08/01/08 "BBC" -- - -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.
Recession is just part of the business cycle. I would be more concerned if inflation reared its ugly head. In any event, the Federal Reserve stated yesterday that it would change interest rates to counter any recession before it materializes..hopefully it works.
"Imagination was given to man to compensate him for what he is not, and a sense of humor was provided to console him for what he is."
This economy will pick up, and by the way islamirama, it seems you live in the US as well, I am not sure how wealthy you or your parents maybe but if we do actually hit a recession, your parents may start cutting costs, such as internet bills.... I wouldnt be to happy about it (The only reason I would assume you would be happy is because of your constant negativity towards the US, and the fact that this article clearly states that the people who actually have the knowledge and authority to declare a recession, have in fact not)
"War does not determine who is right - only who is left."
- Bertrand Russell
"He who fears being conquered is sure of defeat." - Napoleon Bonaparte
"There is nothing so likely to produce peace as to be well prepared to meet the
enemy." - George Washington
Recessions are cycler. I was born during the aftermath of the "Great Depression" (1929-1940) although I missed the effects of that my family went through it.
Fortunately for my family we were a farming family and self sufficient. But, I remember seeing the after effects as a child.
Since then I've been through quite a few recessions. In economic classes it was often pointed out that recessions are the economies relief valve and are beneficial in preventing depressions.
Believe me if a recession is a preventive measure to prevent a depression it is worth it.
Recessions are cycler. I was born during the aftermath of the "Great Depression" (1929-1940) although I missed the effects of that my family went through it.
Fortunately for my family we were a farming family and self sufficient. But, I remember seeing the after effects as a child.
Since then I've been through quite a few recessions. In economic classes it was often pointed out that recessions are the economies relief valve and are beneficial in preventing depressions.
Believe me if a recession is a preventive measure to prevent a depression it is worth it.
wonderfully put
"War does not determine who is right - only who is left."
- Bertrand Russell
"He who fears being conquered is sure of defeat." - Napoleon Bonaparte
"There is nothing so likely to produce peace as to be well prepared to meet the
enemy." - George Washington
This economy will pick up, and by the way islamirama, it seems you live in the US as well, I am not sure how wealthy you or your parents maybe but if we do actually hit a recession, your parents may start cutting costs, such as internet bills.... I wouldnt be to happy about it (The only reason I would assume you would be happy is because of your constant negativity towards the US, and the fact that this article clearly states that the people who actually have the knowledge and authority to declare a recession, have in fact not)
I wasn't too happy about the last recession of 2001 and yet here we are seeing another one while US history's WORST president is in power. Let it come and show the oil greedy gov't how much their people loves them. My first question to that (recession is here) was, WHEN did the last one end?
Btw, If you think I should be worried cuz i live in the US then think again bro. Rizk is in Allah's hand and I will get what is written in my share, regardless of where I live or how the economy is.
Last edited by islamirama; 01-11-2008 at 06:14 PM.
I wasn't too happy about the last recession of 2001 and yet here we are seeing another one while US history's WORST president is in power. Let it come and show the oil greedy gov't how much their people loves them. My first question to that (recession is here) was, WHEN did the last one end?
Btw, If you think I should be worried cuz i live in the US then think again bro. Rizk is in Allah's hand and I will get what is written in my share, regardless of where I live or how the economy is.
From what I have seen in my lifetime, I believe we have been in a recession since the 1960s. Only it has been contained and somewhat controlled. Inflation has been being used as a control factor for most of my life. It has been a method of spuring the economy under a false pretense of growth. Reality is there has been no change in buying power. For as long as I can remember a loaf bread was 1/10th of an ounce of silver. In the 1940s that was 10 cents. Today a tenth of an ounce of silver is valued at $1.63 which still only buys a loaf of bread. No change, just changes in wording.
As long as we have some controlled recession, runaway depression is prevented.
