I made posts earlier about GreenShoots detailing each sector one by one you can read about them here and that’s OK.
But, here we are in September of 2009. Question still remains economic recovery or not ? those greenshoots should have become tress by now right ? Seems to be a very puzzling question everybody seems to have a view of their own about this. Some believe that economic data has turned positive and some believe we are still far from recovery. As usual I tried to get an answer for this question myself and here are the result of my best efforts on this. Now you know that I am no financial guru, no expertise in finance so took one of my proven method to find an answer. That is look for an answer from a more credible person <may be more than one> and if they all talk about the same it’s a good indication that things are what all of them indicate.
Listed below are the people whose thoughts I researched, each of their names have links to their Wikipedia pages, if you have doubts about their credentials I suggest please click on these links and confirm for yourself. Before putting your doubts about them. These are world’s leading economist.
Nouriel Roubini - He is a professor of economics and he had predicted accurately this current financial crisis before it hit us.
Mr.Stiglitz
- The former World Bank chief economist and professor at Columbia Business School, he is a Nobel prize winner.
Mr. Paul Krugman - Nobel Prize Winner.
Mr. Roubini is the one who is in media more often than others, probably because of his dire predictions but lately he has been the least favorite as he has changed his view too many times on economic recovery. Here is a sample…
Op-Ed Contributor
The L Curve
By NOURIEL ROUBINI Published: February 28, 2009
And things could get worse. We now face a 1 in 3 chance that, if appropriate policies are not put in place, this ugly U-shaped recession may turn into a more virulent L-shaped near-depression or stag-deflation (a deadly combination of economic stagnation and price deflation) like the one Japan experienced in the 1990s after its real estate and equity bubbles burst.
Nouriel Roubini is a professor of economics at the New York University Stern School of Business, and the chairman of an economic consulting firm.
Patterns of recovery: Economist Roubini on the shapes of things to come
Melly Alazraki
Sep 4th 2009 at 3:30PM
After predicting our current global financial crisis, New York University professor of economics Nouriel Roubini earned himself the nickname Dr. Doom. Roubini’s words have the power to move markets; when he talks, people listen.
And lately, Roubini seems to have changed his tune somewhat, albeit with many caveats. He anticipates a possible “U-shaped” recovery, with leading economies undeperforming for as many as three years, but also warns of the increased risk of a “double-dip” scenario. “U-shaped,” “L-shaped,” “double-dip,” “V-shaped” — what do these terms mean?
–if you want to find out what these terms means feel free to click the article, but point here is Mr. Roubini has pointed out every possible shape of recovery. Now it does not matter what recovery pattern we are in, he has covered them all.
Roubini: “U-shaped” recovery is possible
Fri Sep 4, 10:27 am ET
Leading economist Roubini warns of “U shaped” or “W shaped” recovery
Leading economist Nouriel Roubini who predicted the global financial crisis said Friday in Italy that he expects a slow recovery for advanced economies, but emerging economies may experience a quicker more robust growth.
Saturday, September 5th 2009 - 6:06 am UTC
–Not sure about you but when I hear so many different shapes and forms of recovery from one person, not sure if I want to believe in what I am hearing. True that policies are changing every day at Washington and at Wall Street and at every G-20 meeting and debates are held every month. Should these policies change so will the out come. But changing views so many times in such a short span is no good…I guess then it’s better not to speak until situation clears itself. So I must look into what the others are saying about this recovery to darw any meaningful conclusion.
Nobel laureate Stiglitz says U.S. economic recovery very weak
by Xinhua writer Yang Lei
NEW YORK, Sept. 3 (Xinhua) — Despite recent upbeat data, the U.S. economy may not be in a “sustainable” recovery and still faces “significant” chance of contracting again, Nobel laureate economist Joseph Stiglitz said here Thursday.
Speaking at a press briefing at Columbia University, Stiglitz said he believes the prospects of a robust U.S. recovery are “very, very weak.”
The former World Bank chief economist and professor at Columbia Business School said he sees two scenarios for the U.S. economy. One is a Japanese style “malaise” that the economic growth would remain low in a long-term period. The other is a “W-shaped” recovery with a double-dip recession.
It will be a W-shaped recovery: Paul Krugman
11 Aug 2009, 0840 hrs IST, Andy Mukherjee , ET Now
Will the recovery be W-shaped or a V-shaped one?
