Recession Over? Fat chance...

[Berkshire_Bull]

2/3 believe the market will not go up the intermediate future
Dec. 1 (Bloomberg) -- Gold rose to a record above $1,200 an ounce in New York trading as a weaker dollar, rising government debt and concern over Iran’s nuclear program spurred investors to seek a haven.

Gold Climbs to Record on Inflation Outlook as Dollar Declines - Bloomberg.com

Commodities are going to be a great place to be. I'd have no problem with 5-7% in gold.

 

[Martha]

Personally observed recession signs: Neighboring business went out of business. Sister's BF got his hours cut and lost his health insurance. Friend's mid size business has laid off a number of people and Christmas sales are down 25% from last year, which were down 40% from the prior year. Relative still laid off after more than a year and can't find a job.

My economist cousin believes that the market is too high and will go down.

 

[W2R]

My economist cousin believes that the market is too high and will go down.

I am not an economist, but I would take that one step further to say that the market will go down, then up, then down, then up (lather, rinse, repeat). OK, sorry if that was a little snarky but I couldn't help myself!

Anyway, I would not completely discount the possibility that the general trend could be up for a while, given that we have a bazillion baby boomers approaching retirement and (hopefully) building their retirement accounts. Supply and demand. On the other hand, my crystal ball is a bit cloudy regarding future market trends.

 

[DblDoc]

I am not an economist, but I would take that one step further to say that the market will go down, then up, then down, then up (lather, rinse, repeat). OK, sorry if that was a little snarky but I couldn't help myself!

Anyway, I would not completely discount the possibility that the general trend could be up for a while, given that we have a bazillion baby boomers approaching retirement and (hopefully) building their retirement accounts. Supply and demand. On the other hand, my crystal ball is a bit cloudy regarding future market trends.

Mine just shows the world over-run by orcs and ending in flame and destruction...

DD

 

[Moemg]

The recession is far from over here in Florida .There are still tons of foreclosures . My SIL lost his job and is having a hard time finding another . My SO' s son's business is so rocky we are not sure it will survive and his other son constantly worries about layoffs .

 

[W2R]

Mine just shows the world over-run by orcs and ending in flame and destruction...

DD

LOVE IT!!! Now that is a NEAT looking crystal ball.

 

[Martha]

I am not an economist, but I would take that one step further to say that the market will go down, then up, then down, then up (lather, rinse, repeat). OK, sorry if that was a little snarky but I couldn't help myself!

Anyway, I would not completely discount the possibility that the general trend could be up for a while, given that we have a bazillion baby boomers approaching retirement and (hopefully) building their retirement accounts. Supply and demand. On the other hand, my crystal ball is a bit cloudy regarding future market trends.

Yeah, for sure. She believes that it will occur in the near term. I believe that I have no ability to predict the near term or even the long term. But she does know a lot more about our economy and how it works that I ever will.


I stopped in at my old workplace yesterday. Everyone is very busy there, some because it is a recession and the legal fall outs that inevitably occur. So even bad times can be good times for some. And those lawyers support families and staff and staff families and they can buy things from cars to groceries, helping the economy.

When I left the elevator opened up on the office and five blue suited lawyers exited the elevator. I only knew one of them, the rest were new young associates. The firm newsletter spoke of yet another baby pool. People working, people making babies. Just like the good old days.

 

[TargaDave]

Interesting thoughts. I certainly sense a disconnect (not just a lag) between Wall Street and Main Street. Hard for me to imagine anything but a tepid U shaped recovery with lots of fits and starts for both the market and the economy.

The coastal resort area we are FIRED in (Outer Banks, NC) continues to do ok with with summer vacation home rentals. The strong restaurants, retailers, and activity businesses survive, and sometimes thrive, but the weak ones go under quickly. In general people don't want to give up those 1-2 weeks of precious vacation but they are spending with extreme caution. Real estate sales and construction are still in freefall with the bottom still not in site. Many long distance vacation home owners who purchased recently are well underwater with neg cash flow. Not surprising to see many short sales and foreclosures. Things are selling at the right price and aging boomers with $ looking for retirement-vacation spots are actually helping to stabilize things

Commercial and Charter fishing were both struggling before the crisis, and now it's even tougher with the economy and dwindling fisheries both contributing. My semi-ER occupation (kiteboarding) is doing pretty well considering. Plenty of affluent adventure types still spending $$ to travel, learn the sport, and buy gear, although it's just a teeny tiny cottage industry to start with.

My old VC backed biz was 6 years of constant uncertainty so at least I got use to the environment

 

[DblDoc]

Just more evidence that this will be a prolonged recovery: Productivity revised down, still best in 6 years - MarketWatch

Companies are getting leaner and meaner, doing more with fewer workers and paying them less to do it. It will take time for the pendulum to swing back the other way which bodes poorly for the spending power of the US consumer and likely a long, slow recovery.

