Wednesday, December 30, 2009

Are We In An Economic Recovery or Not?

Christmas sales are finally in, so we can gauge the nature as to whether a bona fide recovery is indeed taking place.  Of course, there is bad news and good news.

The bad news is that the so-called recovery is much weaker than originally reported.  Third quarter GDP or Gross Domestic Product was first reported at 3.5%.  It has since been revised downward twice to 2.2%.

Of course, the revisions are courtesy of the Bureau of Labor and Statistics, an entity known for "juicing" the real numbers.  If you follow you get an entirely different picture.  According to them, GDP currently is tracking at MINUS 3%!

According to Reuters, online spending ROSE 5% from the beginining of November through December  Activity tracked by SpendingPulse, a unit of MasterCard Advisors, showed retail sales ROSE 3.6 % in the period from November 1 through Christmas Eve on December 24.

The Wall St. Journal has weighed in on home sales.  The Case-Shiller index of home prices for 20 cities increased a seasonally adjusted 0.4% from September, the fifth consecutive monthly increase. Before the seasonal adjustment, the index was unchanged.  Home prices are 7.3% lower than a year ago..

Furthermore, the situation for mortgage redefaults has improved.  Some 18.7% of loans modified in the second quarter of 2009 were at least 60 days past due three months later, according to the report, by the Office of Comptroller of the Currency and the Office of Thrift Supervision.  That compares with a redefault rate of 30% or more after three months for loans modified in the previous four quarters.

"Net net" it's still impossible to formulate a definitive conclusion.  What we do know for now is that some signs of recovery are present.  Yet, we still don't know to what extent.  As Confuscious once said "I'm confused"!

If you think you know the answer to the question at hand, PLEASE hit me with your best shot.  Fire away!
There is a comment section below in case my constant repetition of the existence of such a section somehow  escaped you!

Tomorrow we'll return to another "California Crisis Deepens Series"

Marko's Take


  1. What about employment figs? There can and will be no recovery without jobs; meaningful jobs, not fast food jobs reclassified as 'manufacturing.'
    Tracking spending habits and house prices are indicators of the consumer economy the US Federal Corporation has created for us, which is unsustainable as we now see.
    Until we start making more things and spending on fewer things, the 'recovery' they talk about will just be a quarter-by-quarter circle jerk. People will know there's a recovery when there's an environment for new business and the possibility of not being broke for the rest of their lives.

  2. Anon: You're absolutely right!

    Dr. Williams website puts Unemployment at 22%

    As to small business virually every major thorough is littered for "out of Business", "Going out of Business", "For Lease signs" or just plain empty!



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