PeakTrader.com

[administrator]

PeakTrader said...

Friday May 4, 2012

Lakshman Achuthan, ECRI's co-founder and chief operating officer said:

"The median recognition lag after a recession begins is about half a year. After the last recession began, it actually took nine months before the consensus view accepted the reality, especially since we had clearly positive real-time GDP readings for the first half of 2008 that were later revised downward.

When we review the year-over-year growth rate of the U.S. Coincident Indicator Index, which includes broad measures of output, employment, income and sales, we find it to be in a clear, cyclical downturn. That is an authoritative indication that overall U.S. economic growth is actually worsening, not reviving."

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Construction likely turned the corner, although it may recover at a slow rate, from its deep depression.

The E.U. recession and a China hard landing will slow the weak U.S. expansion-recovery.

Contractionary U.S. fiscal policy, or the "fiscal cliff" will cause a recession, and worsen the depression.

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To begin to close the $1 trillion a year output gap, U.S. GDP will need to expand faster:

U.S. Real GDP Growth

2008 0%
2009 -3.5%
2010 3.0%
2011 1.7%

2012 2.0%?

From the trough in 1991 to the peak in 2007, annual U.S. real GDP growth averaged about 3.2%.

According to the Fed:

Fed Watch: Fed Still Lowering Potential Output Growth Estimates?
March 20, 2012

"Last fall, Dudley thought that growth somewhat above 2.5% would not bring unemployment down, while 2.75% would only have modest impacts.

That suggests an estimate of potential growth around 2.6-2.7%.

We need sustained growth above that rate to absorb the substantial amount of unused productive capacity."

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When speculators drive-up oil prices, they raise oil supply and reduce oil demand.

Moreover, speculators provide a buffer against unexpected shocks.

Without that buffer, much higher oil prices or shortages can more easily take place, with severe consequences to the economy.

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The federal government is well overdue for a massive "creative-destruction" process to increase efficiency and reduce waste.

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Charts:

http://www.streettalklive.com/images/stories/housing-starts-completions-052512.png

http://www.streettalklive.com/images/stories/home-sales-newandexisting-052512.png

http://www.streettalklive.com/images/stories/1dailyxchange/home-renters-vs-occupied-052512.png

http://www.streettalklive.com/images/stories/1dailyxchange/home-vacant-heldoffmarket-052512.png

http://www.streettalklive.com/images/stories/1dailyxchange/home-ownership-rate-052512.png

http://1.bp.blogspot.com/-_7npZrjMKeM/T8HJ-jJvW2I/AAAAAAAAPRI/i5mfkdasXMU/s1600/wallace%2B-%2BNew%2BHome%2BSales%2BApril%2B2012.png

http://www.washingtontimes.com/news/2012/may/24/number-of-high-school-students-with-jobs-hits-20-y/#.T7-k9eW4guw.reddit

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