On Dec 17, 2008, at 9:57 AM, Patrick Bond wrote:
> Sean Andrews wrote:
>> ... Though there isn't agreement about what to do, at least the
>> hegemonic
>> position seems to be that Luskin, et. al. are a discredited group of
>> cranks. That's a nice change.
>
> By the same token, what would we say about dear comrades Henwood,
> Panitch, Gindin? Hey, I wouldn't say they're discredited. Just
> sanguine cranks.
> :-)
>
> Doug Henwood, July 10, http://www.leftbusinessobserver.com/Radio.html#081004
> : "The economic news remains pretty much the same as the last few
> weeks: the U.S. economy remains weak, with no signs of picking up
> steam—and no signs of imploding either. I have a feeling I may be
> saying some version of this for weeks, maybe months to come."
That was July, man. And it was an accurate description of things at midyear. You've been predicting disaster for almost all of the 20 years I've known you! Does that make you more right?
And my analysis evolved with the news. E.g.:
September 6, commenting on the August employment report: "This one was, if not a disaster, still quite a stinker.... The only consolation is that in earlier recessions, we’ve lost as much three or four times that many jobs a month. So though this is crummy, it could be a lot worse."
October 4, commenting on the September employment report: "And although the unemployment rate held steady at 6.1%, it got some support from the fact that lots of people dropped out of the labor force and so weren’t counted as officially jobless. And the number of those working part time because they couldn’t find full-time work rose by 300,000, and is now up 1.6 million over the year. Still, these job losses are only half as large as they are in 'normal,' meaning average, recession months. But I suspect things are going to get worse in the coming months as the effects of the credit crisis spread."
October 9, commenting on the credit freeze: "If this continues, an it’s likely to, it’s only a matter of time before banks cut back further than they already have on the vital day-to-day loans to businesses—the loans that enable retailers to buy inventory and manufacturers to buy raw materials. Without those, the economy grinds to a halt."
October 16: "We’re in a recession, but for now, Armageddon has been kept at bay – FOR NOW" [emphasis in original].
October 30: "We’re starting to see some more real world effects of the credit crisis, with an emphasis on starting. Thursday morning, the Bureau of Economic Analysis reported that GDP contracted by 0.3% in the third quarter (at an annualized rate, adjusted for inflation). That’s a mild contraction, but some of the components beneath that headline number were anything but mild."
November 6: "In economic news, there’s now little doubt that the U.S. recession that began early this year in fairly mild form is now taking a turn for the worse, and possibly a sharp one."
November 13: "Further signs of economic weakening piled up over the last week, and not just in the U.S. Some 15 countries have reported declines in GDP in recent quarters—among them big ones like the U.S., Japan, Germany, the UK, Spain, Ireland, Italy, and France, and less big ones like Singapore and Latvia. More of this is likely to come."
November 20: "Bad news coming from both the financial sphere and the real economy.... And now to the real economy. The latest batch of news has been pretty terrible. On Wednesday, the Census Bureau reported that housing starts and permits to build new houses both hit all-time lows. And that’s not in percentage terms, or relative to the size of the economy—it’s in absolute numbers. Numbers that go back almost 50 years, when the U.S. population was about 40% lower than it is now. In other words, the housing market hasn’t been this weak since the 1930s. But still, prices would have to fall another 15% to reach their long- term average ratio to household incomes. Another fall of that magnitude —prices are already down around 20%—would put even more homeowners underwater, owing more on their mortgage than the house is worth, and prompt more defaults and foreclosures. It’s a damn mess. And the job market is looks to be weakening as well. On Thursday morning, the Labor Department announced that first-time claims for unemployment insurance rose by 27,000 last week to 542,000. While not the highest on record, either in numerical terms or especially as a percentage of the labor force, it’s rising sharply—up 22% since September. This almost certainly means that November’s employment report, to be released on the first Friday of December, will look horrible. For the first half of this year, job losses looked mainly to be a function of a hiring strike by employers—layoffs and firings were relatively modest by the standards of earlier recessions. That’s changed now, and job losses are rising sharply."
