Posts Tagged ‘Recovery’
pair of recent Gallup Polls shows distinct loss of confidence in the US economy. The first poll shows Americans’ Economic Confidence at the 2011 Low. A second poll shows 55% still think the economy is in a recession, or worse.
Please consider Americans’ Economic Confidence Declines Further
Gallup’s Economic Confidence Index dropped to -39 in the week ending April 24 — a new weekly low for 2011. This continues a downward trend that began in mid-February. The current deterioration of confidence contrasts sharply with the improving trend found at this time a year ago.
Optimism About Economic Outlook Drops to 2011 Low
Slightly more than one in four Americans said the economy is “getting better” last week. This measure has been declining since mid-February, and is now at its 2011 low. Far fewer Americans currently feel the economy is improving than held that expectation a year ago, when 41% said things were getting better.
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Just 12 months ago, economic confidence was improving and there was talk of “frugality fatigue.” The U.S. saw a sharp spike in spending — particularly among those with higher incomes — during May 2010. Things were looking up for the nation’s retailers and the economy as a whole until the debt crisis in Europe surfaced.
This year, economic confidence is going in the opposite direction. There is an increasing danger of stagflation as prices surge and the economy slows. As a result, retailers and the economy could find it difficult to match last May’s sales performance in 2011.
Survey Respondents Think US Still In Recession
For example, please consider More Than Half Still Say U.S. Is in Recession or Depression
More than half of Americans (55%) describe the U.S. economy as being in a recession or depression, even as the Federal Open Market Committee (FOMC) reports that “the economic recovery is proceeding at a moderate pace.”
Right now, do you think the economy is growing, slowing down, in a recession, or in an economic depression?
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Although economists announced that the recession ended in mid-2009, more than half of Americans still don’t agree. These ratings are consistent with Gallup’s mid-April findings that 47% of Americans rate the economy “poor” and 19.2% report being underemployed.
In another possible disconnect with monetary policymakers, many Americans may not see the trade-off Bernanke suggests between promoting a stronger economy and experiencing higher inflation. Right now, prices are soaring, yet the latest Gallup Daily tracking data show that 67% of Americans say the economy is “getting worse.”
Majority Do Not See A Recovery
Is there a recovery? The answer is in the eyes of the beholder. Turn on mainstream media and the answer would likely be a resounding yes. Take a poll of average citizens and the answer is clearly different.
The one bright spot in the Gallup survey is 27% of respondents now think the economy is growing. This is up from 3% in September of 2008. However, there are more who think the US is in a depression than a recession, and more who think the US is a depression than think the economy is growing.
With rising gas prices, rising food prices, falling real wages, and falling nominal wages for many households, it should not be difficult to figure out reasons for declining sentiment.
Recovery is a Mirage
There is no real recovery, at least in any meaningful sense. Unemployment is down, but employment is not up. The economy is finally adding jobs, but at snail’s pace compared to any normal recovery.
Mean Unemployment Duration Weeks
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If you lose your job, good luck finding another one quickly. You will need it.
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Does that depict a recovery? Before you answer, bear in mind that Bernanke estimates that it takes 125,000 jobs a month just to hold the unemployment rate flat.
The only reason the unemployment rate has fallen is 2.3 million workers dropped out of the labor force in the last year alone, smack in the midst of an alleged recovery.
Take away government spending, unemployment insurance, and food stamps and you have a widespread economic depression. Gallup respondents realize that; The average commentator on mainstream media doesn’t.
Mike “Mish” Shedlock
Global Economic Analysis
There are two economies–the real one, which is in decline, and the “let’s pretend” one touted by the State and corporate propaganda machines.
Children love to play “let’s pretend.” Let’s pretend the economy is “recovering.” Why does this “recovery” remind me of an addict who’s conning his caseworker? (Yes, I’m really in recovery–those aren’t tracks, they’re insect bites….)
Let’s play pretend that jobs are really really coming back, so please ignore this chart, or turn it upside down:
Also ignore that Big U.S. Firms Are Shifting Hiring Abroad.
Let’s pretend that households, corporations and government are reducing their debt. To do that, we have to ignore that the debt-junkie (i.e. the U.S.A.) hasn’t kicked the monkey off its back, it just keeps feeding it more debt. David Stockman dismantled all that propaganda about corporations sitting on trillions in cash–they’re sitting on even bigger piles of debt: Federal Reserve’s path of destruction. He also takes out the claim that “consumers are deleveraging.” Consumer debt has barely budged.
Never mind, let’s pretend we’re deleveraging. So please ignore this chart:
Excuse me but that cute little debt monkey on your back is actually an 800-pound gorilla.
