SubscribeReuters Poll Proves US Is Already In Recession
From a determined Reuters:
Consumers, inflation weaken as slowdown drags on
By Burton Frierson
NEW YORK (Reuters) - Consumer confidence fell further into recessionary territory in March, hitting a 16-year low, even as other data showed incomes rose and inflation dipped in February, which should support the Fed’s efforts to bolster the economy.
The Reuters/University of Michigan Surveys of Consumers said its final index of confidence fell to 69.5 in March — its lowest since February 1992, when it was at 68.8 — from the previous month’s reading of 70.8.
Consumers were apparently unimpressed by February’s 0.5 percent rise in personal incomes, reported by the Commerce Department. That exceeded forecasts of a 0.3 percent gain made by analysts polled before the release.
However, the best news from the U.S. personal income report may have been the benign reading on underlying inflation, which was 2 percent. This matched the prior month’s gain, which was downwardly revised from 2.2 percent.
This latest reading on the "core" personal consumption expenditure price index is also just within the Federal Reserve’s perceived comfort zone…
The inflation reading provided a boost to Wall Street with the Dow Jones industrial average rising 0.4 percent. It also helped lift bond prices but pushed the dollar to near a record low around $1.58 per euro…
The Commerce Department’s report also showed signs of economic weakness, with personal spending increasing just 0.1 percent in February. This was in line with expectations but is down from a 0.4 percent gain in January.
This weakness was consistent with the Reuters/University of Michigan Surveys of Consumers report, which said "it is now nearly unanimous among consumers that the economy has already entered a recession."
Its index of consumer expectations fell to 60.1, its lowest since January 1992, when it was at 59.1. In February this year it was at 62.4.
The report showed the final reading on one-year inflation expectations jumped to 4.3 percent in March from 3.6 percent in February.
That was the highest final reading since October 2005, when gasoline prices were soaring in the wake of Hurricane Katrina, but was down from the preliminary March reading of 4.5 percent.
Excluding the post-Katrina period, the March reading would be the highest since 1990.
The index of consumers’ economic outlook for the next 12 months fell to 46 — the lowest since a similar reading in January 1991 — from 54 in February.
"Consumer confidence slipped due to growing concerns about weakening prospects for the economy as well as anticipated increases in unemployment and inflation during the year ahead," the Reuters/University of Michigan statement said…
What a coincidence.
16 years ago was also an election year. In fact, it was the year that ended up giving us Mr. Clinton as our President.
And as he and his lickspittle slaveys in the media constantly told us, "it’s the economy, stupid." Without mentioning that in fact the economy had rebounded long before the November elections.
This weakness was consistent with the Reuters/University of Michigan Surveys of Consumers report, which said "it is now nearly unanimous among consumers that the economy has already entered a recession."
Gee, where did these consumers ever get that idea? Could it be from the endlessly disinformation from the news media?
But alas, the Democrats and our watchdog media (but I repeat myself) always repeat whatever lie has worked for them before.
28 Responses to “Reuters Poll Proves US Is Already In Recession”
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March 28th, 2008 at 3:34 pm
I thought a recession was defined as two consecutive quarters of negative growth…Or am I wrong?
March 28th, 2008 at 4:09 pm
HAHAHAHA…
That wacky Comedy Act which Reuters offers is really cackle worthy.
Whoopi should take notes for the VIEW…
Reuters should take that Routine on the road, by making it into a Circus Act.
Barnum would be impressed.
March 28th, 2008 at 4:55 pm
Personal income is up. Personal spending is up, albeit not as much as income which means people are saving some of their earnings. The GDP is still growing. Interest rates are still low and inflation is down. The housing market is picking up and unemployment is still at a near record low.
Yet al-Reuters insists we are in a recession….???
Damn, damn, damn, what the h*ll was I thinking..!! All those damned economics and business classes I took in college were for naught. Nothing but tuition dollars down the drain when all I really had to do was wait and listen to al-Reuters. What a waste..!! ;o}
March 28th, 2008 at 6:06 pm
GM same here - nice roof over the head, so much food in pantry and refrig/freezer that I utter the words ‘got to rearrange again, darn it - sorry should be thanking God for such an abundance - every couple of weeks,’ car that fits everyone and is still spiffy inside (no crumb crunchers around any more), and able to do what we want - most of the time. House and car - only debts, a little coin socked away for those rainy days - isn’t that what is considered good economics for the average joe?!?
I am amazed that the bds is so bad - no one can give GWB even a lick of credit for pulling us out of what could have been the worst economic disaster (9/11) coupled with the 12 to 20 million illegal non-citzens who are gumming up our economic positives - daily.
