Posted on 01/08/2008 12:55:00 PM PST by blam
Recession in the US 'has arrived'
Merrill said Friday's employment figures confirmed the recession
The feared recession in the US economy has already arrived, according to a report from Merrill Lynch. It said that Friday's employment report, which sent shares tumbling worldwide, confirmed that the US is in the first month of a recession.
Its view is controversial, with banks such as Lehman Brothers disagreeing.
But a reserve member of the committee that sets US rates warned that it could do little about the below-trend growth expected in the next six months.
"I am concerned that developments on the inflation front will make the Fed's policy decisions more difficult in 2008," Charles Plosser, president of the Federal Reserve Bank of Philadelphia said.
He was referring to the problems faced by the US Federal Reserve, which might want to cut interest rates to avoid a recession, but is worried about inflationary factors such as $100-a-barrel oil.
'Significant decline'
An official ruling on whether the US is in recession is made by the National Bureau of Economic Research, but this decision may not come for two years.
The NBER defines a recession as "a significant decline in economic activity spread across the economy, lasting more than a few months".
It bases its assessment on final figures on employment, personal income, industrial production and sales activity in the manufacturing and retail sectors.
Merrill Lynch said that the figures showing the jobless rate hitting 5% in December were the final piece in that puzzle.
"According to our analysis, this isn't even a forecast any more but is a present day reality," the report said.
'Actual downturn'
But NBER president Martin Feldstein denied Merrill's claims.
"I think we're not in a recession now," he told CNBC.
"But I think there is a serious risk that it could get worse and we could see an actual downturn," he added.
Merrill said that the current consensus view on Wall Street that there is a good chance of avoiding a recession is "in denial".
It also objected to the use of euphemistic terms for the state of the economy.
"To say that the backdrop is 'recession like' is akin to an obstetrician telling a woman that she is 'sort of pregnant'," the report said.
Housing figures
There were further signs of the housing slowdown that has sparked off the problems in the US economy in home sale figures.
Pending sales of existing homes fell 2.6%, according to the National Association of Realtors, which saw its pending sales index drop to 87.6 in November, 19.2% below the point it was at a year ago.
The figures were better than expected, however, because October's index reading was revised upwards from 87.2 to 89.9.
Anyone that takes the BBC seriously on any topic, let alone the American Economy, needs their head examined.
“Everything that should be up is down and everything that should be down is up!”
Vote for the third party - It can’t get any worse....
Oh sorry - flashbacks..
Well, hell, if you’re in sales, sell, sell, sell now, before your prospects decide there is a recession.
So Merrill Lynch doesn’t know the definition of a recession?
I said to short the index futures on December 12th, and reiterated that this morning. Hope someone listened.
Well, if the BBC says so, it must be a lie.
The stock market continues to decline as we head into the final half-hour of trade. The comments made by AT&T's (T 38.07, -2.96) CEO fueled broad-based selling pressure.
AT&T's CEO said the company is disconnecting more home phone and broadband Internet customers for failing to pay their bills, according to Bloomberg.com. Traders are fearful that this may be a sign of recession. The telecom sector is currently down 6.7%, after being down more than 7%. It was in positive territory prior to the report.
5%?????? 5% has long been regarded as FULL EMPLOYMENT! People have gotten so used to an outstanding economy, that a better than average one is looked at like a recession. If people keep talking down the economy, they're going to get the recession the want. Consumer confidence is key.
Yeah? Well the rest of the world define a recession as an actual decline in economic growth for two consecutive quarters.
Merrill Lynch said that the figures showing the jobless rate hitting 5% in December were the final piece in that puzzle.
In a sane world, we used to call unemployment figures under 6% full employment!
What idiocy!
Ask 2 economists about Wall Street, and you'll get 3 opinions.
The economy grew at 4.9% last quarter, that's hardly a recession.
Between the Brit's opinion of our "quaint" political process and wishful thinking about our impendig economic recession I'm starting to grow very disgusted with the lot of them.
Conveniently just in time for an election year.
I know. All this tells you is the writers political affiliation.
You're right..5% is about full employment. 3.5-4% is scraping the bottom of the barrel.
Locally, we were at 2.8% for a period of time. It was tough to get service, anywhere. And the quality of service at places like retail + restaurants, stunk. Coincidence? I think not.
I thought the definition of recession was 2 consecutive quarters of negative growth?
Phew, it's only a Recesion. For a while there I thought it might be a Recession which is almost twice as bad. :O)
A Recession is two consecutive quarters of negative economic growth. The BBC is economically illiterate.