I wasn't too happy about the last recession of 2001 and yet here we are seeing another one while US history's WORST president is in power. Let it come and show the oil greedy gov't how much their people loves them. My first question to that (recession is here) was, WHEN did the last one end?
Huh. Are you serious? That last recession only took like 6-9 months. The US has had some excellent years since then with high economic growth, above average compared to other industrialized countries.
From what I have seen in my lifetime, I believe we have been in a recession since the 1960s. Only it has been contained and somewhat controlled. Inflation has been being used as a control factor for most of my life. It has been a method of spuring the economy under a false pretense of growth. Reality is there has been no change in buying power. For as long as I can remember a loaf bread was 1/10th of an ounce of silver. In the 1940s that was 10 cents. Today a tenth of an ounce of silver is valued at $1.63 which still only buys a loaf of bread. No change, just changes in wording.
As long as we have some controlled recession, runaway depression is prevented.
Except that your house is filled with luxury articles, computers, TVs, a dishwasher, air conditioning, multiple cars in your garage, a refrigerator, washing machine, mobile phones, etc... And you take more vacations that take you farther away every time. Besides, the amount of money we now spend on food has more then halved compared to the 1960's. Back then many households spend close to 20% their income on food and beverages, nowadays thats closer to 10%. (source)
And that ignores the fact that the choice of goods has increased enormously, both perishable and not. Good luck finding pine apples or lychies in the 1960s.
Except that your house is filled with luxury articles, computers, TVs, a dishwasher, air conditioning, multiple cars in your garage, a refrigerator, washing machine, mobile phones, etc... And you take more vacations that take you farther away every time. Besides, the amount of money we now spend on food has more then halved compared to the 1960's. Back then many households spend close to 20% their income on food and beverages, nowadays thats closer to 10%. (source)
And that ignores the fact that the choice of goods has increased enormously, both perishable and not. Good luck finding pine apples or lychies in the 1960s.
Both pineapples and lychees are now raised in Texas. In fact I'm growing a pineapple right now. Being prepared for the pineapple shortage. Now to speed up the growth on my lychee, the seed hasn't even sprouted yet.
In seriousness now. You do bring up a good point and the physical standard of living has increased tremendously since I was a kid.
You are right very few products are produced here in the USA any more and many US owned businesses are in other countries.
Our major exports now seem to be food products and technology. Everything else seems to be an import.
I wasn't too happy about the last recession of 2001 and yet here we are seeing another one while US history's WORST president is in power. Let it come and show the oil greedy gov't how much their people loves them. My first question to that (recession is here) was, WHEN did the last one end?
Btw, If you think I should be worried cuz i live in the US then think again bro. Rizk is in Allah's hand and I will get what is written in my share, regardless of where I live or how the economy is.
I am not sure you know much about economies or recessions... no offense
"War does not determine who is right - only who is left."
- Bertrand Russell
"He who fears being conquered is sure of defeat." - Napoleon Bonaparte
"There is nothing so likely to produce peace as to be well prepared to meet the
enemy." - George Washington
Huh. Are you serious? That last recession only took like 6-9 months. The US has had some excellent years since then with high economic growth, above average compared to other industrialized countries.
Are you serious? i'm not talking about nor do i care about other industralized countries. Clinton had left the economy in good condition and since then it has been going down hill and that's about it. Yea there has been some upward motions but since 2001 all i've been reading is which giant company is going out business now, how many 1000s are being laid of this Quater and what not. Some will try to tell you economy is improving and what not, look at the unemployment rate, ask the people what they think and the public will tell you where the economy has been for the last 7 years.
Are you serious? i'm not talking about nor do i care about other industralized countries. Clinton had left the economy in good condition and since then it has been going down hill and that's about it. Yea there has been some upward motions but since 2001 all i've been reading is which giant company is going out business now, how many 1000s are being laid of this Quater and what not. Some will try to tell you economy is improving and what not, look at the unemployment rate, ask the people what they think and the public will tell you where the economy has been for the last 7 years.
