Economy faces recession, probably in Q1

[LiberalNation]

http://news.yahoo.com/s/nm/20080312/ts_nm/economy_usa_poll_dc;_ylt=ApaLbIPwsWPCfDNuG7D_sjF34 T0D

NEW YORK (Reuters) - The U.S. economy has ground to a halt and probably already is in recession but faces higher inflation this year than thought just a month ago, a Reuters poll showed on Wednesday.

A dismal run of economic data including two months of job market contraction, a declining factory sector and shrinkage in the dominant service sector, has led analysts to downgrade the already grim economic assessment they gave a month ago.

Economists made their forecasts before the Federal Reserve and other central banks teamed up on Tuesday to get hundreds of billions of dollars in fresh funds to cash-starved credit markets, allowing financial firms to use securities backed by home mortgages as collateral for central bank loans.

[jimnyc]

I edited your post to just the first 3 paragraphs.

[truthmatters]

They may have to come up with a new name for it like Shrinkflation.

[Little-Acorn]

They may have to come up with a new name for it like Shrinkflation.

Could be, since "recession" certainly doesn't fit. A recession is two consecutive quarters of decrease in the GDP, which we're nowhere close to, liberal hopes notwithstanding.

You could use the correct term, "slowdown", which the GDP is doing - increasing at a slower rate. But that wouldn't be terrifying enough for the leftists' purposes, would it?

You guys have a problem: How to lie in a way that will be believed?

[Trigg]

Well with gas prices in the midwest reaching $3.50 a gal and on the coasts $4 it's no wonder people are holding onto there money instead of spending it.

Not to mention the fact that grocery prices are up also because of the increased cost of shipping goods across country.


I actually found gas this morning for $3.24 and pulled in, knowing it would make me late for work, they ran out of gas as I was pumping. I got a little over a gallon, whoopie!!! Man I was pissed

[5stringJeff]

I think we'll have negative GDP growth in 1QFY08 at the very least.

[LiberalNation]

call it whatever but things aren't so hot right now. Gas thru the roof, loss of jobs, inflation.........

[Dilloduck]

call it whatever but things aren't so hot right now. Gas thru the roof, loss of jobs, inflation.........

Things are working out well for you though. Lots of bad news for you to cut and paste. :laugh2:

[LiberalNation]

Yep my life is sweet, cept this dang job I have to work.

[Dilloduck]

Yep my life is sweet, cept this dang job I have to work.

well---bitch about it ! :laugh2:

[LiberalNation]

Of course but even bitching doesn't make this working thing more satisfactory. Specially when a tank of gas takes half my paycheck.

[Dilloduck]

Of course but even bitching doesn't make this working thing more satisfactory. Specially when a tank of gas takes half my paycheck.

My hear just bleeds for ya--poor thing.:boohoo:

[LiberalNation]

:laugh2: :cheers2:

[Hobbit]

All I have to say is, so what? The economy slows down and even recesses every once in a while. It's a perfectly natural cycle that repeats over and over again throughout the history of the economy. When this happens, things are tough for a while, but then the market corrects and we're back on an upswing. The idea that there should never ever be a market slowdown is what leads us to huge messes of government regulations that hurt more than they help, if they even help at all. Usually, all they do is make the swings more extreme.

[JohnDoe]

I think we'll have negative GDP growth in 1QFY08 at the very least.negative NET job growth too....

so I would say we ARE in a recession....and i believe it may be an extended one this time too...for various reasons tying in to the home loans due to bust going on for a bit and the banks not having money to lend.

What i do NOT in any way understand is why Bernake is lowering interest rates?

Inflation is occuring and normally they RAISE interest rates to supposedly curb inflation?

Do you understand what is going on in that realm?
Any help you could give me on that would be appreciated....

jd

[avatar4321]

im glad i have job security unless the state government collapses.

[manu1959]

im glad i have job security unless the state government collapses.

my tax dollars are supporting you?!........holy crap...:poke:

[diuretic]

negative NET job growth too....

so I would say we ARE in a recession....and i believe it may be an extended one this time too...for various reasons tying in to the home loans due to bust going on for a bit and the banks not having money to lend.

What i do NOT in any way understand is why Bernake is lowering interest rates?

Inflation is occuring and normally they RAISE interest rates to supposedly curb inflation?

Do you understand what is going on in that realm?
Any help you could give me on that would be appreciated....

jd

jd I can't help you because I am not educated in economics. But perhaps a brief reference to what's happening here (Australia) may throw some light on it, at least indirectly.