And isn’t al-Reuters a Brit organization?!? and against the Iraq War?
Bias - I don’t see no stinkin bias. . .
March 28th, 2008 at 7:18 pm
We get lied to even more than Hillary does when Bill gets home at six am.
March 28th, 2008 at 7:51 pm
“”it is now nearly unanimous among consumers that the economy has already entered a recession.”"
Nearly unanimous, just like global warming.
March 28th, 2008 at 8:04 pm
The MSM want their recession, and by God, they’ll do whatever it takes to get it! All in the name of promoting their favourite lefty candidate when the time comes…. “See, you dumb masses don’t have a clue what to do with your money, just send it to us and we’ll redistribute it for you!”
March 28th, 2008 at 8:15 pm
I’m not as sanguine about the health of the economy as most of the above posters appear to be.
From Econoday (hat tip to Karl Denninger’s Market Ticker):
March 28th, 2008 at 9:03 pm
Well, sure Dave, the economy isn’t in a boom state right now, but recession?? I beg to differ
From Wikipedia: In macroeconomics, a recession is a decline in a country’s gross domestic product (GDP), or negative real economic growth, for two or more successive quarters of a year.
March 29th, 2008 at 3:03 am
Sorry Dave2882 but the postulations above are nothing more than shall we say, “voodoo economics”. They, them or whatever are saying that a single Federal adjustment to Medicare payments are impacting the entire US economy? Sorry my friend but that is pure and utter horsesh*t..!!!
As our current economy stands, Medicare operates on a 50 to 60 billion dollar yearly surplus. I.E., 4 to 5 billion dollars a month EXTRA with the average total expenditure per month of roughly 3% of the GDP. Our average GDP per month is $1.15 TRILLION. That would equate to a maximum of $35 billion a month in Medicare expenditures. Based on the above, a 5% error in TOTAL Medicare expenditures would only account for $1.75 billion a month versus our total GDP, which is less than .002% of our GDP per month.
The numbers are here;
http://www.cbo.gov/
And here;
http://www.cbo.gov/budget/budproj.shtml
Sorry but “Econoday” or perhaps others, are blowing smoke up you know where.
March 29th, 2008 at 5:23 am
GM:
No, they’re saying that the ‘adjustment’ to Medicare payments is what’s primarily responsible for the wages and salaries component of personal income advancing by 0.3 percent month-over-month.
0.022*(12x) = $38.2 billion –> x = $145 billion in monthly current transfer receipts
Which is on the same order of magnitude as the $35 billion a month that you claim for Medicare expenditures.
- - - - - - - - - - - - - -
In any case, both the Reuters article and the Econoday report agree that personal spending increased 0.1 percent in February. Since core PCE came in at 0.1 percent for February, this means that there was no real gain in personal spending.
In case you missed it, Bear Stearns, one of the U.S.’s largest investment banks, imploded two weeks ago (link). It overdosed on the same toxic credit instruments that have been causing problems throughought our financial system.
March 29th, 2008 at 5:59 am
Well if we ARE in a recession how much credit does When Harry met Nancy want to take?!?! ROFLMAO Didn’t they promise change for America?! Well we got it!!
March 29th, 2008 at 6:35 am
^ The people and entities most to blame for the mess in our financial system are the Fed, the “shadow banking system”, and all the greedy people who thought they could get something for nothing.
March 29th, 2008 at 9:48 am
From the website of the Bureau of Economic Analysis:
GM, you are of course free to claim that the BEA doesn’t know what it’s talking about, but the “Highlights” report I excerpted from earlier in this thread appears to mesh well with what the original report says.
March 29th, 2008 at 11:17 am
Dave2882; …..”The January change in current transfer receipts was also reduced by lump-sum social security benefits payments, which had added $6.9 billion to December benefit payments; these benefit payments resulted from a recalculation of the earnings base underlying the benefits for recent retirees…..”
Indeed, these benefit payments along with medicare/medicaid payments have, and will continue to have, a negative impact well into the future unless something is done to remedy the underlying cause. But since these are “entitlements”, no one in government will move to, or even suggest, the only remedy, which is to cut the benefits for current recipients, and eliminate them altogether for those now paying the taxes which make the payments to the current recipients possible. But that doesn’t make the current state of affairs a recession by definition. What it does point to is a coming tax revolt by those who will be forced to underwrite (honor) the commitments made to the current retirees by scores of former politicians who don’t have to answer for their calumny nor participate in, or rely on, the folly they have wrought. If this is to be a factor as a determinate, (and it probably should be) then our economy faces nothing but one protracted, continuous recession. It really is time to tell the current and future generations of taxpayer the truth. Our government has been running a huge ponzi scheme for years, and the pyramid is about to collapse.
