Marty

Signs of an Economic Bottoming Process

Hey Dominic , great job. I agree with your info here. I am a CPA in CT in the northeast and have been posting about how bad this economy has been for 2 years now. Now that the media, and Govt are aware of the problems it seems to churning and on the way to a recovery. Being on the ground floor with clients in many industries I can see the news will still be glum as this process begins. In Feb of 2008 I saw things as being quite bad. Since the federal reserve aggresively cut rates I have seen more of a mixed picture. I actually have some clients doing better, some worse but not the straight downhill picture. I also see the cash crunch a little better, but almost dipped again with the late summer credit crunch.
Marty

Is the U.S. Heading Towards a Recession?

I work as a CPA in CT. I have to tell you the statistics have been misleading for years. All the media looks at the "unemployment rate" but rarely discusses where all the "job creation" is coming from. Add up all the franchises, all the new stores over the last 5 years and see how much of the job creation is near minimum wage. It is no secret that good benefits and job security are disappearing. What is more frightening is the inflation reporting. As part of a discussion in a group I grabbed these cost of living figures. The last inflationary period vs the current inflationary period..

I pointed out that in the late 70s and early 80s the Govt announced there was rampant inflation. We have inflation now, way over 3%. By the time that prior inflationary period was over the average person on Social Security, Govt workers and others were making 60-70% more in salary than they were before they started. This is why, and how people survived, they had more income to pay down (then mostly fixed) debts. Here are the details.

First the prior 8 year inflationary period.. (these are what people got as cost of living increases on social security , Govt pensions etc)

1975 8.0%
1976 6.4%
1977 5.9%
1978 6.5%
1979 9.9%
1980 14.3%
1981 11.2%
1982 7.4%

Now these are the last 8 years and what those increases were...

**********
1999 2.5%
2000 3.5%
2001 2.6%
2002 1.4%
2003 2.1%
2004 2.7%
2005 4.1%
2006 3.3%


Now can anyone tell me that their costs for things they spend a lot of money on have only gone up 20 some odd percent in 8 years??????????????

How about this..

Heating oil 69 cents a gallon to 2.59 here
Beef up 60% in that time
Gasoline up 100% (see google gas price history)
Medical insurance group family coverage up 300% or more!

I have RETIRED CLIENTS with NO MORTGAGES having to sell their homes because their taxes and energy costs have skyrocketed. This is NOT about a select few Sub-prime mortgages.

Another issue is the Wealth transfer muffler (as I call it). Part of the reason we didnt get sucked down the tube earlier is that people used up their savings, their retirement funds in many cases and some seniors reverse mortgaged their homes. This is evident in savings statistics that show the lowest savings rate since the Great Depression. It has muted the downfall, but takes assets from the next generation.

I have to tell you if you really do not know this is not a pretty picture on the ground floor. There has been an unprecedented concentration of wealth. Trickle down might have worked at one time but not with technology and outsourcing. In the current environment people have to be crazy to send their kids to college at 150k an education for the job market out there.

Now have poisoned pet food, leaded childrens toys and antifreeze in toothpaste all from China. This is NOT a free market economy working to perfection. This is greed at its worst, Corporate America using glorified Chinese Slave labor that is destroying the very fabric of the American Dream. We deserve better, the Chinese people deserve better.

I am all for tax cuts for the rich providing we have a balanced budget. This nonsense we have now is just that . Listen to Warren Buffet ""Putting $1,000 in the pockets of 310,000 families with urgent needs is going to provide far more stimulus to the economy than putting the same $310 million in my pockets," Buffett added."

I worry that either as a nation we are getting too stupified by the media or something, because much of what I am seeing is just plain math. Your income is going down and your expenses are going through the roof yet the Govt says there is no inflation and jobs and the economy are booming.

Sometimes I get so mad I cannot even post to these articles, other times I do in hopes at least someone out there is listening and feels a little better that someone else "gets it"

Not too long ago , electricity prices skyrocketed in California. Small businesses saw prices go through the roof, bills go from 400 to 2000 a month. Everyone said CA was growing too fast, there was so much demand for electricity. As it turned out Enron was rigging the market. The "market forces" were really not at work.

I fear that another "surprise" is in the works that NO the economy wasnt booming, no the jobs market wasnt healthy and No way inflation was 3%.

Marty in CT