It certainly is not going to be V-shaped. There’s no driver for rapid recovery. The W (the double dip) — I guess there might be a W and it will be fuzzy, so you won’t be able to see it. But it certainly is looking like a weak recovery with a possible setback. What drives those V-shaped recoveries is the housing sector. We had this enormous housing problem which imploded. Although housing is probably stabilising now, there’s still a huge overhang of excess building and there are bad memories of what happened. We’re not going to have a traditional housing-led recovery. So, we don’t have the set-up for a traditional, strong bounce back.
–There you have it ! question is what do we make out of this ? well, one thing is for sure, we are definitely not in a fast recovery mode “V” shape recovery. We are in a “W” or a “U” share recovery mode there is little difference between how you draw “U” or “W” if a child drew it they have the potential to look same < go figure>. Most important thing to notice here is not what shape of recovery we are in. But, if you paid attention all 3 of these are talking about ‘RECOVERY’ meaning..sooner or later we would be on our way to recovery. That view has not changed yet ! and that’s a good news if not the only good news.
–It could be better if these economist could tell normal people like us where, at which location we are on any of these letters when it comes to recovery such as have we touched bottom of the U ? are we on the ascending side of ‘^’ in the ‘W’ or the descending ? then we could gauge what to expect next. But that information is greatly missing.
–However when I dig deeper to find an answer to these question this is all I could find.
Fed’s Fisher Says Prolonged Period of ‘Sluggish’ Economy Likely
By Vivien Lou Chen
Sept. 4 (Bloomberg) — Federal Reserve Bank of Dallas President Richard Fisher said the U.S. economy will probably undergo an extended period of slow growth
while facing “financial headwinds” that will take years to wane.
“We are likely to see a prolonged period of sluggish economic performance and uncomfortably high unemployment as businesses reallocate capital and labor,” Fisher said yesterday in a speech at the University of California in Santa Barbara.
Stiglitz Says U.S. Economic Recovery May Not Be ‘Sustainable’
By Michael McKee
Sept. 4 (Bloomberg) — The U.S. economy faces a “significant chance” of contracting again after emerging from its worst recession since the 1930s, Nobel Prize-winning economist Joseph Stiglitz said.
“It’s not clear that the U.S. is recovering in a sustainable way,” Stiglitz, a Columbia University professor, told reporters yesterday in New York.
Economists and policy makers are expressing concern about the strength of a projected economic recovery, with Treasury Secretary Timothy Geithner saying two days ago that it’s too soon to remove government measures aimed at boosting growth.
–Now let us look at these views with some data to back it up…the thing is all this recovery thingy, it’s fueled by government intervention and throwing money at the problem ( typical American way of solving any problem). Here is the data that indicates that recovery is very difficult to predict/sustain or claim. The US is 70% consumer economy and if recovery was on it’s way it would be creating jobs, jobs bring money that people would spend either pay down debt or buy new things, in either case when consumer spend - banks make money. Let us look at each of these one by one to see if we are in recovery or not.
-First let us look at jobs - then we look at spending and then we look at banks.
ADP Says U.S. Companies Cut 298,000 Jobs in August (Update2)
By Timothy R. Homan
Sept. 2 (Bloomberg) — Companies eliminated more jobs than forecast in August, a private survey indicated today, signaling that employers have yet to gain confidence about a recovery from the deepest recession since the 1930s.
U.S. Economy: Companies Cut More Jobs Than Forecast in August << this is bad news >>
By Timothy R. Homan and Shobhana Chandra
Sept. 2 (Bloomberg) — U.S. companies cut more jobs than forecast in August and boosted their workers’ productivity the most since 2003 in the second quarter, signaling employers are seeking to cut costs further even as the economy stabilizes.
A survey by ADP Employer Services showed businesses reduced payrolls by 298,000 after a 360,000 decline in July. The Labor Department in Washington said productivity, a measure of employee output per hour, rose at a 6.6 percent annual rate in the three months through June.
U.S. Recovery Leaving Workers Jobless May Spur Company Profits
By Carlos Torres
Sept. 5 (Bloomberg) — Employers kept Americans’ working hours near a record low in August, signaling that economic growth is poised to reward companies with added profits while postponing any recovery in the job market. The average workweek held at 33.1 hours, six minutes from the 33 hours in June that was the lowest since records began in 1964, the Labor Department said yesterday. The report also showed that while payrolls fell by the least since August 2008, the unemployment rate rose to a 26-year high of 9.7 percent.
–As you can see from article above not only that job losses are continuing but since job losses actually may spur company profit what kind of hope there may be for people how lost jobs. But fear not media is full time at work…in a consumer economy where jobs (pay/salary) rules everything we are going to have ‘JOBLESS RECOVERY’. This term is fully sold to everybody around the world, next very soon we are going to find we would have ‘RECOVERY LESS RECOVERY” check this next article out this is how bad news is made to look good, kind of putting lipstick on a pig.
