Finally, the "economists" seem to realize what we have been saying for a while. We are in a recession. The recession is unavoidable.
After the jobs report, almost everyone is saying we are in a recession. Just about a week ago, many analysts were saying we will avoid a recession. Now they are changing their tunes and fast.
The dismal jobs report released Friday showed overall employment to be lower than it was three months ago. Every time such a slump has occurred since the early 1970s, a recession has followed — or already been under way.
And if the good times have really ended, they were never that good to begin with. Most American households are still not earning as much annually as they did in 1999, once inflation is taken into account. Since the Census Bureau began keeping records in the 1960s, a prolonged expansion has never ended without household income having set a new record.
This is the point I try to make all the time. The incomes have not gone up since 1999. Home price increases should be correlated to income and mortgage rates. While the mortgage rates might have gone down from 1999, it does not justify 100% or 200% increases in home prices. The only reason housing has gone up is because of debt!
For months, policy makers and Wall Street economists have been predicting, and hoping, that the aggressive series of interest rate cuts by the Federal Reserve would keep the economy growing, despite the housing bust. But the possibility seemed to diminish almost by the hour on Friday.
Once again, we did not think the lowering the interest rates would work. Even before the rate cuts, the dollar was in the dumps. The cuts have made it only worse. Now, inflation is picking up. You have to feel sorry for the seniors who are getting hit from both sides. Their inflation is going up and can't get even a decent return on their savings.
....Almost immediately, the economists at JPMorgan Chase — who only last week had told clients they thought the economy was still growing — reversed course and said a recession appeared to have started earlier this year.
Some times I wonder what these guys get paid to do? They tell us there is a recession after everyone knows. They downgrade stocks after it has been beaten down (ie. Countrywide, Thornburg mortgage, Ambac, etc....). They upgrade stocks when it does not make any sense (housing stocks! Twice now. First from Citi analyst who upgraded them in Dec and now Bofa analyst Daniel oppenheim).
Of course, the Bush administration still does not think we are in a recession!
The median household earned $48,201 in 2006, down from $49,244 in 1999, according to the Census Bureau. It now looks as if a full decade may pass before most Americans receive a raise.
Median income after a decade has actually gone down, not up! Now imagine that 48K number with inflation adjusted and you get a true picture of what is happening. The median picture gives you an idea of how poorer an average family is compared to last decade. Add to this the fact the rich might be earning more, and it's a bleak picture for the lower income families.
No comments:
Post a Comment