It Isn’t Terrifying, But It Sure Ain’t Cheerful Either (or) Happy Halloween
It’s Friday and it’s Halloween. So I’m warring with my own desire to take it easy and keep it light, and the need to completely freak you out. I really was much more inclined to write something short, quick and casual - though still highly informative and witty - when sadly, I noticed that the U.S.’s growth rate has shrunk again. So, since that is much more noteworthy than oil sliding again, I suppose I’ll keep with the holiday and try to terrify you as much as possible. These days, it isn’t really that much of a task.
While the economy still grew, it only did so at a 2.8% pace in the second quarter, and third quarter results are likely to be just as bleak if not more so. Economists predicted that the drop would be at 0.5%, though in some small relief, it was only recorded at 0.3%.
While experts are busy weighing in on whether we’re “officially” in a recession or not, no “official” word has been made as I write. To make it one for the history books, the National Bureau of Economic Research has to put their two cents in, and so far, they’ve remained silent.
However, if you’re looking for a little confirmation of your worst nightmares, Jeff Frankel, a professor at the Harvard Kennedy School who just happens to be a member of the private-sector committee that determines whether the economy is in a recession, has stated we’re in one.
Hold Onto Your Hats: There’s More.
And that isn’t the only piece of glum news out there:
- Final Sales to domestic purchasers are down 1.8%, a decline unmatched in 17 years.
- Consumers are still obviously shaky, as evidenced by their 3.1% drop in buying. That marks not only a first decline in 17 years, but also the biggest drop in 28 years.
- Business investment fell 1%.
- Investments in homes fell again. Since they have been falling for the last 10 quarters now, that isn’t really all that surprising.
Not surprisingly, the boost that tax rebates and stimulus checks provided in previous months just didn’t have the power to make any lasting difference. And why should they? I’m still dumbfounded that anybody thought they would. It was a quick and temporary fix, and thinking that it was anything else proved a dangerous and costly mistake.
In the same breath (though not the same paragraph) I’ll admit that I enjoyed the $600 I got. And while I disagree with the second stimulus package they’re toying with right now, I’ll take that money too if they want to send it to me.
But right now we don’t even have that band aid to rely on, and the government spending, exports and investments in business structures that helped rally our national numbers before won’t be nearly as impressive in the waning months of ‘08 or the beginning of ‘09. Christmas could still account for a small boost, but as I cautioned before, it won’t be anything close to the ones we’ve seen in previous years.
A number of economists believe the economy will contract at around 2.8% by the fourth quarter, and pull back further by 1.5 in the first. If that happens, even the hard-core, definition-following analysts (among whose number, I belong) will have to admit that yes, the U.S. in officially in a recession.
http://www.smartprofitsreport.com/archives/2008/healthcare-still-strong.html
Friday, October 31, 2008 — by Jeannette Di Louie, Assistant Editor of Mt. Vernon Research
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