Only if a Dem is in the White House. If a Republican is president, a recession occurs at the whim of the media.
In our area it’s down.
Merrill Lynch has been caught more than a few times.
Of all the so called experts the media likes to quote, when I hear Merrill Lynch, I go in auto ignore mode.
Probably is 2, I couldn’t remember. 3 consecutive months would be a complete quarter so I should have gone with 2.
‘A Recession is two consecutive quarters of negative economic growth. The BBC is economically illiterate.’
I know, then again, unlike the BBC I’m actually an American business owner.
‘Pay no attention’ to those recession warnings.
‘free trade has produced good jobs in this country’
‘only a prosperous economy can continue to export jobs, factories and industries’
‘it’s only paper we are sending to China’
Elect me and I will keep all this prosperity going.
That's all this is. George Soros and the rest of the moneyed socialists have officially launched their campaign of lies to get the president they want. If they can get the lie out there now that there is a recession, by November it will have penetrated the brains of enough fat, happy, clueless morons that (probably) Obama will walk into the White House.
This is all about the people who are trying to reshape America into a socialist utopia getting the puppet president that they need to implement their agenda.
December 12 2007 - The unemployment rate fell to 5.3% - down 0.1%
Caroline Flint, Minister of State for Employment (UK)said:
“It’s great to see the number claiming unemployment benefit fall for the fourteenth month in a row to reach its lowest level for over thirty years.”
In what area are you a business owner, if I may ask?
Just in time to get hillary going down in flames off the front page.
Seriously, they can’t play the Iraq=quagmire card anymore, so this is next in line. A lot of FReepers have been predicting there would be significant talking down the economy to put a dem in the WH.
That's all this is. George Soros and the rest of the moneyed socialists have officially launched their campaign of lies to get the president they want. If they can get the lie out there now that there is a recession, by November it will have penetrated the brains of enough fat, happy, clueless morons that (probably) Obama will walk into the White House.
This is all about the people who are trying to reshape America into a socialist utopia getting the puppet president that they need to implement their agenda.
Precisely. That is how the same people got Clinton elected in 1992.
You have freepmail.
;) Back at ya.
The Brits PRAY for a bad economy like ours.
While I agree wholeheartedly with the adage that correctly notes that newspapermen have successfully predicted 12 of the last 3 recessions, I will also say that I believe firmly that we are indeed in recession.
I’ve been tracking the situation for 11 months as part of my job as a consumer marketer and saw behavioral real changes last February. Recent numbers can get worse if and when when the employment, etc. statistics are revised, as they invariably are, we will start to get the real story.
I won’t make any personal predictions regarding the impact of a recession on specific people or classes or guesses toward the magnitude of what’s going on - and respect that many folks won’t be affected or pinched - but denying the realities of this economy is going to look real silly in hindsight. The US economy is very cyclical, and when you start to look at the internal graphs, it’s easy to see where we are in the cycle. Hint: after things run like gangbusters for a few years, they tend to slow down for a bit.
I looked at the Merrill Lynch report this AM and believe what they’re looking at accurately predicts the bump in unemployment that some freepers are citing. Again, revision of the stats in time could put the December numbers past “magical threshhold” in a short time as well.
That's what I say. Anyone who didn't live through the late 70's doesn't have a clue!
Ah yes, just in time for the 2008 election cycle. Like clockwork.
Two quqrters in decline is a recession.
This piece is but yet a lefty attempt to talk the economy down.
The employment figures are being lowballed to be raised again after the primary season.
Once I loaded iTunes I made it run
Made it race against time.
Once I loaded iTunes
Now it's done
Brother, can you spare a Zune?
How is the average stock market valuation vs earnings doing? Anyone?
Since this article is written for 11/8/2008 I think everyones getting a bit ahead of themselves.
The employment data are noisy (i.e., subject to sampling error) but I don’t think they are fraudulent.
The markets must drop 20% before it’s considered a recession.
4.9% growth is a bad economy, if you depend on recessions for a living, like Democratic challengers do.
Does anyone know the real unemployment figure? Does anyone bother to calculate it?
By real, I mean the actual or at least estimated number of people out of work but looking for work, not the stats we get where people are removed from unemployment stats if they’ve been unemployed for more than a few months.
If that stat is calculable and/or available, that would probably be a good place to look to see the condition of the job market.
No. It’s only the usual yearly lock on employment done a month early, in hopes that it will choke oil prices. Oil will go up anyway, and the dollar will continue to fall. The economy won’t be that bad.
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