DD

 

[harley]

Hard to say. Personally, I was getting 10-20% raises in the early 80s, then 2-3% until the late 90s, then back to 7-15% for a few years, then back to 3% until I retired. What goes around comes around. If you push something hard enough, it WILL fall over.

 

[rescueme]

Companies are getting leaner and meaner, doing more with fewer workers and paying them less to do it. It will take time for the pendulum to swing back the other way which bodes poorly for the spending power of the US consumer and likely a long, slow recovery.

DD

That's the truth! My DW is certainly getting meaner since her company has had massive layoff's, she's still there (doing more than ever) and yelling at me every day when she comes home from w*rk (that's OK, I'm retired )...

Funny thing is that she was to retire the same time as me (a bit over 2.5 years ago), but decided to stay in the workforce.

But hey - productivity is up in the U.S. and I can't see employment going up if you can still fill the few orders with the current staff.

Like most of the former downturns (and I'm older than dirt, so I remember a lot of them), employment is the last to return. OTOH, it was the last to get hit after an observed downturn start, so it's just more of the same....

 

[LARS]

But hey - productivity is up in the U.S. and I can't see employment going up if you can still fill the few orders with the current staff.

Like most of the former downturns, employment is the last to return.

The problem on the employment front is that when demand returns employers are going to take up initial slack with existing worker base. The avg. hours worked per week per worker in the country has dropped along with outright unemployment. Hours per worker will go up first before any hiring (and the slack in the system is not insignificant). Put another way, high unemployment is going to be with the US for a considerable time.

 

[TromboneAl]

As long as the market stays up until rebalance day (Jan 4)...

 

[Gone4Good]

The problem on the employment front is that when demand returns employers are going to take up initial slack with existing worker base.

This is always true. Employment is a lagging indicator. But it is one that is now starting to improve . . .

US Unemployment Rate Down to 10.0% from 10.2%

The net job loss of 11,000 workers in November was well below expectations. Prior period revisions have all been positive (fewer job losses than originally estimated). If that trend held in November, then we probably added jobs in November for the first time since December 2007.

 

[LARS]

This is always true. Employment is a lagging indicator. But it is one that is now starting to improve . . .

First, one months data (November) doesn't mean anything.

Second, you have missed the point. Go read some of David Rosenberg (ex Merrill Lynch chief economist) if you want to get into the details.

But in summary, the point is that hiring will not be seen in new jobs, but instead through increased hours of existing workers. The slack in worker hours going back to historical levels is equal to approximately 6 million new jobs (if my memory serves). Until that slack is taken up there will not be meaningful employment gains (re-hiring).

That is the point of my post.

 

[Bestwifeever]

I know a few young people who have been told during job interviews that firms are not filling jobs until the economy picks up. I also know a few young people who are up to their asses in alligators at work right now because staff has been cut to the bone.

So based this completely nonscientific and purely anecdotal evidence (but when has that ever stopped me before ) I think once the economy picks up, there is is no way existing staff can handle an increase in production--they can barely handle the work they have now--and there will be new hires.

 

[Gone4Good]

But in summary, the point is that hiring will not be seen in new jobs, but instead through increased hours of existing workers.

Yes, I understood. But this is also not new. It happens after every recession. And thus far, it has never prevented a recovery.

Besides, we don't actually need to see work weeks get back to where they were before the collapse to see net increases in hiring. The industries with the largest slack (homebuilders) will not likely be leaders in any recovery. Other areas have fared better (software, healthcare, etc) and may need to start hiring sooner even though their are plenty of homebuilders working part time, or not at all.

And we're not talking about "one month's" worth of employment data. But rather a downward trend in job losses since January 2009.

I also wonder to what extent businesses over did the layoffs during the downturn. Everyone was preparing for the apocalypse. But it didn't happen. In fact, profitability has turned out better than anyone had hoped. If businesses cut too much last year in preparation for a deeper recession than we actually got, they may need to hire more quickly than any of the prognosticators currently think.

 

[LARS]

And we're not talking about "one month's" worth of employment data. But rather a downward trend in job losses since January 2009.

From Rosenberg this morning:​

WAS THE DROP IN THE U.S. UNEMPLOYMENT RATE A BIG DEAL?
[FONT=Franklin Gothic Book,Franklin Gothic Book][FONT=Franklin Gothic Book,Franklin Gothic Book]In our opinion, the answer is no. This was the eighth time we have seen the unemployment rate go down in a month since it bottomed back in October 2006. Nothing moves in a straight line. The peak still lies ahead of us. [/FONT][/FONT]​

[FONT=Franklin Gothic Book,Franklin Gothic Book][FONT=Franklin Gothic Book,Franklin Gothic Book]In the prior cycle, the unemployment rate bottomed on April 2000, at 3.8% and peaked at 6.3% on June 2003. During that time, we saw the jobless rate fall five times. In the early 1990s cycle, the unemployment rate actually fell no fewer than six times. Declaring victory because of a one-month wiggle can be dangerous. Especially since a key reason why the jobless rate dipped was because the ranks of discouraged workers who exited the labour force due to grim job prospects jumped 60,000 to 357,000 last month. [/FONT][/FONT]​

