Friday, July 30, 2010

8 Reasons Why It's Getting Worse

1. U.S. orders for durable goods fell 1.0% in June. Economists expected them to rise 1.0%. Excluding the volatile transportation sector, orders fell 0.6% and shipments were down 1.3%. Inventories rose for the sixth month in a row, indicating goods are being produced, but they're not moving out the door.
2. Industrial output in China fell 2.8% in June. A "potential weakening of the global economy" was cited as the cause.
3. The ECRI (Economic Cycle Research Institute) weekly leading indicators index has fallen as low as minus 10.5. There has never been a case when it has gotten this low and there hasn't been a recession.
4. The Consumer Metrics Institute's Growth Index has been negative since January and is now around minus 3.0 (it fell to around minus 6.0 in August 2008). It leads U.S. GDP by approximately two quarters.
5. The U.S. trade deficit widened in May and was the largest in 18 months. This happened even though oil imports fell over 9%. Rising oil imports are usually the factor that makes the trade deficit go up. The trade deficit subtracts from GDP.
6. After a sharp drop in June, U.S. consumer confidence fell even more in July. The Conference Board's latest reading was 50.4. As usual, economists' estimates were on the high side. A reading of 90 or above indicates a robust economy. Before the most recent recession, consumer spending was 72% of GDP.
7. U.S. weekly unemployment claims refuse to drop below 400,000, the approximate dividing line between recession and non-recession. At no point during the current "recovery" have they gotten that low. The unadjusted number of claims for the week of July 17th was 498,000. Even though companies are reporting huge earnings increases and raising estimates for next quarter, more and more workers continue to lose their jobs.
8. The economic cheerleader-in-chief, Fed Chair Ben Bernanke, gave a gloomy report on the U.S. economy last week in his bi-annual testimony before congress. Bernanke didn't see the subprime crisis coming, nor did he realize the U.S. was in a recession in the spring of 2008, months after the recession had begun. So if even he admits the economy is weak, it must really be in bad shape. Bank of England Governor Mervyn King, has also recently stated, "Britain can't be confident that a sustained recovery is under way."
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2 comments:

  1. Reason # 9 is I'm getting older and spending less on drinking and whoring...That alone will lower the GDP of the US with loss of revenue from my taxes paid on alcohol, condoms, sleazy motels and Valtrex.

    ReplyDelete
  2. Not to worry 5:14 I got your back

    I drink 2 six packs a day; puff on a couple good stogies & use a couple nice whores with great regularity and will continue into the foreseeable future

    I love this country !

    ReplyDelete

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