Economy grows in 3Q, signals end of recession

**Prince** · 10-29-2009, 09:51 AM

Economy grows in 3Q, signals end of recession

By JEANNINE AVERSA (AP) – 23 minutes ago

WASHINGTON — The economy grew at a 3.5 percent pace in the third quarter, the best showing in two years, fueled by government-supported spending on cars and homes. It's the strongest signal yet that the economy has entered a new, though fragile, phase of recovery and that the worst recession since the 1930s has ended.

Going forward, many analysts expect the pace of the budding recovery to be plodding due to rising unemployment and continuing difficulties by both consumers and businesses to secure loans.

"This welcome milestone is just another step, and we still have a long road to travel until the economy is fully recovered," said Christina Romer, President Barack Obama's chief economist. "It will take sustained, robust ... growth to bring the unemployment rate down substantially. Such a decline in unemployment is, of course, what we are all working to achieve."

The much-awaited turnaround reported Thursday by the Commerce Department ended the streak of four straight quarters of contracting economic activity, the first time that's happened on records dating to 1947.

It also marked the first increase since the spring of 2008, when the economy experienced a short-lived uptick in growth.

The third-quarter's performance — the strongest since right before the country fell into recession in December 2007 — was slightly better than the 3.3 percent growth rate economists expected.

Armed with cash from government support programs, consumers led the rebound in the third quarter, snapping up cars and homes.

Consumer spending on big-ticket manufactured goods soared at an annualized rate of 22.3 percent in the third quarter, the most since the end of 2001. The jump largely reflected car purchases spurred by the government's Cash for Clunkers program that offered a rebate of up to $4,500 to buy new cars and trade in old gas guzzlers.

The housing market also turned a corner in the summer. Spending on housing projects jumped at an annualized pace of 23.4 percent, the largest jump since 1986. It was the first time since the end of 2005 that spending on housing was positive. Purchases of home furnishings and appliances also added to economic growth.

The government's $8,000 tax credit for first-time home buyers supported the housing rebound. Congress is considering extending the credit, which expires on Nov. 30.

The collapse of the housing market led the country into the recession. Rotten mortgage securities spiraled into a banking crisis. Home foreclosures surged. The sector's return to good health is a crucial ingredient to a sustained economic recovery.

A top concern is whether the recovery can continue after government supports are gone.

Many economists predict economic activity won't grow as much in the months ahead as the bracing impact of Obama's $787 billion package of increased government spending and tax cuts fades.

The National Association for Business Economics thinks growth will slow to a 2.4 percent pace in the current October-December quarter. It expects a 2.5 percent growth rate in the first three months of next year, although other economists believe the pace will be closer to 1 percent.

Romer, in remarks last week said the government's stimulus spending already had its biggest impact and probably won't contribute to significant growth next year.

Brisk spending by the federal government played into the third-quarter turnaround. Federal government spending rose at a rate of 7.9 percent in the third quarter, on top of a 11.4 percent growth rate in the second quarter.

In other encouraging developments, businesses boosted spending on equipment and software at a 1.1 percent pace in the third quarter, the first increase in nearly two years.

Third-quarter activity also was helped by increased sales of U.S.-made goods to customers overseas, as economies in Asia, Europe and elsewhere improved. The cheaper dollar is aiding U.S. exporters, making their goods less expensive to foreign buyers. Exports of U.S. goods soared at an annualized rate of 21.4 percent in the third quarter, the most since the final quarter of 1996.

Businesses, meanwhile, reduced their stockpiles of goods less in the third quarter, after slashing them at a record pace in the second quarter. With inventories at rock-bottom levels, even the smallest increase in demand probably will prompt factories to boost production. This restocking of depleted inventories is expected to help sustain the recovery in the coming months, economists said.

Even with the third-quarter improvement, the economy isn't out of the woods yet.

Federal Reserve Chairman Ben Bernanke and members of Obama's economics team have warned that the nascent recovery won't be robust enough to prevent the unemployment rate — now at a 26-year high of 9.8 percent — from rising into next year.

Economists say the jobless rate probably nudged up to 9.9 percent in October and will go as high as 10.5 percent around the middle of next year before declining gradually. The government is scheduled to release the October jobless rate report next week.

The Labor Department said Thursday that newly laid-off workers seeking unemployment insurance fell by 1,000 to a seasonally-adjusted 530,000. Analysts expected a drop to 521,000.

The number of people continuing to claim benefits, fell by 148,000 to 5.8 million, steeper than analysts expected. Those figures lag initial claims by a week.

With joblessness growing and wages dipping slightly in the third quarter, consumers are expected to turn more restrained in the months ahead. That would put a much heavier burden on America's businesses to keep the recovery going.

