Thought I'd taken a minute to check in on the variables I've been using to judge whether the recession is ending, moving sideways or getting better. The last time I checked in was back in November of 2011.
(note: this is a non-PR related post and one I've been doing simply out of personal interest).
Previous posts on the topic can be found here:
Top 10 Reasons This Recession Will Never End
Update 1
Update 2
Update 3
Update 4
So on with the show:
1. Crashes hurt for a long time - unchanged -
9. Baby Boomer Cost - unchanged -
Fourth Largest Gun Maker In US Is Out Of Guns
If you can believe it, Americans are buying so many guns that the fourth largest manufacturer had to suspend acceptance of new orders because they don't have the capacity to make them fast enough.
Over the past five years the company, Sturm, Ruger & Company, Inc, has seen its stock price rise 571 per cent. Who would have thought under Obama gun sales would be going through the roof and the court system would be circumvented by the government like never before.
Crazy times.
(note: this is a non-PR related post and one I've been doing simply out of personal interest).
Previous posts on the topic can be found here:
Top 10 Reasons This Recession Will Never End
Update 1
Update 2
Update 3
Update 4
So on with the show:
1. Crashes hurt for a long time - unchanged -
While the DOW has bounced up to 13,000 or so, it's done so on low volumes and anticipation of future quantitative easing. In addition, it's started slipping and word on the street is that it won't surprise anyone if the markets tank in the coming months.
So we are still nowhere near out of the woods with pension funds and retail investors still not recouping their losses from the 2008 crash. Forget all the compounding interest investors were suppose to make over the past four years, they don't even have their principle back.
2. Until Debt do us Part - unchanged -
This is a tough one. I've labelled it as unchanged given nothing has really changed. The PIIGS countries are still in trouble but haven't defaulted yet. Europe is a mess. The US debt continues to climb, now at 15.6 trillion I think (100% or slightly more of GDP).
While this variable is listed as unchanged, I suspect it will change to worse in the coming months. Odds are looking good that the US will have another debt ceiling fight and that the country may yet again be downgraded.
3. Eroded Trust - unchanged -
Nothing much has changed here either. People don't have any more faith in their government than before. Congress continues to have horrible approval ratings and the president continues to get sub-50 per cent approval ratings.
The banks haven't done anything to recoup the trust of the public and the MF Global fiasco (in which Jon Corzine stole $1.2 billion of customer funds and then lied to congress about doing it) only reinforces the current public view that the big shots on Wall Street are corrupt to the core.
4. Anxiety - unchanged -
Anxiety among the general public seems to be unchanged over the past few months. The potential for war with Iran doesn't seem to be bothering people much. The debt growing doesn't bother them much. Greece collapsing doesn't bother them much.
In Canada extending the retirement age to 67 from 65 passed without any public uproar.
All these things traditional would increase anxiety within the public, but I don't sense that it is.
Which suggests to me that the public as a whole has simply 'tuned out' to everything going on in the world as a result of stress and fatigue. Perhaps that is why CNN's viewership literally dropped in half last quarter - people are simply coping with their anxiety by tuning out all these events that are beyond their ability to control.
I suspect this metric will remain unchanged until either the stock market crashes, we go through another wave of lay-offs, the housing market tanks or hyper-inflation kicks in. If any of those four variables occur, despite people's 'I see nothing, I hear nothing.' mentality right now, anxiety levels will rise.
5. Growth versus Replacement Cycle - worse -
There's a wave of lay-offs that are starting to happen that I don't see people talking much about. In just the past couple of weeks some of the major lay-off stories were:
Anyway, you get the picture. Companies are retrenching. Despite already cutting to the bone in 2008/2009, they are still cutting deeper still.
These actions are being taken because clearly we are not out of recession. Despite the claims that unemployment in the US is down to 8.2 per cent, it's clear that those numbers are manipulated beyond recognition and most of the decline in unemployment is coming from people simply no longer being counted as unemployed.
So are companies re-entering a growth model yet? Not by a long shot. They are still retrenching and making money off basic replacement cycles.
6. Shareholder model breakdown - unchanged -
Not much to say here other than retail investors continue to pull their money out of the market.
Whether people are pulling their money out because they are afraid of another crash or because they need the money to pay their bills, who knows, it's probably a combination of both.
Point is, the shareholder model is breaking down. People aren't investing, in fact the opposite, they are redeeming.
As for why the stock market continues to climb while retail investors are pulling their money out, it's a bit too complicated to explain here, but suffice to say the Fed and the banks are doing their best to manipulate the markets higher in the hopes of regaining investor confidence (good luck with that, retailers have been withdrawing from the market for something like 34 weeks now).
