Jul
16
Recession? Recovery? Despression! Oh My
It seems Wall Street, more than American citizens, are quick to claim that we are having a recovery. Are you kidding? Are they getting that fact from the still low but increasing Dow? Last time I checked, the Dow was never a proper indicator of a recession recovery. In fact, I remember a multiple choice question in my financial markets class that had the “stock market gain” as a choice for indications of economic recession recovery; I chose it and lost points.
Lets look at the real numbers. In case people haven’t noticed Housing Starts is the number of new home construction in the year. Usually the drop in this number precedes a recession, then it picks back up and after some time the economic slump does as well. Housing Starts dropped in 2008 from 1.7 million to about 450 thousand, that’s lower than housing starts in the 50′s. The expectation was that it would pick up in six months, above 1 million again. News flash, it only at 590 thousand and were over 2 years out – that’s an indicator for a depression, not a recovery.
Second, an increase in the unemployment rate usually precedes a recession, then it drops back down and the economy recovers after that. In case you haven’t noticed because you’ve got good job security, the unemployment rate has been steadily climbing (not to mention how the Gulf oil spill will kill more jobs in the south). You may think “but I heard the unemployment rate is at 9%, that’s stable.” I think our Bureau of labor statistics has been avoiding a big chunk. People who have been searching for some time and have temporarily stopped searching – are not included (they stopped looking, so they must not need a job, right?) Also, people who have had temporary, or part time, jobs are not included. Real unemployment rates have come as high as 17.5% or 22%. By the way, these numbers were calculated with the same criteria that was used nearly 80 years ago, you know, during the Great Depression – when unemployment was at 25 percent! It also took 4 years for the unemployment rate to get that high from the beginning of the depression. Looks like were not far behind.
Keep informed America.