Pace of US job cuts appears to ease < hi, time to celebrate >
By Alan Rappeport in New York
Published: September 2 2009 14:00 | Last updated: September 2 2009 16:04
US companies shed the fewest number of jobs in nearly a year last month, as the sharp pace of job cuts slowly started to ease.
Separately on Wednesday the commerce department said that US factory orders increased in July for the fifth time in the last six months as companies have begun to replenish their stocks.
– Now, let us see how the company’s replenished stocks of good and products are doing…due to increased demand in July and this will clearly show that lipstick is being put on the pig.
Merchants get punished in July < no kidding >
Retailers suffered their second-worst monthly sales in July, a crucial month for sellers since it also starts the back-to-school shopping period.
By Parija B. Kavilanz, CNNMoney.com senior writer
August 6, 2009: 10:42 AM ET
NEW YORK (CNNMoney.com) — Merchants suffered their second-worst monthly sales of the year in July — a trend that could signal that the back-to-school shopping season, the second-biggest selling period of the year, will be much weaker than expected.
– Not only the pace of job losses was reducing, but commerce department saw companies replenishing stock as positive sign. You get the point, you must be very careful in what you read in the media. Here is the reason why this was going to happen, here is the reason why merchants were going to be punished, writing was on the wall.
U.S. Incomes Fall 1.3%, Biggest Drop in Four Years (Update2)
By Shobhana Chandra
Aug. 4 (Bloomberg) — U.S. personal incomes tumbled 1.3 percent in June, more than forecast and the biggest drop in four years, signaling that consumer spending will take time to recover. The decline partly reflected the unwinding of one-time transfer payments from the Obama administration’s stimulus plan, which boosted incomes 1.3 percent in May, figures from the Commerce Department showed today in Washington. Spending rose 0.4 percent in June as prices climbed. Adjusted for inflation, purchases fell 0.1 percent, the report showed.
The worst economic slump in seven decades eased last quarter as government spending programs started to take hold, underscoring forecasts the recession will end by the end of the year. The recovery is likely to be muted as job losses and falling home values cause Americans to boost savings and limit spending, which accounts for about 70 percent of the economy.
–Here is even a bigger reason not to expect consumer leading the recovery.
Consumer bankruptcies jump 34%
Bankruptcy filings spike in July as households are squeezed by unemployment.
By Catherine Clifford, CNNMoney.com staff writer
August 4, 2009: 12:23 PM ET
NEW YORK (CNNMoney.com) — Consumer bankruptcies surged in July to the highest level since October 2005 as U.S. households struggle under the burden of past debt and rising unemployment.
Total filings reached 126,434 in July, a 34.3% increase from the same period a year ago and an 8.7% increase over June, according to a report released Tuesday from the the American Bankruptcy Institute.
–May be there is no recovery in job market, no recovery in consumer spending, may be there is recovery in financial sector and if financial sector recovers well, then all is good, once again there is be more money to spend, more people to hire (even though less people have higher productivity). All will be well after that….. here is a view on the banks.
5 bank failures bring 2009 tally to 89
Sep 4, 2009, 10:17 p.m. EST,
By John Letzing, MarketWatch
SAN FRANCISCO (MarketWatch) - Five banks in Missouri, Iowa, Illinois and Arizona were closed by regulators Friday, bringing the number of U.S. bank failures in 2009 to 89 as the effects of the credit crisis continue to ripple through the financial system. Two suburban Chicago banks failed in Illinois, the Federal Deposit Insurance Corp. said:
–Now let us see what lies ahead…..for banks.
1,000 Banks to Fail In Next Two Years: Bank CEO
Published: Thursday, 27 Aug 2009 | 10:29 PM ET
By: Natalie Erlich
Writer/Producer
The US banking system will lose some 1,000 institutions over the next two years, said John Kanas, whose private equity firm bought BankUnited of Florida in May.
–Video as well.
–Humm, what’s next ? like I said earlier ‘Recovery Less Recovery’…that news is coming pretty soon on the media of your choice.
Jobless recovery that’s a given. That concept has been sold to you already….
Sep 4, 2009, 10:35 a.m. EST
U.S. unemployment rate jumps to 26-year high of 9.7% Nonfarm payrolls fall 216,000 in August, 20th consecutive monthly decline
- Thankyou! [↩]
1 response so far ↓
1 John Hoegy // Sep 11, 2009 at 8:14 am
Good article. When the brightest minds in economics keep changing their tune, this makes me think that perhaps we are swimming into uncharted waters. Recovery-less Recovery - hmmm…
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