Thread: US Economy and Spending Fall, Signaling a Recession

Originally Posted by Silverbird

http://www.cnbc.com/id/27453297
[oh, by the way...as if you didn't know. Data indicates it, though no official announcement yet]

They'll revise the .3% number to 0% by Thanksgiving. That way we will have 6 more months until it is "OFFICIAL"

I found this article on a blog site and found it interesting, since I've been having trouble making heads or tails out of what the market is doing, Not that I'm near the Guru a lot you folks here are, but it kinda sums up my thoughts and I guess frustration with the markets.

http://www.bloggingstocks.com/2008/1...hy-are-stocks/

I've always enjoyed his comments and he seems to make since most of the time. It's just a shorty. And maybe this guy is just a flake.

CB

Originally Posted by CountryBoy

I found this article on a blog site and found it interesting, since I've been having trouble making heads or tails out of what the market is doing, Not that I'm near the Guru a lot you folks here are, but it kinda sums up my thoughts and I guess frustration with the markets.

http://www.bloggingstocks.com/2008/1...hy-are-stocks/

I've always enjoyed his comments and he seems to make since most of the time. It's just a shorty. And maybe this guy is just a flake.

CB

Q- "If consumer spending is down and layoffs are up, why are stocks rising?"
A- (IMHO) If we didn't see such panic and rampant selling over the credit
crisis and possible bank failures, the market would never had gone down as
much as it did. With fear subsiding, this is simply a rally back up to where
we should be considering tough economic times. The tougher the news
gets about our economy, the lower we will drop from there. But we had
to make up (maybe still do) the rediculous loses that fear and panic had
created. One last thing, I'm spending my gasoline savings on Christmas, do
you really think I'm gonna save it in a bank or something ! Retail shows doom
and gloom, but earnings expectations might be under estimated for that reason.

well...IMO...if they are finally using the "R" word and acknowledging a recession, that means we are well beyond "R" and into the big "D" word...a Depression. All the symptoms are there...and spreading. Layoffs everywhere, every industry, small businesses going under, people hoarding cash. Classic.

Reported in the WSJ that 2000 "new" car dealerships will go out of business in the next year. That is a lot of good paying jobs.

Originally Posted by luv2read

well...IMO...if they are finally using the "R" word and acknowledging a recession, that means we are well beyond "R" and into the big "D" word...a Depression. All the symptoms are there...and spreading. Layoffs everywhere, every industry, small businesses going under, people hoarding cash. Classic.

They are using the "D-Word" but there calling it Deflation.

Just so we're on the same page here, I'm posting some terms to help those researching:

1. Deflation

A general decline in prices, often caused by a reduction in the supply of money or credit. Deflation can be caused also by a decrease in government, personal or investment spending. The opposite of inflation, deflation has the side effect of increased unemployment since there is a lower level of demand in the economy, which can lead to an economic depression.

Declining prices, if they persist, generally create a vicious spiral of negatives such as falling profits, closing factories, shrinking employment and incomes, and increasing defaults on loans by companies and individuals. To counter deflation, the Federal Reserve (the Fed) can use monetary policy to increase the money supply and deliberately induce rising prices, causing inflation. Rising prices provide an essential lubricant for any sustained recovery because businesses increase profits and take some of the depressive pressures off wages and debtors of every kind.

2. Inflation

The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.

As inflation rises, every dollar will buy a smaller percentage of a good. For example, if the inflation rate is 2%, then a $1 pack of gum will cost $1.02 in a year.

Most countries' central banks will try to sustain an inflation rate of 2-3%.

3. Recession

A significant decline in activity across the economy, lasting longer than a few months. It is visible in industrial production, employment, real income and wholesale-retail trade. The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country's gross domestic product (GDP).

Recession is a normal (albeit unpleasant) part of the business cycle; however, one-time crisis events can often trigger the onset of a recession. A recession generally lasts from six to 18 months. Interest rates usually fall in recessionary times to stimulate the economy by offering cheap rates at which to borrow money.

4. Depression

A severe and prolonged recession characterized by inefficient economic productivity, high unemployment and falling price levels.

In times of depression, consumers' confidence and investments decrease, causing the economy to shut down. The classic example of this occurred in the 1930s, when the Great Depression shook the global economy.

5. Correction

A reverse movement, usually negative, of at least 10% in a stock, bond, commodity or index. Corrections are generally temporary price declines, interrupting an uptrend in the market or asset.

A healthy market will correct from time to time.


Have a Great Day!

Originally Posted by squalebear

Q- "If consumer spending is down and layoffs are up, why are stocks rising?"
A- (IMHO) If we didn't see such panic and rampant selling over the credit
crisis and possible bank failures, the market would never had gone down as
much as it did. With fear subsiding, this is simply a rally back up to where
we should be considering tough economic times. The tougher the news
gets about our economy, the lower we will drop from there. But we had
to make up (maybe still do) the rediculous loses that fear and panic had
created. One last thing, I'm spending my gasoline savings on Christmas, do
you really think I'm gonna save it in a bank or something ! Retail shows doom
and gloom, but earnings expectations might be under estimated for that reason.