March 29th, 2008 at 11:18 am
Here is a link to the full report that should still be good next month.
Also, it looks like Lehman Brothers may be on the ropes (link).
Although the Fed has opened the Primary Dealer Credit Facility (PDCF) (link), which might be more successful than the TAF and TSLF in restoring liquidity. Also Bear Stearns was something of an outcast on Wall Street for refusing to help bail out LTCM in 1998; Lehman Brothers doesn’t have that problem so the Wall Street banks would be more willing to lend a hand to Lehman if they have the liquidity to do it.
March 29th, 2008 at 11:51 am
JohnMG, the whole bit about the Medicare current transfer receipts was to show that the jump in income was a one-time technical artifact of the way the payments were made rather than indicative of an actual increase in income that could be expected to carry over to next month.
To me, the part of the Econoday summary that was indicative of a recession is:
So MoM real personal spending growth was zilch — and that’s if you believe the government’s claim that PCE inflation was only 0.1% for the month. Personal consumption is 70% of GDP.
When combined with the large drop in jobs shown in the February data (link), it is hard to see how March won’t show a negative growth in real GDP. No, I can’t prove that we will have two consecutive quarters of negative real GDP growth, but it doesn’t look good.
Furthermore, if you look at the graph in the Econoday report, you will see that YoY increases in real personal consumption expenditures have been trending down from the June ‘05 figure of 4.1% and now stand at just 1.6%. At the very least, there is a severe economic slowdown in progress.
March 29th, 2008 at 12:10 pm
“No, I can’t prove that we will have two consecutive quarters of negative real GDP growth, but it doesn’t look good.”
Exactly. The Reuters article this string is about is saying we are already in a recession, we may go into one later, I think the Bush tax cuts will relieve that a lot, but the point is that we are not, at present, in a recession.
March 29th, 2008 at 12:13 pm
^ I’m an investor; I’ve put my money where my mouth is.
March 29th, 2008 at 12:18 pm
It is impossible to be in a recession until AFTER June. You can’t call it a “recession” unless there have been two consecutive quarters of GDP shrinkage. Q4-2007 GDP was up 0.6%. Even if the GDP is down in Q1-2008, it still wouldn’t be a “recession”. You would need two consecutive quarters.
Read this, too. This is a media generated recession.
http://newsbusters.org/blogs/n.....em-elected
I am just now waiting for them to say that the major deposit banks are going broke to cause a run on them in order to intentionally ruin the economy. They need to be jailed.
March 29th, 2008 at 12:30 pm
Agreed, Dave. I’m not well versed in economics but have observed some trends of my own in my 62 years on the planet. Also, the old saw “figures don’t lie, but liars figure” is much of the problem with economic reports and/or projections. Too much of the time these reports are akin to polls. Start with the conclusion and then find the numbers that support that conclusion. Our economy is a complex creature and, although I feel somewhat informed, I realize how little most of my contemporaries are aware of what keep this huge market-based economy fueled. Having said that, I’m also aware of how easily they can be swayed in their thinking and their opinions. If things appear to be going well but aren’t, try to convince them otherwise. Likewise, if they are barraged with gloom and doom prognostications, eventually those prophesies become self-fulfilling. GWB campaigned for almost a year in 1999 on what everyone said was the “third rail” of politics–Social Security and its perils. The dems blew him off saying there was nothing wrong with the trust fund. How often did we hear about the “lock-box” that assured solvency? Now it seems (during an election year) these same people have “got religion” vis-a-vis the SS system, and it’s all Bush’s fault that nothing has been done to address the coming disaster. Enough of the “gotcha” politics. All the numbers need to be put on the table and the public has a right NOT to be lied to. After all, the government doesn’t have any money, we do. So just tell the truth! Unfortunately the economists are almost as clueless as the rest of us. Just like Al Gore’s global warming computer models, “garbage in, garbage out” still holds true. The public need to make their decisions concerning saving and spending based on the facts, not some bulls**t they’ve been fed by someone with a hidden agenda.
