequent banking crisis. But that was well contained, unlike in 1929.

The inflation rate is at a healthy 3%. Unemployment is falling. International trade continues to be healthy. Industrial production is up 12% over the last 2 years. We haven't seen dozens of large companies go bankrupt.

All of those would be symptoms of depression.

Public sentiment tends to lag behind economic trends.

When letsrun folks start asking about things like this, I figure things are about to turn up.

The herd is slow to catch on ... when gold was near an all time high, people here started asking if it is a good time to buy gold. When the stock market was near recent 52 week highs, people here started asking if it was a good time to buy stocks. The same thing occurred when people began bringing up $200/barrel oil. When people start talking about it here, it is time to take the opposite position.

its disappointing how little knowledge people here have of basic macroeconomics.

YOU are the one who is full of B.S. The government and its cowardly little cheerleaders use inflation statistics as a red herring to distract people from the reality of rampant currency debasement. The fact that we have to argue over which index to use is proof of that there is no objective way to measure it, which gives lowlifes like you a license to resort to an infinite number of evasions to avoid acknowledging the fact that people are being FLEECED out of their wealth by a malicious, out-of-control government run by modern liberal scam artists. Well, you may be able to evade the awareness of how destructive your ideas are, but you won't be able to evade the consequences, and I for one will be very happy so see government-loving weasels like you reduced to abject poverty when this thing blows up in your face.