Let’s pretend that wages are rising. Except they aren’t–household income is getting creamed. Real wages are back to the pre-dot-com bubble days of 1996–only the debt load on households and the nation have skyrocketed since then.
Courtesy of the always insightful Oil Empire and Peak Oil, here is a chart of the ratio of wages to gasoline:
Put another way: this is your wage priced in gasoline. Notice how wages tanked when oil hit $140/barrel in the summer of 2008, and how the brief plunge in oil around Q1 2009 caused a spike in the ratio. Now that the Fed is destroying the U.S. dollar, then oil is back over $100 and well on its way to $120 and higher.
Let’s pretend your purchasing power isn’t in a free-fall. Have you eaten an iPad recently? Yum, crunchy!
Let’s pretend unemployment is falling. The only way to make losing 7 million jobs look good is to ignore this chart of the ratio of civilian employment to population. The ratio is back to the 1970 level, back before Mom, Sis and Aunty all went to work. This means there are fewer people working to support the population. Fewer workers means higher taxes on those still standing, and higher debt loads on them, too, as they have to service household debt, student loans, underwater mortgages and a Federal debt that’s exploded higher by $1 trillion a year just since the “end of the recession.”
Let’s pretend corporate profits are the most important metric of our financial well-being.
Who benefits from the surge of corporate profits to record levels around $1.6 trillion, or 11% of GDP? The 21 million employees of global Corporate America certainly do, but then they represent about 16% of non-farm employment, roughly in line with government employment (22 million).
Too bad Global Corporate America is hiring where the growth is faster and the wages lower, i.e. overseas (Big U.S. Firms Are Shifting Hiring Abroad).
Let’s pretend those great profits trickle down to the greater good. Only they don’t. Corporate taxes (around $330 billion annually) cover less than 10% of Federal expenditures (Federal Budget 2009) and despite those record profits–surprise, Corporate Tax Receipts Plunge 31% in Q1.
The tax avoidance Panzer divisions of Global Corporate America are simply unstoppable forces of Nature, it seems. Corporate welfare queens never had it so good.
But let’s pretend those profits increase the wealth of a broad spectrum of citizens. Oops, the top 5% of households collect 72% of the corporate profits.
In Who Rules America?, Sociologist G. William Domhoff draws an important distinction between the net worth held by households in “marketable assets” such as homes and vehicles and “financial wealth.” Homes and other tangible assets are, in Domhoff’s words, “not as readily converted into cash and are more valuable to their owners for use purposes than they are for resale.”
Financial wealth such as stocks, bonds and other securities are liquid and therefore easily converted to cash; these assets are what Domhoff describes as “non-home wealth” on his website Wealth, Income, and Power.
As of 2007, the bottom 80% of American households held a mere 7% of these financial assets, while the top 1% held 42.7% and the top 20% held fully 93%.
Never mind that, let’s pretend the corporate profits trickle down via the “wealth effect” to pension funds that benefit workers everywhere. Too bad that according to the Fed flow of funds data, this rousing, raging Bull Market in stocks fueled by stupendous corporate profits has only brought total pension fund assets back to their 2007 level: $13.3 trillion in 2007 and $13.1 trillion in 2011.
Adjusted for inflation (as measured by the Bureau of Labor Statistics), the pension assets would have to be over $14.3 trillion just to stay even with their value in 2007. So pension funds have actually declined by over $1 trillion in real dollars in the Great Bull Wealth Effect.
So the wage earner’s pension assets have actually fallen. We got your wealth effect right here, buddy, right next to the “recovery.” And the check’s in the mail, we promise.
How much longer are we willing to play “let’s pretend”? Eventually we’ll have to return to the grown-up world and deal with reality.
That which cannot work – and which isn’t working.
The entire premise of the alleged “recovery” is that “growth” will return as a consequence of debt increases. That velocity will increase.
How are they doing?
Or, if you prefer, MZM velocity….
For how long will you believe? QE, QE2, more printing, more goading, more borrowing by the government.
For how long will you believe, as the ship fills with water, that it will not sink?
We entered the 2007 downturn because people could no longer pay their debts.
That’s why it happened folks. You know, I know it, we all know it. That’s not speculation, it’s fact.
The entire premise of a so-called “recovery” is that we can, somehow, restart credit creation – that is, people taking more and more debt once again.
All of these programs – nearly four years worth of them now – haven’t done it.
The facts are what they are.
Was the stock market too pessimistic at SPX 666, were the banks really not about to fail, if we cannot actually afford to take on more debt?
All those numbers and facts were not only appropriate, they were optimistic.
