'The economy is on the brink of the biggest recession since late 70's and he's still trying to convince us all is well.'
I disagree. Our population is growing 1% per year. American business is doing well. S&P 500 earnings for next year are estimated at $100 plus and their cash hoard is enormous - well over $1 trillion. Their earnings are largely driven by growth in emerging nations which will continue at 7 to 8% in 2012. Capex is beginning to recover. Also, I think our reliance on foreign oil will continue to decrease. We're still importing about $300 billion of oil per year but I think that's going to drop thanks to North Dakota oil and big increases in natural gas from the huge amount of shale deposits. The Consumer has significantly reduced indebtedness. Banks are in a much stronger position than 2008. State and local gov't has already cut 550,000 jobs in the last 2 years - so I think most of that pain is over with.
We're already at the bottom in housing and commercial construction. We're down something like 80%. It's not going to 0. The vast majority of job losses in the last recession came from the construction bust and we're shown no improvement to date although multifamily construction projects seem to be coming to life.
New car sales have been running well below trend line for years. The same is also true of durable goods. Huge pent up demand for household appliances and cars.
So I see consumer spending continue to increase modestly at around 1.5 to 2% per year. Capex should improve driven by growth in emerging nations and I look for our balance of trade to improve some as we wean ourselves off foreign oil. State and local government spending may decline modestly but most of the bitter medicine has already been absorbed. Federal spending needs to be reduced by a least $150 billion (4%) in 2012 and entitlements need major reform.
GDP growth for the first half was almost non-existent and the second qtr may still be revised to negative. Every major financial institution (GS, MS, UBS, etc) has cut growth rate estimates for the second half (some twice). Recent data points have been terrible (latest Aug employment). S&P earnings estimates have and are being cut. $100 next year is a dream.
I do not see how you can suggest that recession is not likely - many analysts now have the liklihood at 50% or more).
"GDP growth for the first half was almost non-existent and the second qtr may still be revised to negative."
If you've be tracking the #s you would have known that the bureau of economic analysis in August 2011 changed their methodology in estimating quarterly gdp resulting in the drop in 1st qtr gdp from 1.9 to .4%. Major revisions were also made to subsequent qtrs and years. The 1.5% pt. drop was primarily due to changes in inventories and trade balance. Real personal consumption still increased 2.1% in the 1st 2011 unchanged I believe from the third estimate.
If the economy is so bad, why did real personal consumption spending in July increase .8% or 9.6% annualized? Imo, I think it's due to "catch up" from the second qtr 2011 when real pce spending was reported at less than 1%. I think's there's some fluff in the gov't data and I look at trends and not blips in data points. Retail sales and car sales continue to be ok and do not suggest recession.
Really doubt we'll see negative gdp in the second qtr 2011. Generally, there are not huge changes from the second to third and final estimate.
Take off my rose color sunglasses? Last time I checked they're clear.
"Economy not on the brink?" Zero jobs created, $1.5 trillion debt this year alone. One of two things is going to happen. Unemployment goes to 18% or inflation goes to 10% Either way, our standard of living takes a serious hit because in either situation, the Fed government won't have the tax base to pay for Social Services, Infrastructure, Military and the many other services we are used to having. We have lived well as a country for 40 years from the industrial revolution. Problem is, that money is not flowing into our economy anymore. Those companies are on life support and one by one are dissappearing $8 an hour jobs in foriegn countries. Technology is only delaying the inevitable for many of our companies. Some benefit greatly from tech advances, but the middle class, the auto, steel, appliance workers are retired, spending their billions on retirement. When that is spent, game over!!