We have fairly low employment (due to the "mining boom" where we are selling minerals to China and India at a rate of knots not seen before).

We also have capacity constraints in our economy due to the neglect of the previous federal government in ensuring our infrastructure could cope. That means we have "demand-pull" inflation.

Our central bank, the Reserve Bank of Australia, has used interest rates to try and dampen demand. It's working, consumer confidence is lowering as everyone pays more for their mortgage.

Problem is that our banks are being hit by the credit crunch. They are having to buy money at higher rates in the international market and they are passing that on to the consumers. I think the fear is not just of inflation but stagflation. What happens of course remains to be seen.

Going back to your question. The only reason I can think of for a central bank to be lowering interest rates is to stimulate a slowing economy. A slowing economy means recession. I think that's what Bernanke is trying to do.

[5stringJeff]

negative NET job growth too....

so I would say we ARE in a recession....and i believe it may be an extended one this time too...for various reasons tying in to the home loans due to bust going on for a bit and the banks not having money to lend.

What i do NOT in any way understand is why Bernake is lowering interest rates?

Inflation is occuring and normally they RAISE interest rates to supposedly curb inflation?

Do you understand what is going on in that realm?
Any help you could give me on that would be appreciated....

jd

You are right, inflation is higher than normal (about 4.3%), so you would think the Fed would be lowering rates. However, Bernanke's biggest concern (wrongly, IMO) is recession and the lack of liquidity brought about by the credit crunch. Therefore, Bernanke is risking inflation to combat the credit crunch.

[Said1]

We also have capacity constraints in our economy due to the neglect of the previous federal government in ensuring our infrastructure could cope. That means we have "demand-pull" inflation.



Are you saying that there was little non-basic industry developed during this time to ensure import substitution? There are fears of this happening in Alberta with the oil boom. It sort of is as the province is growing so fast, hopefully they learned a thing or two from last time.

I also came across some interesting data (re:Australia) in a textbook, I might see if I can't find the same charts on line - only if you're interested of course!

[diuretic]

Are you saying that there was little non-basic industry developed during this time to ensure import substitution? There are fears of this happening in Alberta with the oil boom. It sort of is as the province is growing so fast, hopefully they learned a thing or two from last time.

I also came across some interesting data (re:Australia) in a textbook, I might see if I can't find the same charts on line - only if you're interested of course!

Data would be good for sure, thank you.

On your first question. If I can give an example it may illustrate what I mean.

BHP Pty Ltd used to be our biggest manufacturing company. It was involved in iron-ore mining, steelmaking and shipbuilding around the country. It first shut down its shipmaking business, then the steelmaking business went. A couple of years ago it announced it was going into mining only and then teamed up with the South African company Billiton and now as BHP-Billiton it is the largest miner in the world. So it went from manufacturing to digging up and selling ore. You might be familiar with Blundstone boots? Terribly overpriced there in TO by the way. They've shut down and gone offshore to China or Vietnam or somewhere.

If it grows or we can dig it up or it eats grass, we'll sell it overseas. We can't even make shoelaces any longer.

Frankly I'm disgusted but that's not helpful.

[Said1]

Data would be good for sure, thank you.

On your first question. If I can give an example it may illustrate what I mean.

BHP Pty Ltd used to be our biggest manufacturing company. It was involved in iron-ore mining, steelmaking and shipbuilding around the country. It first shut down its shipmaking business, then the steelmaking business went. A couple of years ago it announced it was going into mining only and then teamed up with the South African company Billiton and now as BHP-Billiton it is the largest miner in the world. So it went from manufacturing to digging up and selling ore. You might be familiar with Blundstone boots? Terribly overpriced there in TO by the way. They've shut down and gone offshore to China or Vietnam or somewhere.

If it grows or we can dig it up or it eats grass, we'll sell it overseas. We can't even make shoelaces any longer.

Frankly I'm disgusted but that's not helpful.

That does answer my question. Simply put, no non-basic industry which is supposed to be financed by income from your basic industries such as mining etc.

I'm still looking for the data I mentioned at the World Bank web site, you'll be interested to note that it actually suggests the opposite of what you've been observing! :laugh2:

[diuretic]

That does answer my question. Simply put, no non-basic industry which is supposed to be financed by income from your basic industries such as mining etc.

I'm still looking for the data I mentioned at the World Bank web site, you'll be interested to note that it actually suggests the opposite of what you've been observing! :laugh2:

I'll be highly relieved to see I'm wrong! :cheers2: