Are we really at the brink of a new recession? The stock market has been hit hard lately, and supposedly Christmas spending is not all it could be this year. But the fundamentals haven’t changed very much. Yet if you believe the national media (which of course never errs), the U.S. economy is about to dive head first into the toilet.
Is it a big coincidence that these recession warnings are beginning to be reported during the transition from Clinton to Bush?
Just keep Greenspan happy.
Y’notice how the economy got good when he got married? He just needed to get some. :D:D
Most reports I’ve heard from economists say that a recession is not a foregone conclusion. A slowdown certainly is. 5% growth per year for several years was unrealistic to expect to continue. The last projection I heard (yesterday) was 2.5% growth for 2001.
Presumably this is what Greenspan wanted…a ‘soft’ landing. Hopefully the ground won’t fall out beneath the landing zone.
There’s nothing now or on the horizon to cause the economy in general to head for the shitter. YES, as previously pointed out, the sustained rate of growth over the past few years is a bit unrealistic, but I think it’s far too soon to talk about an “economic downturn” or any sort of “recession.”
My prediction: A stable, but less spectacular, rate of growth over the coming years. If Bush is successful in pounding a significant tax cut through Congress, look for a slight acceleration in growth. (It happens every time.)
What surprises me most is the fact that the media are reporting anything at all about a slowing economy just yet. It would fit their style much better to begin such alarmist squealings around January 21 or so… Credit where credit is due, you understand…
Well, INAE, but I make a habit of reading the finacial news (the economist, the WSJ, and here, where all the smart people hang out) and I can sum up the consensus for you:
Nobody seems to know.
There are a couple of big problems with the us economy. First and foremost is debt; mainly private individuals, but corporations made a few bad moves, too; mainly borrowing money to buy back stock when the cost of borrowing was lower, and stock prices were through the roof. Individuals have had negative savings rates for what, a year now? As consumers cut back spending to pay down some debts, the economy will slow. Businesses will invest less in infrastructure, causing the economy to slow. Now, all of this is a good thing; we have too much debt, and the longer we keep it up, the worse the hang over is. We might slow, but not stop the economy.
Second is the relatively high cost of energy, particularly natural gas. It would be nice if it were a mild winter. It hasn’t been.
Our current accounts deficit is killing us. The fact that other nations have lent us money (by buying US corporate and government bonds) has allowed us to keep up the fast pace of growth for the last year. Sooner or later this money will disappear.
There is some concern about how well Bush will get along with Greenspan. Bush the senior did not get along with him well; this is stated as one of the causes of the early 90’s recession. I personally think Bush the younger will do better job.
These are the things the finacial papers harp on. If the economy does turn south, it should be a fairly short recession. But like I said, nobody seems to be sure…
This is really more of a Great Debates topic. I’ll shoot it over there for you.
We have been spoiled is all. People have gotten so used to high growth that slower growth is looked at as a downturn. It’s like getting a little less of a raise than last time.
Lots of folks are saying that the market has been overvalued for a while now, and a correction was bound to come. The most troublesome thing about this is that if too much is made of these events, it can erode consumer confidence to the point where a downturn really does comealong.
what is the purpose of THE ECONOMY?
are you a wealthy stock holder or do you WORK for a living?
economists talk about interest rates and jobs but how often do they talk about depreciation? they NEVER talk about depreciation of durable consumer goods.
currently reading the book:
CLASS WAR IN AMERICA by Charles M. Kelly
the problems he describes are very interesting tho i don’t agree with his solutions.
Dal Timgar
A horse is a horse,
of course, of course,
unless it’s dead and you’re flogging to pieces.
:rolleyes:
a good “Economics For Dummies” type book? Something that will give me a better grasp of what they hell they are talking about when they talk about the Fed, interest rates, GNP, Nafta, Trade deficits, strgon dollars, weak yen, recessions, and blah and blah and blah?
Because this is a great big blank area in my otherwise relatively well-educated brain. I have always had trouble with math and related topics, so economics slipped right by me. But it is now a topic I wish to understand better. So what I need is a book which explains basic economics in a manner that, say, a bright 14 year old would understand it and not nod off.
Anyone?
thanks
stoid
Stoidela, there is an excellent paperback called “From Here to Economy” by Todd G. Buchholz. It is very easy-to-understand and will give you a better understanding of the economy than 99% of Americans. It will also give you ample ammunition to talk economics with just about anyone.
Good luck and let me know how you like.
The recession is here, folks, right now at this moment. Does it or will it affect you depends largely on your type of business or profession. Most of us won’t be affected at all, and it will correct itself. IMHO it has resulted from the fact that it was an Election Year (wherein a great many people get tight with their money), and the problem was exacerbated by us wonderful folks in Flori-duh, making those tightwads even tighter.
Well, here’s how it affects me, personally: several corporations in this area have had major layoffs these past few months. Why? no one is spending money (it’s a recession).The result? A glut of non-working professionals in an otherwise low unemployment area. Many of these pros are in my profession. They will suck up any job that becomes available. Result? slightly lower wages. This will make it harder for me to a)ask for a raise, and/or b)look for a new job.
But, this is all temporary. After Dubya is sworn in, the tightwads will open up again.
Wrath:
Youse guys! Jeez! Man!
it occured to me a few weeks ago that since Keynes introduced the idea of aggregate demand and the purpose of Freudian psychology in television commercials is to influence aggregate demand, don’t we need a new form of Keynsianism.
Keynes died in 1946, did he ever see a television commercial?
of course i use my VCR to skip them, must be un-American.
Dal Timgar
One thing I’ve noticed locally (well, in addition to my 401k taking a bath) is that many factories seem to have gotten a little too enthusiastic when things were going great guns. They seem to have overbuilt their infrastructure and overinflated their workforce.
The end result of what will be characterized as a “not too serious correction” will be pretty damned serious to workers losing their jobs.
Where I live -
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The county’s largest employer has cut about 150 blue collar jobs, and gutted management, over the past 18 months in an effort to get leaner. Many “lifers” who’d put in decades were let go all at once.
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My community’s second-largest employer (next to the above one) is shutting down, idling more than 300 people. They are part of an auto-parts manufacturing chain, and they have “unused capacity” in other plants that they want to consolidate. Remember that term; I’m seeing it show up in media reports about other plant shufflings and shutdowns.
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The biggest employer in a couple counties south of here just announced they are permanently getting rid of more than 500 jobs next week, citing slowed sales. This is going to be devastating on that community, one of the larger ones in this rural area.
An energy crisis served to kick in our last really big recession, in the 1970s. We’ve had a couple little scares along those energy lines in the past year or so also.
Let’s just say I don’t like what I’m seeing, on a lot of different fronts.
I haven’t seen any effects yet over here in Northern NJ, other than a lot of grumbling about how the Nasdaq is doing, but I’ve always worried that our ballooning current account deficit would come back to haunt us big time. It was obvious that the SUV craze was top-of-the-market (energy market in this case) behavior, but we may become familiar over the next few months with other things that will become obvious as top-of-the-market type behavior.
Good things that may come out of this: lower interest rates, and lower energy prices after the spike we had this year. (the price of a barrel of oil has already come down considerably.)