Has the Recession Arrived?

[unlawflcombatnt]

Monthly Factory Orders increased only 1% for the month of February, much less than the +1.8% increase predicted. This follows January's decline of -5.7%. January's Factory Orders decline was the biggest in 6 years. Over the last year, Factory Orders are down -1.1%. Excluding transportation orders, February orders declined -0.4%, following January's -2.5%. This was the 6th month out of the last 7 that ex-transportation orders have declined. February's total factory orders of $386 billion marks a 5% decline since December's seasonally-adjusted $406 billion.

Even some of the previously bullish experts are expressing newly found "concerns." Today's Factory Orders report from Briefing.com states "The downward trend in factory orders is tuning in to a real economic concern. The struggling auto and housing sectors add to the softening in business capital investment as business confidence is fading with weak economic growth." They've also expressed a new concern for declining demand, as evidenced by their bolded statement "lack of demand is the heart of the manufacturing concern....." (At long last, some of the market experts are acknowledging that someone has to buy goods if they are going to be produced, and that unpurchased goods don't help the economy. Hallelujah!)

Despite this month's small increase in Factory Orders, the long term trend is clearly downward. This can be seen from the 3 graphs below from Briefing.com.

The Durable Orders decline has been even worse than overall Factory Orders decline. The recently reported Durable Goods Orders increase for February was revised from March 28th's previously stated 2.5% down to a 1.7% increase on April 4th. Comparing the last 3 months' total (December, January, & February) for Durable Orders with the same 3 months from the previous year, Durable Goods Orders are down 4.7%, from a 3-month total of $663 billion to $631 billion. This can be seen from the combined, modified charts below from the Census Bureau's April 2007's Factory Orders report and March 2006's Durable Goods report. (April 2007's report is on the top, March 2006 is on the bottom. Durable Goods Orders are underlined in red.)

The American manufacturing sector is clearly in recession. A rapidly declining housing sector, combined with a subprime meltdown that is metastasizing to other financial sectors, makes it difficult to see how this can be called a "strong" economy. It's even more difficult to see how the overall economy won't drift into a recession (if it's not in one already.)

unlawflcombatnt

Economic Populist Forum

EconomicPopulistCommentary

_________________
The economy needs balance between the "means of production" & "means of consumption."

 

[Kandahar]

I do think that we're probably heading for a recession. It's been about five years since the last one, so we're due for one.

 

[oldreliable67]

This past Friday's solid report of the March labor conditions showed more Americans working more hours at higher wages than ever before. Unemployment fell to 4.4%, instead of rising as many expected. The average hourly wage rose to $17.22. The strong jobs report, along with the January-February surge in spending, personal income and core inflation points to continued growth, albeit modest, and quite possibly an inflation problem -- not recession and interest-rate cuts.

 

[128shot]

Well, there are many factors that could lead to a spiraling depression

1. Everyone is living on credit-the rise in "net worth" doesn't account for this at all. savings rate are at all time lows-they're in the negative in most places

2. the US government is living on loans. they're racking up more debt than they bring in each year-and in turn they loan out this money to consumers to spend in the economy (among other things). The credit bubble is just getting bigger

3. housing is slowing down, and so is everything tied to it. Major instiutions that thrive on home loans are looking at some hard times.

4. Sub prime lending collapse-what more do I have to say?

 

[oldreliable67]

Stronger than expected retail sales accompanied by upward revisions to last month's data suggest consumer spending not nearly as weak as previously thought and suggest the overall economy may be stronger than earlier estimates.

Retail sales increased 0.7% last month, after rising 0.5% in February, the Commerce Department said Monday. Originally, February sales were seen up 0.1%.

The 0.7% increase in overall retail sales during March was a surprise on Wall Street. A Dow Jones Newswires survey of 15 economists had forecast a 0.5% increase. The climb in March was the largest since 1.1% in December 2006.

The retail sales report illustrates where Americans are spending their money. Consumer spending makes up about 70% of gross domestic product, which is the scoreboard for the economy.

Automobile and parts sales rose 0.4% in March. February sales increased 0.9%.

Sales of all retailers except auto and parts dealers climbed 0.8% in March. Economists expected an 0.8% climb. Demand rose at retail outlets selling furniture, building materials, and clothing. Ex-auto sales in February had gone up 0.4%.

March gasoline station sales surged 3.1% last month, probably reflecting higher prices at the pump, after a 1.5% increase in February. Stripping away sales at gas stations, demand at all other retailers rose 0.4% in March.

Excluding the auto and gasoline sectors, all other retail sales increased 0.4% in March.

[emphasis added]

The retail sales report is one of the more notorious for its "asterisk effect." That is, these figures are almost always revised, often sharply. The initial report each month is the "Advance Report" and is produced from a sample. That sample is considerably enlarged the next month and frequently leads to rather large revisions.

 

[Kushinator]

Well, there are many factors that could lead to a spiraling depression

1. Everyone is living on credit-the rise in "net worth" doesn't account for this at all. savings rate are at all time lows-they're in the negative in most places

2. the US government is living on loans. they're racking up more debt than they bring in each year-and in turn they loan out this money to consumers to spend in the economy (among other things). The credit bubble is just getting bigger

3. housing is slowing down, and so is everything tied to it. Major instiutions that thrive on home loans are looking at some hard times.

4. Sub prime lending collapse-what more do I have to say?

What does government finance have to do with our economy reaching depression status? I really dont believe it suprises many that government bureaucracy is by far one of the most inefficient type of large scale management. The United States is not a business, and shouldnt necessarily be managed by that model.

While i do agree with point 1, points 3 and 4 are the end result of living a lifestyle one cannot afford (point 1). You make enough to pay your bills, medical insurance, and children. By purchasing a new flat screen, super vacation, new car, or any type of borrowing to purchase retail items; you face the risk of high intrest payments. These credit companies stay in business for a reason. Not everybody can avoid this, an you have mass borrowing to pay off previous debts that leads a family to go into even further debt by calling ditech, etc... Next thing you know we have the highest forclosure rate in 20 years.

There wont be a depression, but a recession is due to balance out the inequalities of the irresponsable spender.

 

[oldreliable67]

The Conference Board announced today that the U.S. leading index increased 0.1 percent, the coincident index increased 0.1 percent and the lagging index increased 0.1 percent in March. The Board summarized the indicator results as follows:

• The leading index increased slightly in March following two consecutive declines. In the six months from September to March, the leading index fell 0.1 percent (a -0.3 percent annual rate). In addition, the weaknesses among the indicators have become increasingly more widespread than the strengths over the past few months. In March, unemployment insurance claims (inverted), real money supply (M2), and average workweek in manufacturing made large positive contributions to the leading index, but these were partially offset by decreases in stock prices, consumer expectations, and the interest rate spread.

• The coincident index increased again in March. From September to March, the coincident index increased by 0.9 percent (a 1.8 percent annual rate). In March, the largest contribution came from nonagricultural employment, and the strengths of the coincident index have been more widespread
than the weaknesses in recent months.

• The leading index is still about 0.9 percent below its most recent high in January 2006 and it is 0.8 percent below its March 2006 level. Despite a small pick up in December, the leading index has been essentially flat since mid-2006. At the same time, real GDP growth was at a 2.5 percent annual rate in the fourth quarter of 2006, following a 2.0 percent rate in the third quarter. The recent behavior of the leading and coincident indexes suggests that slow economic growth is likely to continue in the near term.

Note the Board's conclusion that recent GDP growth at an annual rate of about 2.0% to 2.5% is likely to continue in the near term -- while relatively slow, this rate of growth is hardly recessionary.

 

[unlawflcombatnt]

Note the Board's conclusion that recent GDP growth at an annual rate of about 2.0% to 2.5% is likely to continue in the near term -- while relatively slow, this rate of growth is hardly recessionary.

I think they've revised their GDP growth estimates downward.

Current predictions for 1st quarter GDP are 1.5% growth, according to Briefing.com.

The Leading Indicators index, considered by some to be a good overview of the economy, showed only a +0.1% increase in March. This followed a downwardly revised February reading of -0.6%, and a January reading of -0.3%. The year-over-year trend is definitely downward, as can be seen from the graph below of the Leading Indicators Index from Briefing.com.

The graph shows a dip below 0 during the 2001 recession, a rise to a peak somewhere around 2004-05, and now a decline to below 0. I'd say this pretty much mirrors the direction of the economy.

 

[Stinger]

I do think that we're probably heading for a recession. It's been about five years since the last one, so we're due for one.

So do you support the Democrat tax increase they are proposing if you think we are on the heels of a recession?

 

[Kandahar]

So do you support the Democrat tax increase they are proposing if you think we are on the heels of a recession?

I support balancing the budget through a combination of tax increases and spending cuts. Actually, I'd rather get to a point where we're only spending about 98% of our revenue (and using the rest for debt repayment), and then get a constitutional amendment mandating it.

Whether or not we're in a boom or bust shouldn't change our tax policy very much. Our monetary policy, yes, but not our tax policy.

 

[Sergeant Stinger1]

1,500,000 Factory Jobs lost since 2001.
Bush-GM is making China richer. China took all of GM's tips from the GM plant in China and are building their own Auto plant thanks to their working for GM in China!
Even at that "you AIN'T seen nutin yet."

 

[Kandahar]

1,500,000 Factory Jobs lost since 2001.
Bush-GM is making China richer. China took all of GM's tips from the GM plant in China and are building their own Auto plant thanks to their working for GM in China!
Even at that "you AIN'T seen nutin yet."

So what? We're moving from a manufacturing-based economy to an information-based economy, just like we once moved from an agrarian-based economy to a manufacturing-based economy. Why is that a tragedy? I call it progress.

 

[Stinger]

I support..........
Whether or not we're in a boom or bust shouldn't change our tax policy very much. Our monetary policy, yes, but not our tax policy

You're saying the level of taxation has no bearing on the economy???

Again do you support the Democrats plan to raise taxes if we are on the heels of a recession as you claim? Can you cite any economist worth the degree his name is written on that would suggest any such thing?

 

[Sergeant Stinger1]

So what? We're moving from a manufacturing-based economy to an information-based economy, just like we once moved from an agrarian-based economy to a manufacturing-based economy. Why is that a tragedy? I call it progress.

_____________
OK! So what?
Heres what. Every American does not have the qualifications to work in the "information based economy."
Factor in all the illegals taking work from Americans and where does that leave the honest good factory working Americans?

 

[Kushinator]

_____________
OK! So what?
Heres what. Every American does not have the qualifications to work in the "information based economy."
Factor in all the illegals taking work from Americans and where does that leave the honest good factory working Americans?

Hopefully trying to better themselves through more specialized training, or become better educated. The mindset you display is what will allow China to become the worlds most powerful economic force. Does protecting a workforce that needs high paying factory jobs prevent or promote this?

In order for the United States to continue to be the #1 economic power, mass production labor will have to be outsourced to countries offering lower labor costs. This in turn allows much more capital to be spent on R&D, specialized manufacturing, and a complete overhaul in our industrial infastructure.

We cant compete with China's ability to manufacture products at lower cost. Trying to do so spells doom.

 

[Sergeant Stinger1]

Hopefully trying to better themselves through more specialized training, or become better educated. The mindset you display is what will allow China to become the worlds most powerful economic force. Does protecting a workforce that needs high paying factory jobs prevent or promote this?

In order for the United States to continue to be the #1 economic power, mass production labor will have to be outsourced to countries offering lower labor costs. This in turn allows much more capital to be spent on R&D, specialized manufacturing, and a complete overhaul in our industrial infastructure.

We cant compete with China's ability to manufacture products at lower cost. Trying to do so spells doom.

______
What that allows is the American Capitalist Pigs to spend their BIG TAX breaks on R&D IN OTHER Countrys.
No complete overhauling will be done here. Them days are gone!
Its called: "GREEDY AMERICAN CAPITALIST PIG COMPANYS."

 

[Kandahar]

You're saying the level of taxation has no bearing on the economy???

No, I said that the state of the economy should have no bearing on our level of taxation.

Again do you support the Democrats plan to raise taxes if we are on the heels of a recession as you claim? Can you cite any economist worth the degree his name is written on that would suggest any such thing?

Tax policy is too complicated to tinker with every time we move from a boom to a bust, or vice versa. That's not to say that it should never be altered; just that such alterations shouldn't be based on the current state of the economy, which could change within a few months of the new policy taking effect.

As for whether or not I support raising taxes, I already said yes. I support a combination of spending cuts and tax increases to balance the budget.

 

[Kushinator]

______
What that allows is the American Capitalist Pigs to spend their BIG TAX breaks on R&D IN OTHER Countrys.
No complete overhauling will be done here. Them days are gone!
Its called: "GREEDY AMERICAN CAPITALIST PIG COMPANYS."

Tax breaks??? By outsourcing for cheaper labor, do companys save big bucks.

Its not your fault for the way you are, it the mans! Keeping this country down:roll: :roll: :roll: :roll: :roll:

 

[Iriemon]

I support..........
Whether or not we're in a boom or bust shouldn't change our tax policy very much. Our monetary policy, yes, but not our tax policy

You're saying the level of taxation has no bearing on the economy???

Again do you support the Democrats plan to raise taxes if we are on the heels of a recession as you claim? Can you cite any economist worth the degree his name is written on that would suggest any such thing?

First quarter FY2007 GDP growth 1.3%.

The 1.3 percent annual growth rate was less than forecast and followed a 2.5 percent fourth-quarter pace, the Commerce Department reported today in Washington. A measure of inflation watched by the Federal Reserve rose at a faster pace.

Yep. Those tax cuts have sure worked great making the economy grow faster.

Meanwhile, the US is another $330 billion in debt so far this fiscal year.

 

[Kandahar]

_____________
OK! So what?
Heres what. Every American does not have the qualifications to work in the "information based economy."

Then that is the problem that we need to remedy, not the fact that we are becoming an information-based economy. We should provide training to people so they're employable in new fields, and we need to overhaul our outdated education system. But that's no reason to stand in the way of progress just so that people don't lose their jobs.

Factor in all the illegals taking work from Americans and where does that leave the honest good factory working Americans?

And where did the Industrial Revolution leave the honest good textile workers? Out of work. Does that mean that we should've stopped the Industrial Revolution?

 

[Stinger]

Originally Posted by Stinger
You're saying the level of taxation has no bearing on the economy???

No, I said that the state of the economy should have no bearing on our level of taxation.

So knowing that increasing taxes during a business slowdown could send the economy into a recession cause the huge losses in jobs and business closings, it should nonetheless not be taken into consideration?

Tax policy is too complicated to tinker with every time we move from a boom to a bust, or vice versa.

HEY you are ABSOLUTELY CORRECT!!!!! So do you oppose the Democrats tinkering with it by raising taxes or just leaving taxes alone for now?

That's not to say that it should never be altered; just that such alterations shouldn't be based on the current state of the economy,

Which is absurd but OK if you want to believe that, actually not I hope you never sit in congress.

As for whether or not I support raising taxes, I already said yes. I support a combination of spending cuts and tax increases to balance the budget.

We don't need tax increases to balance the budget, but wouldn't you find it suicidal to raise taxes and causes further slowdown to a slowing economy, perhaps throwing into negative growth, drastically reducing federal revenues rather than just leaving them alone or cutting the rates slightly so that economic activity is helped and the net loss of revenue would be less?

 

[Iriemon]

We don't need tax increases to balance the budget, but wouldn't you find it suicidal to raise taxes and causes further slowdown to a slowing economy, perhaps throwing into negative growth, drastically reducing federal revenues rather than just leaving them alone or cutting the rates slightly so that economic activity is helped and the net loss of revenue would be less?

We don't need tax increases to balance the budget because the Republicans did such a peachy job cutting spending. National debt has only increase $3 trillion over the past 6 years, and $330 billion so far this year.

Pass the buck logic:

When the economy is good: "We can't raise taxes when the economy is good because that will make the economy slow."

When the economy slows down: "We can't raise taxes when the economy is slow because the economy is slow."

 

[Kandahar]

Christ, is it really that difficult to use the quote feature? This isn't rocket science...

So knowing that increasing taxes during a business slowdown could send the economy into a recession cause the huge losses in jobs and business closings, it should nonetheless not be taken into consideration?

1. I don't agree with that premise. Major changes to the tax policy can have systemic, long-term effects (good or bad), but I don't see any evidence that relatively minor tax hikes and tax cuts have any effect on the short-term state of the economy.

2. If the economy was just starting to pick up after a recession, or if we'd been in a recession for a while with no sign of recovery, or if we'd been in a boom for a while with no sign of recession, you'd still be arguing not to raise taxes. So this entire line of questioning is extremely disingenuous.

3. The state of the economy changes a lot faster than our tax policy does. By the time a tax policy designed to pull us from a recession took effect, the economy might have been out of the recession for months, etc.

HEY you are ABSOLUTELY CORRECT!!!!! So do you oppose the Democrats tinkering with it by raising taxes or just leaving taxes alone for now?

No. Like I said, there are other reasons to alter the tax code, such as balancing the budget. The current short-term state of the economy is simply not one of them.

We don't need tax increases to balance the budget,

Yeah, the conservative ideologues keep screaming about how we should just cut spending and not raise taxes. The liberal ideologues keep screaming about how we should just raise taxes and not cut spending. As a result, nobody makes any sacrifices at all, and we just run up a huge deficit. Anyone with a brain can see that that is not the way to run a government.

but wouldn't you find it suicidal to raise taxes and causes further slowdown to a slowing economy, perhaps throwing into negative growth,

A premise with no evidence to support it.

drastically reducing federal revenues

A premise with overwhelming evidence AGAINST it.

rather than just leaving them alone or cutting the rates slightly so that economic activity is helped and the net loss of revenue would be less?

No. If the economy slows down, it slows down. It's part of the natural economic cycle. An individual recession can rarely be attributed to specific economic policies, they just happen.

 

[Iriemon]

You're saying the level of taxation has no bearing on the economy???

Again do you support the Democrats plan to raise taxes if we are on the heels of a recession as you claim? Can you cite any economist worth the degree his name is written on that would suggest any such thing?

From 2003:

NOBEL LAUREATES, 450 OTHER ECONOMISTS FAULT BUSH TAX CUT PLAN

Ten Nobel laureates, joined by more than 450 other economists from all over the country, today cautioned that the tax cut plan proposed by the Bush administration will not only fail to help the economy in the short run, but will also weaken it over the longer term by deepening projected deficits.

The warning note was sounded in a joint statement unveiled at the National Press Club today by three of the Nobel economists: Joseph Stiglitz (Columbia University), Franco Modigliani (Massachusetts Institute of Technology), and Lawrence R. Klein (Universitiy of Pennsylvania). The statement, along with the names of all of its endorsers, will appear as a full-page ad in Tuesday’s (2/11) New York Times.

The economists’ statement notes that there are now more than two million fewer private sector jobs than at the start of the current recession, and that the tax cut plan proposed by the administration is not the answer to our current economic problems. It further notes that the proposed tax cuts would not produce adequate growth or jobs and would lead to fiscal deterioration that would, in turn, “reduce the capacity of the government to finance Social Security and Medicare benefits as well as investments in schools, health, infrastructure, and basic research” and will “generate further inequalities in after-tax income.”

Kenneth Arrow, a Nobelist from Stanford University who is one of the statement’s signers, summarized it this way: “The Administration's tax cut proposals will probably have a negative effect on the current economic situation. The large anticipated deficits mean increased government competition in the capital market and possible inflation and, therefore, higher longterm interest rates. These higher rates, in turn, will inhibit new investment. There is no compensating advantage in encouraging consumption.” In addition to Drs. Klein, Modigliani, Stiglitz and Arrow, other Nobelists joining in criticism of the Bush plan are Daniel McFadden and George Akerlof, both of the University of California at Berkeley, Douglass North of Washington University, Paul Samuelson and Robert Solow of the Massachusetts Institute of Technology, and William Sharpe of Stanford University. The statement acknowledges that the economy is experiencing some slow growth, but notes that it is too slow to prevent unemployment from rising. To stimulate the economy, the statement says, “a stimulus plan should rely on immediate but temporary spending and tax measures to expand demand, and it should also rely on immediate but temporary incentives for investment.”

http://www.epinet.org/newsroom/releases/03/02/030210-econltr-pr.pdf


Just proves that even economists get things right once in a while.

 

[Stinger]

Christ, is it really that difficult to use the quote feature? This isn't rocket science...

Actually the quote system on this board is a joke compared to other boards I have participated in.

1. I don't agree with that premise. Major changes to the tax policy can have systemic, long-term effects (good or bad), but I don't see any evidence that relatively minor tax hikes and tax cuts have any effect on the short-term state of the economy.

The Democrats ARE proposing some MAJOR changes, why is the question so difficult?

2. If the economy was just starting to pick up after a recession, or if we'd been in a recession for a while with no sign of recovery, or if we'd been in a boom for a while with no sign of recession, you'd still be arguing not to raise taxes. So this entire line of questioning is extremely disingenuous.

I'm asking about YOUR opinions on tax policy not MINE. Yes we have a fundimental difference, I believe tax rates should be set on the principle of what is fair and how much we should limit government from taking our hard earned money, government should tax and spend only based on what is fair to us not by what they simply want and we cough it up.

Quite frankly I would rather see a complete overhaul of the system and not just playing with current rates. But the Dems want more than anything to raise taxes.

3. The state of the economy changes a lot faster than our tax policy does.

OK so what?

By the time a tax policy designed to pull us from a recession took effect, the economy might have been out of the recession for months, etc.

But slap a tax increase on and you'll see the effects pretty quickly.

Look if you support taxes increase during a business slowdown we'll just disagree on it. I want to see which Democrat will run on that policy though.

No. Like I said, there are other reasons to alter the tax code, such as balancing the budget.

Which is where the last round to tax cuts is taking, look at the revenues pouring in.

Yeah, the conservative ideologues keep screaming about how we should just cut spending and not raise taxes.

Which is exactly what should be done, revenues are pouring in at tax increase which would slow down the economy would produce a net decrease in the long run.

The liberal ideologues keep screaming about how we should just raise taxes and not cut spending.

Which would slow down revenues into the federal government at the same time it is increasing spending. Disaster.

As a result, nobody makes any sacrifices at all, and we just run up a huge deficit.

We don't need to sacrifice, if spending is just kept to inflation growth and they leave taxes alone revenues will surpass spending.


Quote:
Originally Posted by Stinger
but wouldn't you find it suicidal to raise taxes and causes further slowdown to a slowing economy, perhaps throwing into negative growth,

A premise with no evidence to support it.

Quote:
Originally Posted by Stinger
drastically reducing federal revenues

A premise with overwhelming evidence AGAINST it.

Supported by history.

No. If the economy slows down, it slows down.

And throw a tax increase so the people and business on top of it and we have a Jimmy Carter economy again. So leave tax rates alone, don't you agree? Or do you support the Democrat plan to raise them. That is the simple question I ask you.

It's part of the natural economic cycle. An individual recession can rarely be attributed to specific economic policies, they just happen.

I agree, this slight slowdown is a natural occurrence when we have had such continued growth and there aren't many workers available. So do you greet that with a massive tax increase?