"We're beginning to crawl out a very deep hole," said economist Ken Mayland, president of ClearView Economics. "It will take time to get back to normal again and there are questions about how consumers will hold up in the months ahead. But I think the recovery will be sustained."

To foster the recovery, the Fed is expected to keep a key bank lending rate at record low near zero when it meets next week and probably will hold it there into next year.

With the economy on the mend, the Fed has slowed down some key emergency support programs but doesn't want to pull the plug until the recovery is on firm footing.

Even if the economy climbs back into positive territory in the third quarter, it will be up to another group to declare the recession over. The National Bureau of Economic Research, a panel of academics, is in charge of dating the beginning and ends of recessions. It usually makes it determinations well after the fact.

Big Smoothy · 10-29-2009, 09:59 AM

I've been waiting for the report, and I knew what would happen.

Because of GDP expansion, the government and some "economists" are claiming this is a signal that the recession is over.

It is not.

What does this GDP expansion mean?

Nothing.

At the moment.

Unemployment is still to high
consumer spending too low
housing problem now in its 3rd phase, and will get worse around 2010.
commercial real estate train just started crashing
401Ks as bad as they've always been, are still low
insecurity for many who are working

I expect this "recovery" talk to last about 7-10 days.

maniclion · 10-29-2009, 02:36 PM

Quote:

Originally Posted by Big Smoothy

I've been waiting for the report, and I knew what would happen.

Because of GDP expansion, the government and some "economists" are claiming this is a signal that the recession is over.

It is not.

What does this GDP expansion mean?

Nothing.

At the moment.

Unemployment is still to high
consumer spending too low
housing problem now in its 3rd phase, and will get worse around 2010.
commercial real estate train just started crashing
401Ks as bad as they've always been, are still low
insecurity for many who are working

I expect this "recovery" talk to last about 7-10 days.

I think you are underestimating the power of positive reenforcement. People like to hear good news, news like this supports their need to spend money... Plus I think they will try to keep an optimistic spin on this until the Christmas season is over....

Big Smoothy · 10-29-2009, 02:42 PM

Quote:

Originally Posted by maniclion

I think you are underestimating the power of positive reenforcement. People like to hear good news, news like this supports their need to spend money... Plus I think they will try to keep an optimistic spin on this until the Christmas season is over....

Manic,

Here is my BIG criticism:

spending money: 70% of the US economy is propelled by consumer spending: people buying sh$t.

This, IS the problem. This is false prosperity.

Declining and stagnant wages starting in 1970, consumer per capita debt reaching all-time highs (credit cards) to fuel this consumer spending and false prosperity - buy low quality, cheap stuff you don't need at Wal-Mart.

maniclion · 10-29-2009, 03:32 PM

Quote:

Originally Posted by Big Smoothy

Manic,

Here is my BIG criticism:

spending money: 70% of the US economy is propelled by consumer spending: people buying sh$t.

This, IS the problem. This is false prosperity.

Declining and stagnant wages starting in 1970, consumer per capita debt reaching all-time highs (credit cards) to fuel this consumer spending and false prosperity - buy low quality, cheap stuff you don't need at Wal-Mart.

You don't have to tell me about the problem, it's the whole reason China is going to kick our ass in the near future. They saw how much we love our cheap crap so they started making it cheaper than anyone else and also made sure it would break faster so we'd have to replace it more often....... I have a severe aversion to poorly made cheap crap....or even bare minimum engineering like this company we buy clamps for standing seam roofs, they tried to get us to switch to using a single bolt item they have but even if their engineers think that's all we need I still like to have the double because it will hold even better, you have $20,000+ of solar panels up on the roof having extra holding power makes sense.......engineers should not be accountants, make your products to be strong and have longevity, not to cut a nickel here and there.....

Big Smoothy · 10-30-2009, 01:44 AM

Quote:

Originally Posted by maniclion

You don't have to tell me about the problem, it's the whole reason China is going to kick our ass in the near future. They saw how much we love our cheap crap so they started making it cheaper than anyone else and also made sure it would break faster so we'd have to replace it more often....... I have a severe aversion to poorly made cheap crap

Great points, Manic. I totally agree.

Quote:

...or even bare minimum engineering like this company we buy clamps for standing seam roofs, they tried to get us to switch to using a single bolt item they have but even if their engineers think that's all we need I still like to have the double because it will hold even better, you have $20,000+ of solar panels up on the roof having extra holding power makes sense.......engineers should not be accountants, make your products to be strong and have longevity, not to cut a nickel here and there.....

Interesting business you're in Manic.

