Some of their economic positions as committee members at NBER are highlighted in this Bloomberg article and summarized below:
In April 2010, issued a statement that it was too soon to conclude the end of the recession that began December 2007 (read: a recovery has yet to occur)
This weekend in Jackson Hole, Wyoming, stated there is between 5% and 33% chance of a double dip recession (question: doesn’t a double dip recession necessitate an end of the first recession and a subsequent recovery?)
Forecasts 2011 second quarter GDP growth of 1.1% (question: what is their forecast of third quarter and fourth quarter 2010 GDP growth?)
Perhaps the NBER should take note regarding the hot seats on which several financial and economic advisors sit (e.g. Treasury Secretary Geithner; current and outgoing members of the Council of Economic Advisers in the Obama Administration, Summers and Romer, respectively).
In the past few days, several people and organizations have questioned whether the economy is falling back into a recession (double-dip or “W”recovery). The last double-dip recession in the U.S was the early 1980's.
Our opinion is the economy never really recovered from the notable downturn beginning in late 2007, and for that matter never recovered from the 2001 recession (technology bubble burst).It’s our lost decade – in terms of economic growth, jobs and the stock market.
Nevertheless, there are some lighthearted articles about the topic.Here’s a snapshot from Zero Hedge:
You know we're headed for a double-dip when:
What you thought was your cable bill, turns out to be your 401k statement.
Your mortgage shows up on eBay.
You buy $50 of GM stock, and are named to the board.
The family dog asks for a severance package.
Your parents move to Greece.
There’s even a new song by Merle Hazard about a potential double-dip recession.For a more granular opinion, Yahoo! Finance lists 22 cities in danger of a double-dip recession.Lastly, there’s the conventional approach to economic forecasting using leading indicators published by the Economic Cycle Research Institute (ECRI).Given its perfect forecasting record of recent, what is it forecasting?A double dip recession, as indicated at DailyFinance.
------------------------------------------------------ Note: Footnotes for the first chart may be found at the link provided above (early 1980's at Wikipedia). To summarize, (1) blue line is percent change from preceding period in real gross domestic product (annualized; seasonally adjusted) and (2) red line is average GDP growth 1947–2009.
Update 2 Sep. 2010: Given several have ask about further feedback about the ECRI, its managing director, Lakshman Achuthan, provides an overview in this interview on Yahoo! Finance.
Many people viewed some of the games of the 2010 World Cup, including the championship in which Spain defeated the Netherlands 1-0. And, just as many people who were not at the stadium wondered what was generating the continual humming, bumble-bee sound. Well, it was the vuvuzela horn, and fans took liberty to explore the entire stadium space.
From an economics perspective, the World Cup created a noticeable trickle-down effect. As you review the accompanying infographic (click image to enlarge), you will notice the large number of horns sold, which caused a large number of - you guessed it - ear plugs to be sold.
Not all have been enthusiastic about the vuvuzela horns. Already, the horns have been banned at Yankee Stadium and throughout the Southeastern Conference (SEC) of U.S. college sports, among other worldwide venues.
Given the positive economic impact attributable to vuvuzela horns, where’s the vuvuzelove?
If you want to gain a better idea of why economics is sometimes referred to as the dismal science, then reference the 50 statistics about the U.S. economy highlighted on the Coalition of the Obvious (COTO) Report’s blog.
The blog is anti-corporation oriented and the statistics are one-sided, but each has a link to source or support material to corroborate, so the article provides a concise one-page summary of statistics and links.
Below is a sampling:
#1) According to the Tax Foundation’s Microsimulation Model, to erase the 2010 U.S. budget deficit, the U.S. Congress would have to multiply each tax rate by 2.4. Thus, the 10 percent rate would be 24 percent, the 15 percent rate would be 36 percent, and the 35 percent rate would have to be 85 percent.
#15) 39.68 million Americans are now on food stamps, which represents a new all-time record. But things look like they are going to get even worse. The U.S. Department of Agriculture is forecasting that enrollment in the food stamp program will exceed 43 million Americans in 2011.
#25) In 2009, U.S. banks posted their sharpest decline in private lending since 1942.
#26) Defaults on apartment building mortgages held by U.S. banks climbed to a record 4.6 percent in the first quarter of 2010. That was almost twice the level of a year earlier.
#33) In Pinellas and Pasco counties, which include St. Petersburg, Florida and the suburbs to the north, there are 34,000 open foreclosure cases. Ten years ago, there were only about 4,000.
#43) There are now 8 counties in the state of California that have unemployment rates of over 20 percent.
#50) In 2010 the U.S. government is projected to issue almost as much new debt as the rest of the governments of the world combined.
There is disagreement among economic observers regarding whether the economy is more likely to experience troubling inflation or deflation in the next couple of years.
Some who expect increased inflation reference current fiscal and monetary policies that, alone, are inflationary. Examples include recent government stimulus packages, historically low discount and federal funds rates, issuance of massive amounts of government and municipal debt, and expansion of the currency base, among other factors. Essentially, the more currency being created from nothing other than one’s good faith results in higher prices for goods and services (and a correspondingly lower value to said currency), ceteris paribus, to paraphrase my former economics professor.
As is the case with most theories I’ve been taught while sitting in an ivory tower, ceteris paribus is noteworthy concerning whether theories are useful practically.
According to many who expect deflation, the rationale references value of assets and social psychology.Regarding the former, we’ve experienced the effects of decoupling the price of an asset and its underlying secured cash value.There are many thought experiments.Think of houses: if everybody had to pay cash for a house, home prices would likely be a fraction of what they are today.If municipalities could not issue bonds at reasonable interest rates or assess taxes beyond a moderate amount, then their cost structure (compensation, pensions, contracts) and prices would be lower.These are just two of many examples, albeit presented in a simplistic manner.
What we have experienced in the past two years regarding some banks, companies and municipalities is that the price they paid for their assets exceeded the current and ongoing value of those assets: residential and commercial mortgages, stocks, credit default swaps, and tax receipt streams, for instance.
As such, by printing more money and issuing more debt, inflation can be expected.But, if debt of all kinds must be written down, some by 50% or even 100% (bankruptcy), then deflation is most likely to occur (prices of many goods and services decrease*).
So, the question to ask yourselves, Dear Loyal Readers, is “do you believe the current stated value of debt instruments and future obligations (on-and-off the balance sheets of companies and banks; derivatives; social security and pension funds; mortgages; credit card balances; sovereign and municipal bonds) accurately reflect reality?”
If your answer is yes, then expect inflation.Otherwise, expect near-term deflation.
-------------------- * In this scenario, falling prices are likely attributable to reduced spending and money supply contraction (e.g., reduced value of debt/liabilities more than offsets FED monetary expansion policies).
Reisman, Ph.D., George. "The Anatomy of Deflation." Ludwig Von Mises Institute. Mises Daily, 18 Aug. 2003. Web. <http://mises.org/daily/1298>. Reference for an expanded explanation of deflation.
Remember the Saturday Night Livesketch with actor Christopher Walken portraying a music producer who prods a rock band to use more Cowbell?Quite comical.
Now, replace Cowbell with Education, and we get a sense of the laments of many highly educated, motivated and personable people.Two blogs at Mish’s Global Economic Trend Analysis expose the proverbial elephant in the room.The topics relate to a structural economic shift and the educational system.
The broad theme is the U.S. has an oversupply of highly educated and experienced professionals and an undersupply of employment opportunities that align with said talent.
The current economic environment accentuates this point, yet it has been an undercurrent for more than a decade. The subtext of the topics highlights the rampant inflation of the cost of higher education and a preference for mediocrity, or worse, at many organizations.
Perhaps an outcome to these dynamics will be a resurgence of individual creativity and innovation, which doesn't necessarily equate to earning college degrees.
There are two software tracking applications of the federal government stimulus package (formally known as the American Recovery and Reinvestment Act).One is the government’s, found at recovery.gov, which is oriented towards taxpayers who want to know how their tax dollars are being allocated.
The other is provided by Onvia (ticker: ONVI), a Seattle-based public company. Its application, found at recovery.org, is directed at businesses interested in bidding on projects, before it’s too late to do so.An Onvia representative stated the application is free to use, since it's a means to attract incremental customers to the company’s subscription based data.Fair enough, in our opinion.
Read more about it on GreenBiz.com’s blog by Marc Gunther or listen to an interview with the CEO on reason.tv.
To many Clevelanders and Ohioans, the economy never recovered from the last recession, or several prior to it, for that matter.Today’s headlines and stories in the Cleveland Plain Dealer highlighted the state’s 10.2% unemployment rate in April, exceeding the nation’s 8.9% rate.Even worse, foreclosures and Sheriff’s sales in Cleveland have pummeled the median sales price of existing homes, down 73%, from $62,000 in 1Q 2007 to $17,000 in 1Q 2009.
Understandably, citizens have looked to a sports figure - in this case, the prodigy of Akron and Fighting Irish alumnus, King James - to deliver temporary relief in the form of an NBA Championship.It was not to be.Instead, fans were brokenhearted witnesses of the importance of team composition, despite the immense talents and leadership qualities of one member.
Accordingly, it’s a timely reminder to all, whether it’s a business or a sports team such as the Cavaliers, that to compete and succeed among the best, appropriate and complementary team members are vital.
That said, it’s not all gloom-and-doom.Today’s headlines also mentioned that the Cleveland area has become the U.S. leader in Alpaca farming, and will host the Second Annual World Alpaca Conference this week, where Alpaca Farmgirl will be blogging and tweeting.
And, if that doesn’t adequately lift one’s spirits, then those “At Least We Are Not Michigan, err, California” bumper stickers might deliver some sort of consolation.
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