Are you seriously equating Bill Clinton with a healthy economy? Bill Clinton laid higher taxes on middle and lower classes than any president in recent history. Bill Clinton drained the medicare and medicaid funds, Bill Clinton allowed for the outsourcing of more manufacturing jobs than anyone and drove our trade deficit through the roof! Bill Clinton had the advantage of being president during the dot.com boom, which I am not sure your age or what you were doing in the mid to late 90's but that was HUGE. Small time people with nothing became millionaires overnight because of that, which resulted in a booming economy, but like every bubble it popped. The combination of that and the events of 9/11 and the war following that, yes the economy took at hit, but comparatively speaking our economy has not taken a serious hit considering all of the circumstances. I could give you a million references that indicate just how resilient our economy really is... With that said I dont choose to lure anyone in to believe that GWB is responsible for the economies pliability, to be honest I am not really sure he has had a chance or cared to have much of a say about it. The economy has not been in top shape for some time and he has done nothing or at least I have heard nothing of him doing anything to rectify the situation. But I dont think we are in recession either, heading down that path, yes I would probably say so, but hopefully nothing serious. As Woodrow says a recession is kind of like a relief valve, if you will, it lets the pressure off so the economy can cook again. You will see, an economy like this one where the average income in 35,000 per year and has consistently low unemployment, good to great economic growth and the versatility that many countries would kill for probably wont go under because of high oil prices and a credit crunch. It is all just part of the process.
"War does not determine who is right - only who is left."
- Bertrand Russell
"He who fears being conquered is sure of defeat." - Napoleon Bonaparte
"There is nothing so likely to produce peace as to be well prepared to meet the
enemy." - George Washington
ok maybe clinton was a bad example, but anyways my point is that since 2001 we have been in recession and this new recession is ontop of the last one which was near it's end but not completely dead cuz the economy never picked up to a healthy level. Ask the millions who are still unemployed.
ok maybe clinton was a bad example, but anyways my point is that since 2001 we have been in recession and this new recession is ontop of the last one which was near it's end but not completely dead cuz the economy never picked up to a healthy level. Ask the millions who are still unemployed.
I agree that it never picked back up to the level it was, but you have to understand that the level it was at was nearly unprecedented because of the dot.com boom.. It is very hard to drive an economy to that kind of level, although with this country it is definitely a "do-able" thing, and had our president cared enough it very well could be a different situation right now. But I do understand where you are coming from. I think we may just have to ride it out for another slow year (especially since election years are historically low) and with a new president and hopefully some new ideas and probably a bit of relaxation on the credit crunch and maybe some foreign policy change or new energy ideas, or any of the aforementioned really, you will see the economy flourish and possibly even boom again. Just remember it is healthy to have recession, just so long as it is always changing, if it becomes stagnant that is when you have to watch out.
Edit: It should probably also be mentioned that because of Bill Clintons policies then, much of the unemployment of today could be contributed to him, this may be hard to see because it is masked by the high economic growth of the late 90's
Last edited by MTAFFI; 01-11-2008 at 09:02 PM.
"War does not determine who is right - only who is left."
- Bertrand Russell
"He who fears being conquered is sure of defeat." - Napoleon Bonaparte
"There is nothing so likely to produce peace as to be well prepared to meet the
enemy." - George Washington
First we had the dot.com rush but now we had the housing rush which is being popped as is and sending us into another recession like dot.com did. I have another article on this, i'll share it tonight inshallah.
Many people falsely believe that the president is the one who makes the major impacts on the economy, when in truth he isn't. The Federal Reserve has more to do with managing the overall state of the economy than the president. The president can make economic policy decisions, meaning tax cuts or tax hikes, but the management of currency and interest rates, which have the most impact on the economy, is the responsibility of the Fed.
"Imagination was given to man to compensate him for what he is not, and a sense of humor was provided to console him for what he is."
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