It's for the common good, and it sounds like business is going well.

And you also live in Hawaii.

mcguin · 10-30-2009, 08:06 AM

I rarely ever agree with Big Smoothy's posts, but I have to say you're pretty dead on with this one. With all the spending going on in D.C., they need something positive to surface in the media, whether it be true or false, and in this case quite false. Working in the casualty and property insurance industry, I see in and out first hand the side effects of a horrible economy, and our numbers don't seem to tell any tale of "getting better" at least for another year or two at the earliest. And again, umemployment rates are the # 1 sign whether a recession is there or not.

**Dale Mabry** · 10-30-2009, 11:09 AM

I agree people need to hear good news before they will spend, but I don't think that is necessarily a positive thing. Tell Joe Blow who is working 30 hours a week making $10 an hour and he will spend because he is ignorant. So, in 5 months when he is still making the same amount of money and has nothing to show for it, then loses his job, what do you think is going to happen to him? Like it or not, this is the information age, and people who want to make informed decisions on whether to spend or not have more than the slanted government statistics to look at, and I won't be spending significantly until there is clear cut signs this crap is over. But, IMO, the primary issue driving us deeper into the recession is the continually growing gap between the middle and upper classes, putting an obscenely large chunk of the total money in the US in the hands of a few. And when that isn't enough, they take our tax money and give them more.

What were September new car sales? I think they were down 23% compared to last year. You will see the same thing with housing if the rebates are finished in November. Until the gov't no longer needs to give thousands of dollars to people to get them to spend, I will feel comfortable.

**Prince** · 10-30-2009, 11:11 AM

Quote:

Originally Posted by Dale Mabry

But, IMO, the primary issue driving us deeper into the recession is the continually growing gap between the middle and upper classes, putting an obscenely large chunk of the total money in the US in the hands of a few. And when that isn't enough, they take our tax money and give them more.

lnvanry · 10-30-2009, 05:53 PM

Quote:

Originally Posted by maniclion

You don't have to tell me about the problem, it's the whole reason China is going to kick our ass in the near future. They saw how much we love our cheap crap so they started making it cheaper than anyone else and also made sure it would break faster so we'd have to replace it more often....... I have a severe aversion to poorly made cheap crap....or even bare minimum engineering like this company we buy clamps for standing seam roofs, they tried to get us to switch to using a single bolt item they have but even if their engineers think that's all we need I still like to have the double because it will hold even better, you have $20,000+ of solar panels up on the roof having extra holding power makes sense.......engineers should not be accountants, make your products to be strong and have longevity, not to cut a nickel here and there.....

If China does kick our ass, it won't b/c of that reason...most of the PRC's reserves are in USD. But there are more reasons as to why the PRC will come crashing down just as fast as its rise...the PRC rebound will be its real rise to power but only after it depegs its currency from the USD and its aging, nonworking, older generation dies off.

maniclion · 10-30-2009, 06:05 PM

Quote:

Originally Posted by lnvanry

If China does kick our ass, it won't b/c of that reason...most of the PRC's reserves are in USD. But there are more reasons as to why the PRC will come crashing down just as fast as its rise...the PRC rebound will be its real rise to power but only after it depegs its currency from the USD and its aging, nonworking, older generation dies off.

No...we are going to start having everything manufactured over there, not in whole, but at the component level like parts for guns and tanks and missiles and then we'll go to war with N. Korea or some one and all our shit will fall apart and they will sweep in and wipe us out cause we'll have nothing left that works properly....

lnvanry · 10-30-2009, 07:00 PM

Quote:

Originally Posted by maniclion

No...we are going to start having everything manufactured over there, not in whole, but at the component level like parts for guns and tanks and missiles and then we'll go to war with N. Korea or some one and all our shit will fall apart and they will sweep in and wipe us out cause we'll have nothing left that works properly....

As some one who works in the international missile market, I can say that the few mundane components that are imported from China are not integral pieces and can easily be made somewhere else. Also, our defense systems are under VERY strict quality auditing standards and are tested for years (sometimes, decades) before they are used in the field...I wouldn't worry much about equipment failure.

danzik17 · 10-30-2009, 11:02 PM

Quote:

Originally Posted by lnvanry

As some one who works in the international missile market, I can say that the few mundane components that are imported from China are not integral pieces and can easily be made somewhere else. Also, our defense systems are under VERY strict quality auditing standards and are tested for years (sometimes, decades) before they are used in the field...I wouldn't worry much about equipment failure.

The hell kind of equipment is tested for decades besides a nuke? By the time the testing was done, the freaking equipment would be obsolete.

