Skip to comments.The Market Is In For A Rude Awakening
Posted on 04/27/2012 3:56:59 AM PDT by blam
The Market Is In For A Rude Awakening
April 27, 2012, 4:12 AM
The overwhelming weight of the evidence over the past four to six weeks is that economic growth has peaked and is now slowing down. In that period we have seen either disappointing results or actual declines in the following important economic indicators: core durable goods orders, the Chicago Fed National Activities Index, initial weekly unemployment claims, new home sales, existing home sales, payroll employment, the NFIB Small Business Index, construction spending, the ISM Non-Manufacturing Index, personal income, the Kansas City Fed Index, the Philadelphia Fed Survey, industrial production, the Empire State manufacturing index and the NAHB Housing Market Index.
These indicators cover most of the U.S. economy and generally provide a good idea of where activity is headed. In this regard we point out that the Chicago Fed computes and puts out a little-followed monthly indicator called the Chicago Fed National Activity Index (CFNAI), a weighted average of 85 monthly economic indicators covering production, income, employment, hours worked, personal consumption, housing sales, orders and inventories. The CNFAI has declined for three consecutive months and entered negative territory in March. From what we see so far in the current numbers, another drop is likely in April as well. The significance of the above data is reinforced by ECRI Weekly Leading Indicator.
On December 10th the ECRI dropped to 5.25% below a year earlier, a level that indicates a high probability of recession. In fact, since 1968 the ECRI leading indicator has declined to that level or below only six times, and each time a recession began either a few months before or a few months after. There has never been a false call, and this is the first negative call since January 2008.
(Excerpt) Read more at businessinsider.com ...
“All in all, the economic recovery is not sustainable, and we doubt that the Fed can do anything more.”
Given the source, that screams volumes. Heads up.
If that was a peak it was a helluva small mountain.
"Paul Krugman is now so far into outer space with ridiculous economic proposals that even Helicopter Ben Bernanke recognizes Krugman's proposals as "reckless".
Maybe Krugman does realize this and just wants to speed up the process? No, he thinks that inflation is like a tool, or a lubricant, just spray on the right amount. He doesn't understand inflation psychology because he has utterly no clue how most people survive by hanging on to their jobs and saving despite Bernanke's war on savers.
so...........what’s happened since 2008 has been a nice awakening?
Obama wants more stimulus money.
Of course he’s more ‘flexible’ to get it after November, if re elected.
No economist should be surprised by this conclusion. We are in a classical Keynesian Liquidity Trap and monetary policy cannot provide any escape in real terms. Fiscal policy is the only way out of this mess, and that means lower taxes at the corporate and personal level coupled with less gov't in the market place, especially regulation. At every turn, Obozo is doing exactly opposite what should be done to move us out of recession.
My recollection from 2008 was that the economy was not great but no one was really screaming about a Crisis. That is, until the time when Obama triumphed over Hillary McCain was pretty obviously going to be defeated. At that point, the economy imploded as businesses said "Oh, sh*t!" and stopped hiring and banks stopped lending. Yeah, there was a lot more to it, but I think an Obama presidency frightened the markets.
In 2012, the economy has been lackluster. Sure, the media gives happy talk about a recovery and new jobs being created, but we know things are weak. Still, no one has been panicking over the past few months -- until now. Romney is pretty definitely the nominee. He's weak. He will not win. Which means a second Obama term. And now the markets are panicking.
Perhaps not precisely the cause, still, I think economic truths are more plainly spoken when people stare fear in the face.
...”Krugman need not worry. Inflation is now and in our future”...
Anyone who buys gas and groceries knows we have big time inflation right now. It is the most cruel and HIDDEN tax on the American people. What they have done and are doing to us is a crime and they are doing it because they now have about half of us on the government dole. We are sheep..We are the frog oblivious to the fact that we are being boiled. I weep for my country. I weep for the dearth of honest and courageous men and women in authority positions in our institutions. Very few are willing to risk their lives and their fortunes to secure continuing freedom for us. God, empower some of those people among us who have these traits to get the visibility they need to help our citizens understand the peril we are in.
My IRAs and other retirement funds were moved to Money Market counterparts a couple months ago to try to protect teh principle. Since that time, the ups and downs have not hurt me with the inability to “grow” my money. If it weren’t for the tax penalties, it would all be in my 0.5% saving account...
In other news, I finished my chicken coup and got the 13 pullets and one rooster comfortably situated. And we start planting in our 1/4 acre garden tomorrow.
Whenever I hear them talk of another “stimulus” or QE, I immediately start watching coinflation.com.
I’m adding (useful) buildings to my farm as some are buying gold, etc. Getting all the tools as well - tractor, chain saw, guns, ammo, gardening supplies, you name it.
The “final option” will be to monetize this mess. It looks like we might be getting there.
———we have big time inflation right now———
I would argue the inflation is not uniform nor universal and thus not yet big time. Gold has stopped rising and the presently rising prices for oil and food are lagging the $ devaluation that is represented by the rise in the price of gold.
When the wage inflation begins, as it eventually will, then the inflation will be big time. Wage inflation in the current economy will be the ultimate lagging inflation indicator.
It is unclear to me how to assess and compare the inflation component of GDP growth. It would seem that some portion of the miniscule GDP growth is actually inflation and not real growth.
I have silver dollar sized tomatoes already.
Keep up the 'good work.'