March 29th, 2008 at 12:40 pm
crosspatch,
If you insist on seeing two quarters of negative real GDP growth before declaring a recession, it doesn’t mean we’re not in a recession now; it just means that we can’t declare one using that criterion. However, that criterion is useless if you want to be proactive rather than reactive because it doesn’t allow you to declare a recession until after the end-of-quarter report comes out and shows negative real GDP growth for the second quarter in a row. Fortunately, we have economic indicators that allow us to predict where the economy is going, which allows us to be proactive rather than reacting solely based on what has already been. Even though we don’t have final GDP statistics, I think I’ve given a pretty good argument that we’ll have 0% growth in personal consumption in the first quarter of this year, and personal consumption is 70% of GDP. Also, the downtrend in personal consumption goes back to June ‘05 so it has legs.
No, it’s a recession that’s primarily generated by the business/credit cycle reaching the inevitable conclusion of several years of reckless lending and consumers borrowing more than they could sustainably afford to borrow. The mainstream financial media tends to have a conservative slant and view the economy through rose-colored glasses. However, even the Wall Street Journal’s economic survey now strongly predicts a recession.
The banks that are going broke are doing so because they have a large portion of their assets in highly leveraged securities derived from bad mortgages.
March 29th, 2008 at 1:05 pm
The thing is that a recession is a specific economic term. It does not mean “a period of down markets” or “any arbitrary period of GDP shrinkage” or “the period of time when it is difficult for Dave to make money”. It is not a general national economic recession unless there are two quarters of GDP shrinkage. Otherwise it just isn’t. There is no point in using a word if you are going to ignore the definition of the word. Yes, there can be regional recessions. There can be short pullbacks in economic growth. But they are not “recessions” and we are not in one regardless of what any individual wants to say about it or what any individuals want to call it. Heck, 50% of the American population is below the median intelligence level. You can’t create a recession from a poll … half the people you are polling are going to be morons and the smart ones probably aren’t going to have time to respond to a silly economic poll that doesn’t mean poop.
The problem in the economy right now is pretty simple. Too may realtors sold people on the bunk of “they aren’t making any more land” and that housing prices would rise forever. Well, that isn’t so. The baby boomers are coming out of the real estate market. With each passing month more of them are buying the last house they will ever own. They aren’t buying any more houses. We have the largest generation in American history (and STILL the largest demographic in our population) coming OUT of the real estate market in droves and needing to cash that house in for the retirement investment that was their purpose in buying it. You are going to have MILLIONS of homes going on the market where the seller of the home is NOT going to be in the market for a new one as they move into RVs or retirement communities or die.
With the housing prices dropping, people having no equity to pull out, the boom in spending that was financed with home equity loans is drying up. All those RVs, boats, furniture, home improvements … all going away because people financed their houses to the hilt and banked on the value always rising forever. Those days are over for a while. Pray for wildfires.
March 29th, 2008 at 1:29 pm
JohnMG, I’ll agree with you to the extent that the economy is strongly influenced by psychological factors such a consumer confidence. However, if we remember back to when the housing bubble was in full swing, the few of us who dared to call it an unsustainable bubble were branded as crackpot lunatics. It wasn’t media coverage that’s most responsible for stopping the music the housing bubble was dancing to. The thing that did that was that housing prices were going up much faster than wages, and there’s only so long that can go on before it comes crashing down on itself. Now, the housing prices are falling in value, but the bad debt remains. Rank-and-file consumers are having trouble servicing their debt loads in the face of stagnant real wages and are cutting back on their spending. The investment banks have the bad mortgage debt sitting on their balance sheets or lurking in SIVs. The mortgage debt has been sliced and diced and recombined into CDOs, and then, derivatives have been created based on those CDOs until no one knows who owes what to whom. But they do know this toxic debt could be lurking on the balance sheet of just about any financial entity so banks are afraid to lend to other banks. Furthermore, these derivatives have found their way into the commercial paper market where they’re being used as collateral in place of the physical assets that are supposed to be used as collateral in such loans. Consequently, banks and investors have been leery of rolling over the commercial paper that’s vital for supporting a broad range of financial activity and transactions in the economy. The mainstream financial media has been very Pollyanna throughout this whole affair, and by the time something very negative shows up in their publications, Wall Street has been aware of it for some time. Heck, I don’t have any insider connections, and I often can get clued in to these things well before I read them in the mainstream financial media. So long as the media doesn’t make things up to scaremonger people, I think the people who are primarily to blame are the greedy, reckless, short-sighted people who created this mess, not the people who report on it.
March 29th, 2008 at 1:38 pm
crosspatch,
The WSJ survey I referenced is a poll of economists, not the general public
If there are indicators available that strongly point to there being two consecutive quarters of GDP shrinkage, isn’t it fair to predict that we are in recession before the final GDP numbers are released?