We should have forced all the big banks into receivership in 2007.
We still must.
Bernanke and the government have failed to restart the credit-creation cycle – there is no more absorption available in the broad economy.
We must stop this idiocy while there is still an economy and a government to save.
You Call This An Economic Recovery? 44 Million Americans On Food Stamps and 10 Other Reasons Why The Economy Is Simply Not Getting Better
When Barack Obama, the Federal Reserve and the mainstream media tell us that we are in the middle of an economic recovery, is that supposed to be some kind of sick joke? According to newly released numbers, over 44 million Americans are now on food stamps. That is a new all-time record and that number is 13.1% higher than it was just one year ago. So how many Americans have to go on food stamps before we can all finally agree that the U.S. economy is dying? 50 million? 60 million? All of us? The food stamp program is the modern equivalent of the old bread lines. More than one out of every seven Americans now depends on the federal government for food. Oh, but haven’t you heard? The economy is showing dramatic improvement. Corporate profits are up. The stock market is soaring. Happy days are here again.
It just seems inconceivable that anyone can claim that the economy is improving when the number of Americans on food stamps continues to set a brand new record every single month. But the food stamp program is not the only indicator that the economy is still having massive problems. The following are 10 more reasons why the U.S. economy is simply not getting any better….
#1 Some recent statistics actually indicate that the number of unemployed Americans is still going up. According to Gallup, unemployment in the United States rose to 10.3% at the end of February. That is the highest number Gallup has reported since early last year.
#2 The housing industry is still a complete and total disaster. In fact, new home sales in the U.S. in January were 11.2% lower than they were in December. Not only that, the number of new home sales in January was 18.6% lower than the number of new home sales in January 2010. That is not a sign of improvement.
#3 There wouldn’t even be much of a housing industry at all at this point if it was not for the U.S. government. Right now the U.S. government is either writing or guaranteeing well over 90 percent of all mortgages in the United States. So what would the housing market look like in 2011 if the government was not in the picture?
#4 In 2010, more than a million U.S. families lost their homes to foreclosure for the first time ever, and that number is expected to go even higher in 2011.
#5 Due to rampant economic decay and record numbers of foreclosures there are areas in most of our major cities that now look like “war zones”. For example, the Huffington Post is reporting that there are now approximately 15,000 vacant buildings in the city of Chicago and there are approximately 60,000 vacant houses and apartments in the city of Las Vegas.
#6 According to the Oil Price Information Service, U.S. drivers spent an average of $347 on gasoline during the month of February, which was 30 percent more than a year earlier. This represented 8.5% of median monthly income. So what is going to happen when gas prices go even higher? Sadly, the average price of gasoline in the U.S. has risen another 4 cents since yesterday and it is likely to go much higher from here.
#7 The U.S. trade deficit continues to grow. The trade deficit was about 33 percent larger in 2010 than it was in 2009, and the 2011 trade deficit is expected to be even bigger.
#8 The CredAbility Consumer Distress Index, which measures the average financial condition of U.S. households, declined in every single quarter in 2010.
#9 The number of Americans that have become so discouraged that they have given up searching for work completely now stands at an all-time high.
#10 The U.S. national debt is growing faster than ever. The Obama administration is projecting that the federal budget deficit for this fiscal year will be a new all-time record 1.65 trillion dollars. It is hard to even imagine how much money that is. If you went out today and started spending one dollar every single second, it would take you over 31,000 years to spend one trillion dollars. Long ago the U.S. government should have been getting these deficits under control, but instead they are just getting even larger.
So in light of the statistics above, can anyone really claim that we are in the middle of an economic recovery?
The truth is that there is no sign that any of the long-term trends that are destroying the U.S. economy are even slowing down.
Millions of jobs continue to be shipped overseas.
The U.S. dollar continues to be devalued.
The federal government continues to go into more debt.
State and local governments continue to go into more debt.
Our trade deficit continues to grow.
Our cities continue to be transformed into wastelands as they are being systematically deindustrialized.
The number of Americans that are dependent on the government continues to soar.
The U.S. middle class continues to shrink.
I know that I harp on these themes over and over, but it is vitally important that everyone understands that the mainstream media is lying to us.
The U.S. economy is dying a very painful death and there is no hope on the horizon.
Things are not going to be getting better. Well, they may get a bit better for the boys down on Wall Street, but for the rest of us our standards of living are going to continue to decline.
The best days for the U.S. economy are already behind us. What lies ahead is a whole lot of pain.
We are going to pay the price for decades of corruption and incompetence.
An economic collapse is coming and you had better get ready.