Originally Posted By RoadTrip Has the recession hit bottom? Are we maybe about to start the long climb back up? More than 90% of the economists surveyed by the National Association for Business Economics think the recession will end in either the third or fourth quarter of this year. Now I realize those guys don't have the vast economic experience of LP'ers. But still; it has to provide at least some hope. <<The economy is throwing off signals that it may be bumping along the bottom, and the ride is likely to be rough. Some of recent green lights include: a rise in demand for big-ticket items like major appliances, a decline in applications for unemployment benefits and a housing market that is no longer in free-fall. The data lend weight to the growing notion, supported by more than 90 percent of economists in a recent survey, that the deepest recession since the 1930s may be drawing to a close.>> <<More than 90 percent of economists surveyed by the National Association for Business Economics are predicting that the current recession, now the longest since World War II, will end either in the third quarter or by the fourth quarter of this year.>> Source: <a href="http://www.msnbc.msn.com/id/30979615/" target="_blank">http://www.msnbc.msn.com/id/30979615/</a> Sorry guys. I know it will be a real bummer to have one less thing to be bummed out about.
Originally Posted By DyGDisney I was talking to my financial guy this morning and he said the same thing. Things are lookin' up!!!!
Originally Posted By hopemax I will go on the record as believing that we aren't done yet. I think we are having another period of "irrational exuberance." It may last several months, though. But I don't think we have been 100% honest with the numbers, and that is going to come back and bite us in the butt again. We had a recession end in August 1980, only to have a worse recession in 1981-82. A few weeks ago, Nate Silver titled one of his 538 blog posts as "Hooray! The second derivative has improved!" And that's how I feel about it. It's basically a big, "so what?" Looking at the last few recessions, there were period of times when the unemployment filings went down...only to come back up again. No longer being in free fall, doesn't mean that you aren't still sliding down. The housing incentives and dropping prices have gotten things moving a little, but there is still a limited pool of people that jump in; I don't see it as sustainable. And since housing is moving a little, especially in the low end, its no wonder there has been an uptick in appliances. All those foreclosed homes bought at discount rates need appliances if someone is going to live in the house. However, based on RT's reaction you can see why no one wants to be the Debbie Downer, no one wants to miss out on the party on the way back up.
Originally Posted By hopemax <<More than 90 percent of economists surveyed by the National Association for Business Economics are predicting that the current recession, now the longest since World War II, will end either in the third quarter or by the fourth quarter of this year.>> BTW, what percentage of these economists correctly predicted the fall? So why should we trust them now?
Originally Posted By barboy Outside of a state's stable/legitimate/working government nothing, abosolutely nothing, is more important to a healthy economy than a far reaching production or manufacturing base. A state's economy thrives when it exports things that other states want. Outside of Jack Daniels, Levis, medical equipment and entertainment what other 'goods' does the rest of the world want from the US? How many foreigners buy the US's Dooney and Duck's/Coach's or Cadillacs? The world wants Honda and Kawasaki motorcylces and light motor scooters not loud, obnoxious Harley's. The 1950's have come and gone and the US is economically done as the world's leader. I say that a state's tourism is the next most important feature to a healthy economy. If a state doesn't export jack but has something others want to experience then it will thrive too. The only bright spot for the US economy is tourism; the US has the finest and easily the most comprehensive touring sites on the planet---no other nation can offer a traveler anything remotely close to what is found in the US. But the problem is the US is too populated and vast to rely on tourism and too far from those who travel and have means to drop coin at our casinos, beaches, themeparks, historical structures and natural wonders-- the Japanese, Koreans, Indians, Singaporeans, Chinese, Aussies and Euros live too far away to keep US hotel rooms full.
Originally Posted By SingleParkPassholder "Outside of Jack Daniels, Levis, medical equipment and entertainment what other 'goods' does the rest of the world want from the US?" Levis are made in China. Have been for years.
Originally Posted By hopemax Actually, the US exports lots of stuff. It's just not stuff that the average person like you or I, use in our homes. We export stuff that other countries use to make the stuff they export to us. Heavy equipment, semiconductors, telecomm, etc.
Originally Posted By RoadTrip I try to be optimistic, probably because I'm just naturally kind of an optimistic person. But I also try to be optimistic because pessimism is truly causing our economy a great deal of harm. If only those people who have lost their jobs over the past year had greatly reduced their spending we would still be in pretty good shape. The problem is that those who are still employed have also greatly reduced their spending because they are so pessimistic about the economy. In effect, those of us who are still working but spending considerably less are HURTING THOSE WORSE OFF THAN OURSELVES. Joe isn’t going to be called back to Ford until people start buying cars again. And if even those people with jobs are not buying cars Joe is screwed. There is considerable pent-up demand for housing but people are afraid to buy because they think the price will go lower. And sure as heck, when everyone stops buying the price DOES go lower. What the heck do you expect? Supply and demand. Sooner or later people have to be optimistic enough to say they want a house even though the value might drop some more because they are sure pretty soon prices will start to go back up. Consumer spending drives the economy, and consumers who are pessimistic don't spend money. I'm not talking about going back to the days of out-of-control spending where you spend home equity you don't really have on toys you don't really need. But back to normal levels of spending that we saw before people turned equity lines into checking accounts. You can help your unemployed relative or neighbor by being a little optimistic and BUYING SOMETHING!! If enough people did that we would rapidly be on the road to recovery.
