A recession in recovery's clothing?
Letter to the Editor
By Inman News, Friday, September 18, 2009.Re: 'Forecast: Recovery a long, hard slog' (Sept. 17)
Dear Editor:
It is that time of year again, when the economists from University of California, Los Angeles, publish the Anderson Forecast. I am surprised that this time around they are announcing the recession is over -- and ended during this quarter.
Wow, I bet all of those consumers who continue to be laid off, look for employment, or have given up looking for gainful employment will be happy to hear the good news. I am sure all of the retailers that have shown declines in sales -- quarter after quarter -- will be happy to hear it, as well.
WAIT! I almost forgot, are these not the same economists who stated in the Anderson Forecast in December 2007 ("UCLA economist predicts U.S. will avoid the 'R' word") that the U.S. wouldn't face a recession? I responded to that report as well, stating that the bigger worry at the time was the falling dollar and energy costs.
What happened six months later? Gas/crude oil prices hit their all-time high. This was followed by the meltdown of our banking systems and the subsequent bailouts of banking and private industry, not to mention the massive layoffs that followed. Let's examine the big issues facing our economy at this time.
Manufacturing and consumer spending
I am happy to see that the authors of the Anderson Report are speaking to the fact that U.S. gross domestic product will be driven and based on restocking inventories vs. increased demand. My worry with this scenario is that the consumer has depleted the inventories of retailers due to the incredible bargains most retailers have advertised, not because they have disposable income.
Once the retailers restock their inventories (at more sustainable levels) will the bargains still be there? Will the consumer be willing to pay "full" retail price again? It is hard to convince consumers to spend when one out of 10 in this country is unemployed and you don't know if your job will be there tomorrow.
In addition, why are we becoming dependent on a foreign country for all of our manufactured goods? And who do all of those companies expect to sell their goods to -- the same people they just laid off?
Housing
The first-time homebuyer credit is a nice incentive, but let's be honest: It is a gimmick to get "fence-sitters" to commit. What happens when this incentive expires? And is/was it a good idea to begin with? Wouldn't it be more credible to a recovery if prices stabilized and buyers purchased because they felt it was the right time?
I agree that we need more affordable housing, but I also remember learning that at no previous period in the history of our nation have more than 60 percent of the population owned their own home. Why do you think this is? Could it be that some people aren't financially responsible enough to qualify?
We are about to enter another wave of foreclosures. This time, though, it won't be just the subprime loans, adjustable-rate, interest-only, no-doc and other creative mortgages. It will be the "A+"-paper loans, for those who actually were able to qualify for the best loan rates and had good credit but have now become victims of job loss and the economic downturn. ...CONTINUED
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Submitted by Susie Blackmon on September 20, 2009 - 3:41am.
Nick,
You are so right ... in my very humble opinion.
Susie Blackmon
http://www.google.com/profiles/Susie28751#about
Submitted by Sharon Tudor Isler on September 20, 2009 - 9:50pm.
Nick,
Thanks for your thoughts. I agree. From what I see, and what I hear from my clients, this is not over. Especially in the upper end of real estate (above $850,000 here in the Bozeman Montana area). Lots of listings (136) and only 4 sales in 6 months and 3 pending. Luxury buyers are just too concerned about the whole national situation, and many have lost lots of their investment value.
We need some confidence in our government, not just bandaids, to really get this market moving again.
http://www.bozeman-realestate.com
Submitted by Emmanuel Scanlan on September 21, 2009 - 5:03am.
Hello Nick,
I have not had a chance to read the Anderson Forecast, nor would I as they are generally loaded with BS anyhow. I agree with you 100% and will, without benefit of reading the report, provide a between the lines summary:
"The recession is now over for those in the extreme upper income levels, those politicians who are continually lining their pockets with their actions and any others that have or are taking advantage of every white and blue collar worker in this country that made this country once great (That would be the politicians and CEO's of this country)."
The current propaganda machine is attempting to change the mood and hopefully get the American people to spend, spend, spend! The more level headed economists have indicated that the recession "Might be" bottoming out but a recovery can not occur unless the American people resume at least some amount of spending to support a recovery. These same level headed economists also agree that this miraculous spending needed will not occur due to the current unemployment situation and the anticipation of even more job losses.