Big Smoothy · 10-31-2009, 12:21 AM

As far as the GDP growth this quarter and what discussion it's propelled:

discussion of "recovery."

Here is an article written by Ron Paul on October 30, 2009. (Today.)

I'm not saying I agree with all of his points - I'm a layman to begin with in these matters, as we all are - but I don't believe the mainstream media and these "pundits" in their "recovery" talk. These are the same ones who didn't even realize we were in a recession for an entire year.

Link:
http://mensnewsdaily.com/sexandmetro...for-the-worst/

Quote:

Friday, October 30, 2009
Be Prepared for the Worst
by Ron Paul

Any number of pundits claim that we have now passed the worst of the recession. Green shoots of recovery are supposedly popping up all around the country, and the economy is expected to resume growing soon at an annual rate of 3% to 4%. Many of these are the same people who insisted that the economy would continue growing last year, even while it was clear that we were already in the beginning stages of a recession.

A false recovery is under way. I am reminded of the outlook in 1930, when the experts were certain that the worst of the Depression was over and that recovery was just around the corner. The economy and stock market seemed to be recovering, and there was optimism that the recession, like many of those before it, would be over in a year or less. Instead, the interventionist policies of Hoover and Roosevelt caused the Depression to worsen, and the Dow Jones industrial average did not recover to 1929 levels until 1954. I fear that our stimulus and bailout programs have already done too much to prevent the economy from recovering in a natural manner and will result in yet another asset bubble.

Anytime the central bank intervenes to pump trillions of dollars into the financial system, a bubble is created that must eventually deflate. We have seen the results of Alan Greenspan’s excessively low interest rates: the housing bubble, the explosion of subprime loans and the subsequent collapse of the bubble, which took down numerous financial institutions. Rather than allow the market to correct itself and clear away the worst excesses of the boom period, the Federal Reserve and the U.S. Treasury colluded to put taxpayers on the hook for trillions of dollars. Those banks and financial institutions that took on the largest risks and performed worst were rewarded with billions in taxpayer dollars, allowing them to survive and compete with their better-managed peers.

This is nothing less than the creation of another bubble. By attempting to cushion the economy from the worst shocks of the housing bubble’s collapse, the Federal Reserve has ensured that the ultimate correction of its flawed economic policies will be more severe than it otherwise would have been. Even with the massive interventions, unemployment is near 10% and likely to increase, foreigners are cutting back on purchases of Treasury debt and the Federal Reserve’s balance sheet remains bloated at an unprecedented $2 trillion. Can anyone realistically argue that a few small upticks in a handful of economic indicators are a sign that the recession is over?

What is more likely happening is a repeat of the Great Depression. We might have up to a year or so of an economy growing just slightly above stagnation, followed by a drop in growth worse than anything we have seen in the past two years. As the housing market fails to return to any sense of normalcy, commercial real estate begins to collapse and manufacturers produce goods that cannot be purchased by debt-strapped consumers, the economy will falter. That will go on until we come to our senses and end this wasteful government spending.

Government intervention cannot lead to economic growth. Where does the money come from for Tarp (Treasury’s program to buy bad bank paper), the stimulus handouts and the cash for clunkers? It can come only from taxpayers, from sales of Treasury debt or through the printing of new money. Paying for these programs out of tax revenues is pure redistribution; it takes money out of one person’s pocket and gives it to someone else without creating any new wealth. Besides, tax revenues have fallen drastically as unemployment has risen, yet government spending continues to increase. As for Treasury debt, the Chinese and other foreign investors are more and more reluctant to buy it, denominated as it is in depreciating dollars.

The only remaining option is to have the Fed create new money out of thin air. This is inflation. Higher prices lead to a devalued dollar and a lower standard of living for Americans. The Fed has already overseen a 95% loss in the dollar’s purchasing power since 1913. If we do not stop this profligate spending soon, we risk hyperinflation and seeing a 95% devaluation every year.

Ron Paul is a Republican congressman from Texas

lnvanry · 10-31-2009, 03:17 PM

Quote:

Originally Posted by danzik17

The hell kind of equipment is tested for decades besides a nuke? By the time the testing was done, the freaking equipment would be obsolete.

Not at all...ABL and other land based laser technology has been under testing for 6 years...a prototype was only released 2 years ago. It will take another 4-10 before production would even hit full swing. It took over 20yrs for stealth fighter jets to produced. Exoatomspheric Kill Vehicles took over 15yrs...MRV, KEI, SM-6 the list goes on. Just b/c the technology is over 10yrs old doesn't make it obsolete. SM-2 is over about 40yrs old, and is still one of the premier medium range, sea based defense missiles in the world...at least for most countries besides the US, Russia, and the UK/Australia.