Are we now calling 2 consecutive days and 968 a "rally"? ^VIX at 60 now equals "fear subsiding"? uh, I just wanted to say HELLO!!! The recession isn't over yet. Not even close to the bottom. More dumb bailouts on the way. 2 million more foreclosures next summer, and nothing anyone can do to stop them (I frankly think foreclosures are much better than bailouts anyway) I wouldn't touch equities at these levels, need at least another quarter to assess P/E's. I think there's people with a finger on the button waiting for 1,000 in the S&P. Long-term buyers are going to wait for long term signals of strength; and there aren't any.

More unemployment ahead:

Vise-Grips plant shutting down this week

By The Associated Press
Wednesday, Oct 29, 2008 - 08:26:15 am CDT

The Vise-Grips plant in DeWitt, NE, will officially close this week, ending about 70 years of operations.

The last day assembly workers will show up at the plant in the town of 570 people is Friday, but actual production will cease either Wednesday or Thursday. About 330 people work at the plant.

Irwin Industrial Tools, which operates the plant, is moving operations to China.

A spokesman for the company has said the move is necessary to lower the cost of the locking pliers so they remain competitive with other brands.

William Petersen, a Danish immigrant and blacksmith, invented the tool nearly 90 years ago in DeWitt when trying to find a way to clamp down pieces of metal while he worked on them.

(note: Town of 570 people. 330 of them work at Vice Grip plant. That will be one bad place shortly.)

VICEGRIP SHUTTING DOWN



MOVING TO CHINA

http://www.wowt.com/home/headlines/27811459.html



Employees of the DeWitt, Nebraska Vise-Grips plant got the official word Wednesday morning that their jobs are being eliminated. The plant is shutting down with operations being moved to China.


Gary Oden has known for weeks that the plant where he has spent the last 19 years helping build one of Nebraska's most famous products would be closing, but he still wasn't completely prepared for the meeting at 5:30 a.m. Wednesday.


"It's a kick in the head," Oden said from a DeWitt bar where employees gathered to discuss the announcement and "try to forget about it."


Newell Rubbermaid owns the Vise-Grip brand. A plant employee said managers were in meetings Wednesday and not available to comment.
About 300 people work at the plant, which for decades has anchored the southeast Nebraska town of DeWitt, population about 600.


Roughly 40 of the employees make Unibit tool parts. According to Oden, managers said Unibit operations are moving to Maine. The plant closure is sure to rattle more than the town's residents and the plant's workers.
Vise-Grip is an iconic name in Nebraska, one of the most famous products invented or developed in the state, along with Kool-Aid, raisin bran and the Reuben sandwich.


The locking pliers have been manufactured in DeWitt for more than 80 years. DeWitt blacksmith and Danish immigrant William Petersen got a patent for the device in 1924. By 1928, the company had more than 600 employees.


When Petersen died in 1962, his family took over. The business was eventually renamed American Tool Cos. American Tool sold out in 2002 to Newell Rubbermaid, a minority owner since 1985. Since then, the DeWitt plant has operated under the name of Irwin Industrial Tools, a company American Tool bought in 1993.


Oden said employees were told that "to keep the Vise-Grip name competitive, they had to move to China."


Newell Rubbermaid plans to close the plant at the end of October.
Randy Badman, a member of the DeWitt Village Board says the town is unsure where to go from here. "It will hurt the village for a time. I don't know how devastating it will be, we've never been without it so we really don't know necessarily what to expect."


When small town companies move, they're affecting everyone in the community, not just their employees.


Downtown Valley is thriving and businesses are moving in. "So I really wanted to promote the town and help the town progress and the townspeople have been wonderful, everybody's been supportive,” said Wendy Deane, who brought her business here five years ago and renovated the building with high hopes. She hasn't been disappointed.


"3M, they'll call and sometimes they need sandwiches for they do once a month where they bring in someone else." Although the downtown district has a variety of businesses, Valley's economy is anchored by larger plants, including 3M.


Valley Mayor Mary Caffey says small towns understand the economic impact of the larger companies. "It grows the community, it grows the tax base, it brings new people into town, it creates an opportunity for employment in town, which is very important and additionally it just brings diversity to the town."


"For every job created, more jobs are created, so it works in the negative sense if you lose a job, then you're going to lose opportunities and you could lose business," said Mayor Caffey of the situation in DeWitt.

Recession my arse! More like a depression!

http://news.goldseek.com/Internation...1156358565.php

QUOTE: "We are going to slow down and it’s going to get progressively
worse and it’s going to end in depression." Bob Chapman

Bob's rez...

http://www.theinternationalforecaster.com/Bob_Chapman

Scroll down when you hit the link.

Jason