November 27: "My guess is that we’ve got another six or nine months of this sort of thing [i.e., a weak housing market] before the housing bust finally runs its course—though it could be a lot longer before we see a true recovery. I’d say much the same about the economy, adding maybe six months to the estimate—meaning that the real economy may not begin to recover until 2010. But that’s just a guess. The leading indexes are still falling. The one from the Economic Cycles Research Institute is falling hard, suggesting a severe recession; its counterpart from the Conference Board, while also falling, isn’t looking so scary. But in any case, there is no sign anywhere that the economy—and not just the U.S., but globally—is in anything but the early stages of a major downturn."
December 4 (WBAI only): "For the first six or eight months of the recession, it looked pretty mild. There were job losses, but not as bad as in earlier downturns. Other economic indicators headed south, but most not so sharply. But over the last few months, there’s been an acceleration to the downside. Job losses are now averaging close to the 300,000 a month neighborhood that’s characteristic of recessions— and we may see that many Friday morning, when the November report is released."
December 6 (KPFA update): "And here’s an update added just for the KPFA (and podcast) audience. That commentary was recorded on Thursday evening, before the release of the November employment report on Friday morning. Now we have it, and it was horrid, from top to bottom. About the only bright spot you can find in it is was a small drop in the teen unemployment rate. That’s it. Almost everything else in it was dismal.... Taking a longer-term perspective, while losses so far since the December 2007 peak are slightly less than recession averages, most previous recessions were drawing to a close a year after their peaks. Not this time.... As bad as this report is, it's still 'bad recession' and not 'total collapse,' though who’s to say what December and January may bring? The need for a very large fiscal stimulus now looks undebatable, even to highly orthodox sorts."
December 11: "Economic news continues to look very ugly (even uglier, since I think my car was stolen). This morning, just before I got ensnared in the case of the missing 1989 Buick, the Labor Department reported that 583,000 people filed first-time claims for unemployment insurance last week, up 58,000 from the previous week. Both the level of initial claims and their movement over the last year are at recession levels. They’re not yet at the levels of the mid-1970s and early 1980s recessions, but they’re heading in that direction. A leading index of employment published by the Conference Board and released early this week deteriorated further, suggesting at least six months more bad news for the job market. We probably have to see some serious improvement in these two measures before we can even begin thinking about the economy finding a bottom, much less start to recover.
The housing sector also tends to lead broader economic trends, though it’s usually further ahead when things are turning down than when they’re turning up. In any case, there’s not much sign of stabilization there, either. Energetic optimists are drawing some hope from little upticks here and there, but these look like very thin reeds.
And a new forecast posted to economist James Hamilton’s Econobrowser website offers a very gloomy view of the next couple of years. It comes from Michael Dueker, formerly of the St. Louis Fed, now of Russell Investments, who uses a high-tech statistical technique called vector autoregression to predict economic developments. What gives Dueker some standing is that he correctly forecast both the 2001 and 2007 recessions ahead of time, when many other analysts were singing happy songs. Of course, as they say in the mutual fund ads, past performance is no guarantee of future results, but here we go anyway. Dueker sees the recession not bottoming into July or August of next year, with the job market continuing to shrink for close to a year longer than that. He projects that we have another 4 or 5 million jobs to lose, on top of the nearly 2 million we’ve lost since the peak a year ago. If Dueker is right, this is likely to be the longest and most damaging recession since the 1930s. Since the leading indicators are suggesting no turnaround is in sight, meaning in the next three to six months, Dueker may well be right about duration. And if the economy has technically bottomed but jobs are continuing to disappear, that’s a recovery in name only. Bottom line: the economy stinks, and is likely to get stinkier for some time. Now there’s a chance that if the new Congress and administration enact a big, quick-acting stimulus program—they’re talking about getting $150 billion in infrastructure spending going at the state level (using federal money) in the early months of the year—well, that might mitigate the glum forecast. We’ll see."