A nuke really isn't that high tech anymore either...the guidance systems, sensors, and fuze section on the rocket is the real brains...not the warhead

Soul12 · 10-31-2009, 08:34 PM

It is great news to hear the economy growing, but I think the biggest improvement will be when unemployment drops and consumer spending increases. How can people spend when they don't have any income??

Big Smoothy · 11-01-2009, 12:12 AM

Quote:

Originally Posted by Soul12

It is great news to hear the economy growing, but I think the biggest improvement will be when unemployment drops and consumer spending increases. How can people spend when they don't have any income??

Yes. True.

And also confidence, is a critical factor in spending (and I still disagree with the American economic model of "spending." Over 70% of the US economy is propelled by spending.

Good for certain job creation: Wal-Mart, and other low paying service sector jobs.

Often subsidized by taxpayers.

danzik17 · 11-01-2009, 12:39 AM

Big Smoothy:

Since I know you were interested, the thing that we figured would happen to the Audit the Fed Bill DID happen.

"The bill, with 308 co-sponsors, has been stripped of provisions that would remove Fed exemptions from audits of transactions with foreign central banks, monetary policy deliberations, transactions made under the direction of the Federal Open Market Committee and communications between the Board, the reserve banks and staff, Paul said today. "

Federal Reserve Policy Audit Legislation â€˜Gutted,â€™ Paul Says - Bloomberg.com

lnvanry · 11-01-2009, 12:49 AM

Quote:

Originally Posted by danzik17

Big Smoothy:

Since I know you were interested, the thing that we figured would happen to the Audit the Fed Bill DID happen.

"The bill, with 308 co-sponsors, has been stripped of provisions that would remove Fed exemptions from audits of transactions with foreign central banks, monetary policy deliberations, transactions made under the direction of the Federal Open Market Committee and communications between the Board, the reserve banks and staff, Paul said today. "

Federal Reserve Policy Audit Legislation â€˜Gutted,â€™ Paul Says - Bloomberg.com

what a Effing shame...I sincerely hope Congressman Paul gets his amendment back in. Even if the House does adopt original language, its still going to get stomped by the Senate.

lnvanry · 11-01-2009, 12:51 AM

Quote:

Originally Posted by Big Smoothy

As far as the GDP growth this quarter and what discussion it's propelled:

discussion of "recovery."

Here is an article written by Ron Paul on October 30, 2009. (Today.)

I'm not saying I agree with all of his points - [b]I'm a layman to begin with in these matters, as we all are[b] - but I don't believe the mainstream media and these "pundits" in their "recovery" talk. These are the same ones who didn't even realize we were in a recession for an entire year.

You are not a layman in this topic...nor am I and a decent amount of posters on this site. Give yourself more credit

Big Smoothy · 11-01-2009, 08:23 AM

Quote:

Originally Posted by Dale Mabry

But, IMO, the primary issue driving us deeper into the recession is the continually growing gap between the middle and upper classes, putting an obscenely large chunk of the total money in the US in the hands of a few. And when that isn't enough, they take our tax money and give them more.

I see this also. This has been happenning for the last few decades.

I'm not talking about wealth redistribution, or anything similar.

The middle class - however you define it - started slipping down and shrinking in 1970. This was the year it first became quantifiable.

The Upper-Upper middle classes have really shot up. There is a gap.

(Ginnie Index, the world Income Gap index, for example, can be googled.)

An Income Gap is one thing, but when you have the middle-class - which is important for the stabilization of almost all societies in the West - slipping down, things happen for the worse.

Big Smoothy · 11-01-2009, 08:30 AM

Quote:

Originally Posted by danzik17

Big Smoothy:

Since I know you were interested, the thing that we figured would happen to the Audit the Fed Bill DID happen.

"The bill, with 308 co-sponsors, has been stripped of provisions that would remove Fed exemptions from audits of transactions with foreign central banks, monetary policy deliberations, transactions made under the direction of the Federal Open Market Committee and communications between the Board, the reserve banks and staff, Paul said today. "

Federal Reserve Policy Audit Legislation â€˜Gutted,â€™ Paul Says - Bloomberg.com

Thanks for the update and FYI, Danzik. Yup. They did it...or....didn't do it.

Ivanry: Thanks for the kind words. Good points. I think we try to be as informed as we can. And just look at those boobs on the "financial channels."

Big Smoothy · 11-01-2009, 09:02 AM

Sorry for the thread hogging, but I found this, and I find it a bit - accurate of what I now see.

Not the portion below about not only jobs, but being over-qualified, and job opportunities.

I've seen this in other countries.

