Saturday, August 20, 2011

Recession Coming? Forecasters Say we’re Likely To Muddle Through

JAY BRYAN


One of the wittiest expressions of this truth came from Nobel Prize-winning economist Paul Samuelson. More than four decades ago, he said that economists who claimed the stock market had predicted four of the past five recessions were giving it too little credit. In fact, he said, it predicted “nine out of the last five recessions.”

Underneath the humor, there’s a serious point. The stock market measures what investors guess about the outlook for corporate profits, and there’s a very big incentive for them to be trigger-happy. If they’re among the first to anticipate a slump or an upturn, they can avoid losses or reap profits in a far bigger way than their colleagues…….

Two especially important ones are the diminution of serious auto-industry disruptions caused by the March earthquakes in Japan and a big drop in gas prices since last spring. Cheaper gas puts more spending power in consumers’ hands. Dales agrees, noting that these two factors were so harmful that a return to normal will by itself constitute a fairly important boost to the economy. Interruption of auto and parts shipments from Japan alone probably slashed the pace of economic expansion by as much as one percentage point at its worst.
Second, the phenomenon of a double-dip recession – one that closely follows an earlier slump – is very rare. By Dales’ reckoning, there were only two of these in the past 75 years and both were caused by very big government blunders……

The first blunder was in 1937, when both the Roosevelt administration and the Fed tightened the screws on the economy, causing the recovery from Depression to go into reverse for a while. The second was during a recovery in 1981 marked by persistent inflation, when the Fed jacked up interest rates to about 20 per cent…….

6 comments:

  1. See !!
    Nothing to worry about, all is A Ok

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  2. 20% rates!!!!!!! oh man, ONE can ONLY HOPE!!!!

    that would be 100K a year on a 500K CD whoooohooo

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  3. Yeah, 46 million on food stamps and climbing is 'normal' comibined with escalating unemployment equals hardly signs of a renewed 'recession'.

    Idiots.

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  4. let those interest rates rise can't find a job need to earn money on money I earned. Tired of begging for a job

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  5. 46 million on food stamps? No dude... 46 million people receive food stamps. Only one person per house can receive them, which means 46 million households are on them. So if mommy has five kids, only one is on the food stamps but six use them. I imagine those on food stamps is more like 100 million minimum.

    Also, you have to have a residence to sign up, so this does not include homeless people, those living in their cars or storage facilities, or those people working 100 hours a week with three jobs making less than 30K too haughty to apply for government assistance.

    But either way, everyone will be out of work soon thankfully. When shtf, hopefully asap, we will finally have real jobs.

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  6. Moodys is in the bag, I don't believe them. Statements that say gas prices are lower putting more money in consumers hands make no sense when gas is a buck-plus more than last year. Food prices going up so food stamps buy less, rampant corruption being exposed in the Eurozone. Gads, it would take a real dummy to buy into the idea that its just a slow down and that we'll muddle through.

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