As for why the stock market continues to climb while retail investors are pulling their money out, it's a bit too complicated to explain here, but suffice to say the Fed and the banks are doing their best to manipulate the markets higher in the hopes of regaining investor confidence (good luck with that, retailers have been withdrawing from the market for something like 34 weeks now).
7. Lowest Common Denominator Thinking - worse -
The populous ideology of pulling everyone down to the lowest denominator (ie. bust the unions so they have it hard like everybody else) hasn't reared its ugly head in a while.
I suspect it is much like the anxiety phenomena, people are simply disengaging from the world around them and as such aren't concerning themselves with what is going on with other people (their only focus is on their own situation).
The reason I've marked this as slightly worse is because of what is going on with the PIIGS countries. The austerity measure that Greece swallowed is creating a global acceptance that there is nothing wrong with sending these countries in to abject poverty. While the mentality is currently isolated to the PIIGS countries, it's a negative sign that the destruction of living standards is met by the world with a disinterested yawn.
8. Globalization - unchanged -
As we enter the fourth year of Obama's presidency, you'd think we'd be finally winding down all the warmongering.
Unfortunately, things look to be just heating up with Iran. Just today it looks like Russia is moving its troops to support Iran in the event of a war.
Should a war occur, our globalization metric will clearly go negative.
The cost of baby boomers getting older and retiring still loom as a massive shock to the economic system - both in the loss of their labor and in their inability to finance their retirements. But for the time being nothing much has changed.
10. Extremism - worse -
Thankfully we haven't had any terrorist attacks or new wars, merely the threat of such. It's definitely arguable that the passing of the National Defence Authorization Act (NDAA) was an extreme change with long-term implications.
It is now legal in America for the army to seize people, hold them indefinitely and not give them access to a lawyer or a trial.
Not to mention the supreme court approving strip searches for any offence. Not wearing your seat belt? Please take off your clothes, spread your cheeks and cough. Sounds insane, but the police now have this power. If they were to do this you have no recourse to sue them afterwards.
And of course we can't forget that the president now, for the first time ever, has the authority to assassinate US citizens without a court approving said assassination. As long as he feels you are a threat to national security, he can have you killed without approval from the courts.
It's hard to believe that 10 years ago the fear was terrorists destroying the freedoms of Americans and today it's the government who are stripping those freedoms away at an alarming rate.
On the domestic front, you want to talk extreme? How about this:
If you can believe it, Americans are buying so many guns that the fourth largest manufacturer had to suspend acceptance of new orders because they don't have the capacity to make them fast enough.
Over the past five years the company, Sturm, Ruger & Company, Inc, has seen its stock price rise 571 per cent. Who would have thought under Obama gun sales would be going through the roof and the court system would be circumvented by the government like never before.
Crazy times.
11. Bonus: inflation - unchanged -
Inflation seems relatively unchanged, but there is definitely a pattern going on out there. Prices for various goods are rising, but then they aren't selling, and they subsequently come back down in price.
What this tells me is that businesses are trying to remain profitable by incrementally increasing the price of their goods or services, but then losing customers as a result. As they bring the price back down (often in the form of 'sales', which makes me laugh because some products now are on sale more often than they are not) consumers begin buying again.
The only thing keeping inflation in check is that consumers simply don't have the money to support an inflationary environment. And yet, with Bernanke on the verge of doing QE3, the threat of hyper-inflation is very real (regardless of whether consumers can afford said inflation or not).
For the time being though, with the exception of gas (which is tied more to the Iran issue), prices seem relatively unchanged compared to a few months ago.
The good?
8 of our 11 metrics appear to be relatively unchanged (if you can really call that good)
The bad?
3 of our 11 metrics are worse than they were in late 2011
The really bad?
Not a single one of our metrics showed any kind of positive change.
My thesis in starting this particular blog entry was that the recession that kicked off in 2008, and which supposedly ended in 2009 (I hope you are laughing at that notion now) was not in fact a traditional recession. It was a Great Depression that was turned in to a recession as a result of quantitative easing by the fed (however, unlike a recession it's not ending... hence why some are calling it the Great Recession).
Instead I think it would have been better to call it the dawn of a new norm.
Recessions come and eventually go, but this recession is here to stay. We're probably looking at a decade or more where the above variables don't turn positive (or do so only periodically but never enough to propel us in to a growth phase again). It's possible that the above variables could still turn even more negative than they currently are.
I hope that's not the case and we'll have to look at them again a few months to see.
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