If this is indeed to case to be - in the mid-term future (or longer) of the USA, we are truly entering a new era in America:

Note* I edited out some extraneous info. This info is in the link at bottom.

Quote:

Economic Collapse Permanently Destroys Middle Class Jobs

Oct 29th, 2009
By David Calderwood
Whiskey and Gunpowder

Many people write of the imminent destruction of the U.S. middle class (of which I consider myself a member) but few have explained specifically how this occurs. Understanding the mechanism seems important if I hope to avoid the fate of most of my peers.

One brief passage struck me, however, because it related to the mechanism by which middle-class people become poor during an economic meltdown. The mechanism may be obvious, but it is important to see how theory actually worked in the real world.

Mr. Aguierre shares (in “Part IV”) how, while studying architecture following the 2001 crisis, a social studies teacher illustrated Argentina’s middle class’ slide into poverty. Quoting the teacher from memory, Mr. Aguierre writes,

“[Those in the] middle class suddenly discover that they are overqualified for the jobs they can find and have to settle for anything they can obtain, therefore unemployment sky rockets: too much to offer, too little demand. You see they prepare, study for a job they are not going to get. You kids, you are studying Architecture because you simply wish to do so. Only 3 or 4 percent of you will actually find a job related to architecture.”

We all sat there, letting it all sink in. After a few months, it all proved to be true. Even the amount of students that dropped out of college increased to at least 50%. They either [saw] no point in studying something that would not make much of a difference in their future salaries, had no money to keep themselves in college, or simply had to drop college to work and support their families.

This reads like a premonition.

The USA’s middle-class includes lots of people whose careers rest on higher education and specialized certification. While plumbers, electricians, factory employees and truck drivers typically are among the middle-class, most of those populating suburbia are accountants, middle managers, sales people, financial consultants, teachers, nurses, writers, etc. In other words, as manufacturing and now building activity contract, more of the middle class is made up of the college-educated in white-collar careers.

Factor in our current economic pickle and it’s easy to see the most likely path ahead.

With the economic expansion built on mass optimism and debt rolling over, conditions are now fertile for questioning the college degree system as jobs for the college-educated evaporate en masse. The ability of technology to replace white-collar jobs is widespread, and an increasing need to cut costs is finally driving its use, just as changing economic (and regulatory) conditions also drive the replacement of manpower with robotics in the factory.

Across the economy, the need to cut employment costs (not just payroll, but payroll taxes and benefits) is resulting in mass layoffs of sales people and white-collar office staff. When one considers how much work can be replaced now by accounting software, electronic sales presentations, flatter organizational structures, and “news persons” filing reports for free on the Internet via blogs, it is obvious that vast numbers of middle-class Americans teeter on the precipice of unemployability, not just unemployment.

When the “unique” skill sets that commanded $50,000 to $100,000 (or more) annual salaries turn out to be in vast oversupply, the only course left is to compete with those with neither a college degree nor technical education for jobs that can’t support a middle-class lifestyle.

Hands-on service occupations like nursing and medicine are also far from safe. At the end of the day, it is productivity that pays for such work to be done, and when vast numbers of people cannot find economically productive work, economic reality will land on these occupations, too.

When the economic tide goes out, all boats sink into the mud.

Too many people were goaded into illusory occupations by tax subsidies for higher education, government (rather than market) demand, and other distortions like the credit-without-prior-production of the central bank. Political pandering and central planning replaced the natural balance of an economy growing organically through the honest signals of the price system.

As long as there was enough optimism and ignorance to sustain the illusion, the distortions only grew larger.

Though the ignorance largely remains, there’s no more blind denial left to sustain the burden of all that wasted effort. If your job disappears, it may not come back.

This time it really is different. The final stages of that blind denial included fiscal imprudence that bordered on insanity. The mirage economy can’t return until after the pendulum has swung its full travel to the other side of the arc. That path leads through the valley of a crushing economic depression, one that will radically and permanently alter the lives of middle-class Americans who are almost universally unaccustomed to hardship.

Regards,
David Calderwood

David Calderwood is a businessman, artist and author of the novel Revolutionary Language, which was selected January 2000 Freedom Book of the Month at Free-Market.net.

Link: Economic Collapse Permanently Destroys Middle Class Jobs

Big Smoothy · 11-01-2009, 02:33 PM

Please watch this on the "recovery."

