Recession Journal VI: It's OVER!!!!!!!!!!!! Any Questions?
Are people grabbing strangers in the street and kissing them yet?
Do you see the quivering, multi-colored ticker tape floating in the wind? How about the pitter-pat of feet toward the mall?
Are the talking heads flailing their arms with tales of you winning and the terrorists losing with your purchase of a new smart phone or a plasma television?
Are you happy now?
I ask these things because it’s finally over, technically, officially — the recession is over.
The latest U.S. Commerce Department figures reveal that America's economy grew at a 3.5% pace in the third quarter, beating economist expectations and turning in the best growth numbers in two years.
For any of those still feeling the personal blues and responding to this jargon with a resounding ‘whaaaaa,’ any positive gross domestic product growth after consecutive quarters of contraction or negative GDP, signals a technical, if not literal, end to the recession.
In this case, the latest GDP figures ended four straight quarters of negative GDP growth.
Indeed a relatively bullish equity market — with duller horns than recent years but still bullish — and respectably performing bond market, along with government stimuli and small surges in consumer cars and home purchases, is responsible for the growth.
So I’m checking in with you, how do you feel? Feel good? Okay, you sitting down?
Well here’s what our "post-recession" looks like right now.
In the same week that good GDP data pulled the United States out of a recession, there's also mixed to bad news where other economic indicators are concerned.
For one, consumer confidence is down.
I asked you how you were feeling, how come you didn’t tell me?
The so called "current conditions" indicator from the Conference Board, which was also recently released, fell to 20.7, and is near its lowest level in 26 years.
This is due to the continually lackluster labor market, where the current jobless rate of just under 10% — 9.8% to be exact — is the highest since 1983.
Okay I know that sucks, but are you comfortable?
Apropos, the ABC Consumer Comfort Index, also recently dropped on investors like it’s hot, indicates that consumers are as uncomfortable about current conditions and about spending as they were during peak levels in discomfort this summer.
And of course, we found out, in that same fateful week that consumer spending had nosedived in September by the largest amount in nine months. And incomes, to say nothing of disposable incomes, were flat across the board.
No, no, sit down, this’ll only take a bit longer. Cop a squat.
Further — yes this came out the same exact week too — while the S&P/Case-Shiller home-price index climbed 1% from the prior month, seasonally adjusted, after a 1.2% increase in July, sales of new U.S. homes unexpectedly fell in September.
The fall of home sales points to fear about lingering foreclosures and the end of tax credits for home buyers that could hamper a housing industry recovery.
Speaking of foreclosures, the U.S. Census Bureau — yes recently they said this — the number of vacant properties, including foreclosures, residences for sale and vacation homes, rose from 18.4 million a year earlier.
Meanwhile durable goods orders are up, but continued high unemployment looms in the shadows, as does the potential for a wild correction in commercial real estate.
Additionally, buried in the basement of the Commerce Department's glowing is data that reveals the inflation-adjusted disposable personal income of consumers falling fell 3.4%, almost the same percentage of positive GDP growth.
Don’t get mad at me, I’m just being real.
Okay, put the torches and pitchforks down. I repeat, we are officially out of a recession folks.
But the long-term effects of new or amended spending habits, our country’s personal and government debt and how we respond now that we’re out, will determine our personal and collective future.
Do you plan to get out there and make something happen? Do you plan to wait until the coast is clear? How has your philosophy changed, if at all?
I know, I know, more questions but as Ken Mayland, president of ClearView Economics pointed out to me in a, to belabor the point, “recent” conversation, “questions are all we have in the present.”
And the more we ask of our government and ourselves where fiscal and personal decisions are concerned, the more answers we have.
This post was included in the Carnival of Money Hackers.