Originally Posted By Sport Goofy << If only those people who have lost their jobs over the past year had greatly reduced their spending we would still be in pretty good shape. The problem is that those who are still employed have also greatly reduced their spending because they are so pessimistic about the economy. >> If only it was that easy. Leading up to the bubble bursting, the savings rate in this country was negative. People were spending money because banks were lending it to them easily. All those people with jobs were spending money they didn't have. I don't think the people with jobs have stopped spending because of pessimism -- they've stopped spending because the easy credit spigot known as HELOC no longer exists. They are now forced to live within their means. << Joe isn’t going to be called back to Ford until people start buying cars again. >> 40% of new car purchases in 2007 were financed in some way, shape, or form with HELOC money. How do those people ever buy a car now that houses are worth about 30% less than they were then? The home equity ATM is tapped out. Car sales aren't coming back even if you put everyone back to work tomorrow. Current wages don't support buying cars unless there is easy money being lent to supplement the paycheck.
Originally Posted By Sport Goofy << I'm not talking about going back to the days of out-of-control spending where you spend home equity you don't really have on toys you don't really need. But back to normal levels of spending that we saw before people turned equity lines into checking accounts. >> We aren't going to see the economic activity of 2007 for quite some time then. GDP has contracted by at least 5-6%. Assuming we make a rapid turn-around and start growing GDP by 1-2%, it's going to take at least 4-5 years just to get back to the level of economic activity in 2007. That assumes a rapid turn-around. What if we remain stagnant longer? This could take a decade or more to recover. People need to realize that now and plan for it.
Originally Posted By hopemax >There is considerable pent-up demand for housing but people are afraid to buy because they think the price will go lower. And sure as heck, when everyone stops buying the price DOES go lower. What the heck do you expect? Supply and demand. Sooner or later people have to be optimistic enough to say they want a house even though the value might drop some more because they are sure pretty soon prices will start to go back up. < It should go lower, a lot lower. DH and I are buying this year. We start actively looking beginning of July, after DH's project finishes and I get back from WDW. Our household income is approx $80K. I've heard the rule of thumb is 3x income. So that means we should be looking for something that costs $240K and under. We really want to keep it under $200K though. In the Denver metro area itself there are 3430 listings. 1218 are less than $250K, which is about 35% of available homes. So who is going to buy the other 65% of houses. Median income is $61K so we are 25% above that and we shouldn't be looking at those expensive homes. Median price is $350K, 5.7 times median income. We are looking in a cheaper suburb though. In that one there are 526 homes, 185 below $250K, also about 35% of inventory. Median price is only $249K though. And Denver's real estate market crashed a couple of years ago, not recently. They keep predicting bottom, but I am not sure.
Originally Posted By hopemax Note, that the housing prices are based on what is in the inventory right now. Average home prices based on sales is lower. But the inventory is all higher priced stuff, that isn't moving, and probably shouldn't move based on incomes.
Originally Posted By fkurucz <<I will go on the record as believing that we aren't done yet. I think we are having another period of "irrational exuberance." >> Record deficit spending can cause that. <<BTW, what percentage of these economists correctly predicted the fall? So why should we trust them now?>> A lot of spin doctoring (by the economists), if you ask me. And like you said, these are the same clowns who said that "subprime was contained", "there is no recession". As for things looking up: Dell just reported a lousy quarter. So did HP a few weeks ago, and future guidance was flat. Are car sales up? Retail? Nope.
Originally Posted By fkurucz <<The 1950's have come and gone and the US is economically done as the world's leader.>> There is serious talk of the Chinese Yuan replacing the dollar as the world's reserve currency.
Originally Posted By fkurucz <<But I also try to be optimistic because pessimism is truly causing our economy a great deal of harm. If only those people who have lost their jobs over the past year had greatly reduced their spending we would still be in pretty good shape. >> So in other words, they should have been less optimistic about the future?
Originally Posted By fkurucz <<Current wages don't support buying cars unless there is easy money being lent to supplement the paycheck.>> You mean 30 year car loans that are tax deductible? During the bubble I was always blown away seeing people that I knew made less than I do driving 50K cars.
Originally Posted By fkurucz <<GDP has contracted by at least 5-6%. Assuming we make a rapid turn-around and start growing GDP by 1-2%, it's going to take at least 4-5 years just to get back to the level of economic activity in 2007. That assumes a rapid turn-around. What if we remain stagnant longer? This could take a decade or more to recover. People need to realize that now and plan for it.>> One only need look at Japan and its "lost decades" to get a glimpse of what awaits us.