[FONT=Franklin Gothic Book,Franklin Gothic Book]He also points out that if indeed unemployment has peaked that is NOT good news for earnings because most of the gains companies have been showing has been driven by cost savings (i.e. laying off employees). [/FONT]​

 

[Snidely Whiplash]

From Rosenberg this morning:​

WAS THE DROP IN THE U.S. UNEMPLOYMENT RATE A BIG DEAL?
[FONT=Franklin Gothic Book,Franklin Gothic Book][FONT=Franklin Gothic Book,Franklin Gothic Book]In our opinion, the answer is no. This was the eighth time we have seen the unemployment rate go down in a month since ...[/FONT][/FONT]​

****** worthless drivel by an "expert" deleted *******​

... s companies have been showing has been driven by cost savings (i.e. laying off employees). ​

My goodness, did you even bother to read ... Yrs to Go's excellent post right above your last message?

This recovery is proceeding in classic textbook fashion.

 

[Snidely Whiplash]

Yes, I understood. But this is also not new. It happens after every recession. And thus far, it has never prevented a recovery.

Besides, we don't actually need to see work weeks get back to where they were before the collapse to see net increases in hiring. The industries with the largest slack (homebuilders) will not likely be leaders in any recovery. Other areas have fared better (software, healthcare, etc) and may need to start hiring sooner even though their are plenty of homebuilders working part time, or not at all.

And we're not talking about "one month's" worth of employment data. But rather a downward trend in job losses since January 2009.

I also wonder to what extent businesses over did the layoffs during the downturn. Everyone was preparing for the apocalypse. But it didn't happen. In fact, profitability has turned out better than anyone had hoped. If businesses cut too much last year in preparation for a deeper recession than we actually got, they may need to hire more quickly than any of the prognosticators currently think.

. . . Yrs to Go this is the best message of the thread, and you are exactly right on all counts. Those who cant see that this recession is making a classic recovery (barring any unexpected geo-political issues) are burying their head in the sand and probably wont see the light until the index' again start making new highs / just before the next recession.

 

[W2R]

I know a few young people who have been told during job interviews that firms are not filling jobs until the economy picks up. I also know a few young people who are up to their asses in alligators at work right now because staff has been cut to the bone.

So based this completely nonscientific and purely anecdotal evidence (but when has that ever stopped me before ) I think once the economy picks up, there is is no way existing staff can handle an increase in production--they can barely handle the work they have now--and there will be new hires.

Oddly, despite several attempts during the past half year to fill my old position, nobody even remotely qualified has applied for it. Apparently the job shortage doesn't apply to physical oceanographers or engineers.

The people at my old workplace are indeed up to their a$$es in alligators because my (physical sciences) unit has decreased to half its previous size during the past few years. They just can't seem to find qualified replacements for those who leave or transfer to other parts of the organization, despite advertising on the usual government jobs site at usajobs. Not only that, the workload in our unit had been increasing by leaps and bounds. I was anticipating a crushing workload in 2010 had I not retired.

Believe me, it was a perfect time to retire.

 

[Zathras]

Some people seem to think that the number is uniform.
A loss of 11,000 jobs doesn't meant that more jobs were not lost, nor that some jobs were not gained. Sure, our economy may have lost 250,000 jobs (totally made up number), but it ALSO gained 239,000 jobs.
Yes, some people will contnue to see losses and businesses going under, but more and more people have seen job and business growth.
This is not to discount the people going through a tough time, or seeing others in their area go through a tough time. It is just to say that what you (or I) see in our local area doesn't necessarily translate to the entire economy.

 

[LARS]

My goodness, did you even bother to read ... Yrs to Go's excellent post right above your last message?

This recovery is proceeding in classic textbook fashion.

I suggest you worry less about my reading and more on your personal comprehension of the current global economic landscape.

There is nothing text book about the current economic situation. For you to suggest such, demonstrates your lack of understanding of the titanic forces at work.

 

[HFWR]

I suggest you worry less about my reading and more on your personal comprehension of the current global economic landscape.

There is nothing text book about the current economic situation. For you to suggest such, demonstrates your lack of understanding of the titanic forces at work.

Just as this possibility exists, so does the possibility that you have it wrong.

Just sayin'...

 

[LARS]

Just as this possibility exists, so does the possibility that you have it wrong.

Just sayin'...

I don't think anyone with a grasp of the current financial situation would disagree that the current environment is not text book. One need look no further than the US governments' trillion dollar plus involvement in propping up the financial industry and markets to understand the statement.

That statement is an absolute and does not speak to the possible direction/intensity/duration of any recovery. So your comment about possibilities is not relevant.

Just sayin'...