YouTube Video

10-29-2009, 09:51 AM	#1
Prince IronMagLabs Owner Administrator Join Date: Nov 2000 Location: Colorado Posts: 37,397 Photos: 356	Economy grows in 3Q, signals end of recession Economy grows in 3Q, signals end of recession By JEANNINE AVERSA (AP) – 23 minutes ago WASHINGTON — The economy grew at a 3.5 percent pace in the third quarter, the best showing in two years, fueled by government-supported spending on cars and homes. It's the strongest signal yet that the economy has entered a new, though fragile, phase of recovery and that the worst recession since the 1930s has ended. Going forward, many analysts expect the pace of the budding recovery to be plodding due to rising unemployment and continuing difficulties by both consumers and businesses to secure loans. "This welcome milestone is just another step, and we still have a long road to travel until the economy is fully recovered," said Christina Romer, President Barack Obama's chief economist. "It will take sustained, robust ... growth to bring the unemployment rate down substantially. Such a decline in unemployment is, of course, what we are all working to achieve." The much-awaited turnaround reported Thursday by the Commerce Department ended the streak of four straight quarters of contracting economic activity, the first time that's happened on records dating to 1947. It also marked the first increase since the spring of 2008, when the economy experienced a short-lived uptick in growth. The third-quarter's performance — the strongest since right before the country fell into recession in December 2007 — was slightly better than the 3.3 percent growth rate economists expected. Armed with cash from government support programs, consumers led the rebound in the third quarter, snapping up cars and homes. Consumer spending on big-ticket manufactured goods soared at an annualized rate of 22.3 percent in the third quarter, the most since the end of 2001. The jump largely reflected car purchases spurred by the government's Cash for Clunkers program that offered a rebate of up to $4,500 to buy new cars and trade in old gas guzzlers. The housing market also turned a corner in the summer. Spending on housing projects jumped at an annualized pace of 23.4 percent, the largest jump since 1986. It was the first time since the end of 2005 that spending on housing was positive. Purchases of home furnishings and appliances also added to economic growth. The government's $8,000 tax credit for first-time home buyers supported the housing rebound. Congress is considering extending the credit, which expires on Nov. 30. The collapse of the housing market led the country into the recession. Rotten mortgage securities spiraled into a banking crisis. Home foreclosures surged. The sector's return to good health is a crucial ingredient to a sustained economic recovery. A top concern is whether the recovery can continue after government supports are gone. Many economists predict economic activity won't grow as much in the months ahead as the bracing impact of Obama's $787 billion package of increased government spending and tax cuts fades. The National Association for Business Economics thinks growth will slow to a 2.4 percent pace in the current October-December quarter. It expects a 2.5 percent growth rate in the first three months of next year, although other economists believe the pace will be closer to 1 percent. Romer, in remarks last week said the government's stimulus spending already had its biggest impact and probably won't contribute to significant growth next year. Brisk spending by the federal government played into the third-quarter turnaround. Federal government spending rose at a rate of 7.9 percent in the third quarter, on top of a 11.4 percent growth rate in the second quarter. In other encouraging developments, businesses boosted spending on equipment and software at a 1.1 percent pace in the third quarter, the first increase in nearly two years. Third-quarter activity also was helped by increased sales of U.S.-made goods to customers overseas, as economies in Asia, Europe and elsewhere improved. The cheaper dollar is aiding U.S. exporters, making their goods less expensive to foreign buyers. Exports of U.S. goods soared at an annualized rate of 21.4 percent in the third quarter, the most since the final quarter of 1996. Businesses, meanwhile, reduced their stockpiles of goods less in the third quarter, after slashing them at a record pace in the second quarter. With inventories at rock-bottom levels, even the smallest increase in demand probably will prompt factories to boost production. This restocking of depleted inventories is expected to help sustain the recovery in the coming months, economists said. Even with the third-quarter improvement, the economy isn't out of the woods yet. Federal Reserve Chairman Ben Bernanke and members of Obama's economics team have warned that the nascent recovery won't be robust enough to prevent the unemployment rate — now at a 26-year high of 9.8 percent — from rising into next year. Economists say the jobless rate probably nudged up to 9.9 percent in October and will go as high as 10.5 percent around the middle of next year before declining gradually. The government is scheduled to release the October jobless rate report next week. The Labor Department said Thursday that newly laid-off workers seeking unemployment insurance fell by 1,000 to a seasonally-adjusted 530,000. Analysts expected a drop to 521,000. The number of people continuing to claim benefits, fell by 148,000 to 5.8 million, steeper than analysts expected. Those figures lag initial claims by a week. With joblessness growing and wages dipping slightly in the third quarter, consumers are expected to turn more restrained in the months ahead. That would put a much heavier burden on America's businesses to keep the recovery going. "We're beginning to crawl out a very deep hole," said economist Ken Mayland, president of ClearView Economics. "It will take time to get back to normal again and there are questions about how consumers will hold up in the months ahead. But I think the recovery will be sustained." To foster the recovery, the Fed is expected to keep a key bank lending rate at record low near zero when it meets next week and probably will hold it there into next year. With the economy on the mend, the Fed has slowed down some key emergency support programs but doesn't want to pull the plug until the recovery is on firm footing. Even if the economy climbs back into positive territory in the third quarter, it will be up to another group to declare the recession over. The National Bureau of Economic Research, a panel of academics, is in charge of dating the beginning and ends of recessions. It usually makes it determinations well after the fact. BOARD SPONSORS: MassNutrition.com - Discount Supplement Superstore IronMagLabs.com - Bodybuilding Nutrition AlltheWhey.com - Bulk Protein Powders & Supplements CEMProducts.com - Research Chemicals & Supplements MusclesProd.com - Steroids, Bodybuilding & Training Blog Maximizer.com - Maximum Strength for Maximum Performance MikeGetsRipped.com - The Original 'Get Ripped' Blog ProteinRoutine.com - Experiments in Healthy Living Follow on Twitter Join Facebook Group Befriend on Myspace