As for your questions regarding the previous status of the United States as a manufacturing giant/leader/super power, and the extensive loss of service jobs as well, the answer lies within. That is within our own government who has not only allowed this to happen but has facilitated it with their quest for a "Global interwoven economy". I do not believe in isolationism, however our government has gone to the extreme other end of the spectrum. Most of that has originated in the greed and total stupidity of our leaders. As long as we have only a two party government (Republicturds and Demoncrats) we will never see "Real Change You Can Believe In"!
Submitted by Danny C. Flucke Jr. on September 21, 2009 - 3:45pm.
It seems the ether is wearing off. More and more taxpayers are realizing "news" is more about pushing agendas and creating desired effects (hysteria or complacency) - And less about reporting the actual facts.
I have debates with industry professionals on a seemingly daily basis - On the topic of recovery vs. further recession. I am on the side of home values sliding further - Perhaps even another 25 to 35% over the next 12 months.
Why? Simple.
Compare the number of homeowners 60 days late in the first half of 2008 - Vs - The number of homeowners 60 days late in the first half of 2009.
You will find a 60%+ increase. Now tell me again how home values are on the rise? With more and more homeowners facing foreclosure in an already saturated market?
And the "real" sales numbers still remain hidden. When BofA forecloses on a home - The transaction results in a "change-of-title". So when BofA forecloses on a $400,000 mortgage - And the property is only worth $300,000 - Guess which amount is recorded as the "sale" price...?
Yes. $400,000.
Ever wonder how we had property values sliding slower - Then stabilizing while there was a moratorium not allowing foreclosures. And now that foreclosures are happening at one of the highest rates in our history - We have a RISE in home sale prices...?
The media can twist data as they see fit. It's up to taxpayers to know when to call "BS"...
Thanx, Danny
Danny C. Flucke Jr.
Senior Partner
Nationwide Mortgage Experts, LLC
Direct: (714)624-9479
DCFJ@NationwideMortgageExperts.com
www.NationwideMortgageExperts.com / www.NaMoEx.com
Submitted by Tyler Schuett on September 27, 2009 - 12:15pm.
"We need to bring back the jobs that have supported so many families for generations. All of these layoffs will continue to have a trickle-down effect and result in continued downsizing and layoffs."
Face facts. The country that existed when blue collar jobs were it's backbone no longer exists. We live in a changed world. There is no 'going back' only going forward.
I'll bring up a GE company value here "See change for the growth opportunity it brings". We need to adapt and overcome. We need to recognize that we are in a different time, and the longer we cling to the way things were, the longer we'll slip and slide. I hate to say this but your article speaks of all the problems you perceive us to have and contains no solutions. What would you propose the government do, stand idly by and do nothing?
What say you?
Signed,
- - Devils Advocate to Chicken Little.
Submitted by Nick Chucales on September 27, 2009 - 3:54pm.
Tyler or should I say Devils Advocate?
Apparently you never read the article I was responding to. If you had you would know that I was responding to several claims that the recession was over.
In response to your comment, I disagree with your statement "We live in a changed World". What has changed? The labor laws in third world countries? Government control, regulations and oversight regarding manufacturing in those same countries? Tell me Tyler what has changed? The only thing that has changed is that we lack oversight in this country, big corporations (including GE) continue to move manufacturing overseas improving their profit margins and increasing executive compensation while eliminating the middle class in this country. The kicker is that these same companies import their goods back to this country to sell to the same consumer’s whose jobs they just eliminated.
A good start to solving this issue would to be go back to how this was handled under the Reagan administration, place tariffs on imports until manufacturing returns to this country or the countries were the jobs have been shipped increase wages to provide a decent and competitive wage to those workers. I do not know what industry you currently work in, but I hope that you never experience the results of having that industry outsourced or shipped overseas. In addition I am guessing that from your cmment you are in your mid to late 20’s, am I correct?
Signed,
Not Chicken Little just a Realist