As I said:
MoM real personal spending growth was 0,1% in January. In February it was 0% — and that’s if you believe the government’s claim that PCE inflation was only 0.1% for February; if PCE was running higher than 0.1%, real personal spending would have shrunk in February. Personal consumption is 70% of GDP.
When combined with the large drop in jobs shown in the February data (link), it is hard to see how March won’t show a negative growth in real GDP. No, I can’t prove that we will have two consecutive quarters of negative real GDP growth, but it doesn’t look good.
Furthermore, if you look at the graph in the Econoday report, you will see that YoY increases in real personal consumption expenditures have been trending down from the June ‘05 figure of 4.1% and now stand at just 1.6%. At the very least, there is a severe economic slowdown in progress..
March 29th, 2008 at 2:23 pm
Lipstick on PIAPS eluded to it earlier.
A little over one year ago:
1) Consumer confidence stood at a 2 1/2 year high;
2) Regular gasoline sold for $2.19 a gallon;
3) the unemployment rate was 4.5%.
Since voting in a Democratic Congress in 2006 we’ve seen:
1) Consumer confidence plummet; (Due to press lies)
2) the cost of regular gasoline soar to over $3 a gallon;
3) Unemployment is up to 5% (a 10% increase but still low especially compared to other western nations.
4) American households have seen $2.3 trillion in equity value evaporate (stock
and mutual fund losses);
5) Americans have seen their home equity drop by $1.2 trillion dollars;
6) 1% of American homes are in foreclosure. ( mostly speculators)
America voted for change in 2006, and we got it!
March 29th, 2008 at 2:44 pm
Dave2882; ….”I think the people who are primarily to blame are the greedy, reckless, short-sighted people who created this mess, not the people who report on it….”
Again, I agree. In this case, they are one and the same. Lenders who were encouraged to make poor-risk loans with the understanding that Freddie-Mac and Fannie-Mae would prop them up, yielded to the temptation to take undue profit with little perceived risk. Egged on by members of congress in influential circles, in a quest for votes, these lenders were only partially unwitting in abetting the debacle. Still, it is a very small percentage of total mortgages that are affected. And those consumers who are judiciously tending to the greater priorities of their financial obligations by becoming more conservative in their spending habits, whether out of necessity or choice, is yet another example of the free-market attempting to right itself. I’m well aware of the housing market as my business is directly engaged in those activities, albeit to a small degree. And every one of my acquaintance is familiar with the old caveat “if it seems too good to be true, it probably is”, so caveat emptor. And I, for one, having spent a lifetime in the construction business, and knowing of its boom-or-bust nature, continually warned that the bubble would, sooner or later, have to burst. Most people know this intuitively, especially those of my generation. But there are two, and beginning a third, generations who have never seen a really hard time, and unlike myself, are an easy mark for the first snake-oil salesman who convinces them that they can indeed “have it all”, and right now, too! These are the ones who will panic first, and hurt the most. A bitter pill, to be sure, but kicking the can down the road doesn’t help. The market must be allowed to work, or it will cease to exist. Better a small taste of reality than a total collapse.
Still, for people to make good choices, they need truthful information.
March 30th, 2008 at 2:45 pm
I stand corrected Dave2882, the numbers you quote seem to pass muster concerning the Fed adjustment.
However, I respectfully decline the MSM induced notion that the US is currently in a recession or headed down a steep slippery slope towards one.
Referring to the same BEA.gov site you linked, you will see occasions where PI or GDP growth was slow or even decreased at times over the last few years, yet no recession was claimed or experienced. The 1st and 3rd quarters of 2005, the 2nd quarter of 2006 and the 2nd quarter of 2007 all experienced a loss or poor growth in adjusted 2000 dollars, yet the MSM wasn’t screaming recession then. Why not?
http://tinyurl.com/2by3ug
I will leave it to your own summarization as to the reasons why that is but IMHO, the MSM has their agenda for the upcoming election. As others have stated here, history has proven that out with regards to the MSM’s more than obvious agenda.
As am I Dave, along with a lot of other folks here I’m sure. I can’t vouch for every investor here, of course, but my personal investments have consistently provided a solid return with the lone exception being the 4th quarter of 2001. Sure, there are always ups and downs in any free market economy, and those bumps will always exist but if you maintain a good balance in your portfolio(s) and don’t bend to every wind of change that blows by, you will likely make out in the long run. Hey, it sounds simplistic but it works for me.
BTW, that balance I referred to seems to have escaped Bear Stearns.