10-29-2009, 09:59 AM	#2
Big Smoothy Windy City Elite Member Join Date: Jan 2004 Location: Chicago Posts: 3,266	I've been waiting for the report, and I knew what would happen. Because of GDP expansion, the government and some "economists" are claiming this is a signal that the recession is over. It is not. What does this GDP expansion mean? Nothing. At the moment. Unemployment is still to high consumer spending too low housing problem now in its 3rd phase, and will get worse around 2010. commercial real estate train just started crashing 401Ks as bad as they've always been, are still low insecurity for many who are working I expect this "recovery" talk to last about 7-10 days. Military men are dumb, stupid animals, to be used as pawns for foreign policy – Henry Kissinger (January-February 2003 edition of Eagle Newsletter)

10-30-2009, 11:09 AM	#8
Dale Mabry Moderator Moderator Join Date: May 2003 Location: Elsewhere Posts: 14,335 Photos: 10	I agree people need to hear good news before they will spend, but I don't think that is necessarily a positive thing. Tell Joe Blow who is working 30 hours a week making $10 an hour and he will spend because he is ignorant. So, in 5 months when he is still making the same amount of money and has nothing to show for it, then loses his job, what do you think is going to happen to him? Like it or not, this is the information age, and people who want to make informed decisions on whether to spend or not have more than the slanted government statistics to look at, and I won't be spending significantly until there is clear cut signs this crap is over. But, IMO, the primary issue driving us deeper into the recession is the continually growing gap between the middle and upper classes, putting an obscenely large chunk of the total money in the US in the hands of a few. And when that isn't enough, they take our tax money and give them more. What were September new car sales? I think they were down 23% compared to last year. You will see the same thing with housing if the rebates are finished in November. Until the gov't no longer needs to give thousands of dollars to people to get them to spend, I will feel comfortable. If sense were common, everyone would have it. 4/2007-Current 75th Ranked most popular image 1 spot behind Prince's bulge...

11-01-2009, 12:39 AM	#18
danzik17 Gender: MALE Elite Member Join Date: Oct 2005 Location: Connecticut Posts: 3,072	Big Smoothy: Since I know you were interested, the thing that we figured would happen to the Audit the Fed Bill DID happen. "The bill, with 308 co-sponsors, has been stripped of provisions that would remove Fed exemptions from audits of transactions with foreign central banks, monetary policy deliberations, transactions made under the direction of the Federal Open Market Committee and communications between the Board, the reserve banks and staff, Paul said today. " Federal Reserve Policy Audit Legislation â€˜Gutted,â€™ Paul Says - Bloomberg.com Ron Paul 2012 Journal: danzik17's Log - 4-6 Week Strength/Bulk Journal: Sub 10% by April <old>

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10-30-2009, 08:06 AM	#7
mcguin "It's not a tooma!" Join Date: Jan 2008 Location: US Posts: 358	I rarely ever agree with Big Smoothy's posts, but I have to say you're pretty dead on with this one. With all the spending going on in D.C., they need something positive to surface in the media, whether it be true or false, and in this case quite false. Working in the casualty and property insurance industry, I see in and out first hand the side effects of a horrible economy, and our numbers don't seem to tell any tale of "getting better" at least for another year or two at the earliest. And again, umemployment rates are the # 1 sign whether a recession is there or not.

10-31-2009, 08:34 PM	#16
Soul12 Registered User Join Date: Sep 2009 Location: Chicago, IL Posts: 13	It is great news to hear the economy growing, but I think the biggest improvement will be when unemployment drops and consumer spending increases. How can people spend when they don't have any income??