Is the economy really bad?
 

My wife and I go to my favorite Brazilian steak Fogo de Chao around 10pm Saturday night. It runs about 60 bucks a person with dessert. The place was packed, I watch the news, read the papers its all doom and gloom. Sales for this month have been up. Is it everyone is just using credit cards? Im not getting it.

Yes Tony I think thats what it is ,people are spending all thier income and having loans of every type.

I think the days of building solid savings and income for many has long gone :(

Credit card debt went 8% last month so yeppers that is what they are doing.

Our "economy" survives on ever increasing debt:2 cents:

I think almost every country is going in the same direction :(

The bad mortgage fallout is only .07% of all house loans in the USA but press is doom and gloom because it's and election year.

There are a few big Banks and hedge funds who got greedy and took on too many sub-prime loans and now they are taking the hits but overall it isn't as bad as the press is making it out to be.

The biggest problem we're going to have is inflation for the next year or two !

Fucking ethanol fuel is stupid and it's causing wheat, corn and sugar to go up 300% the last three months and causing a shortage in many countries.

Credit card defaults ... when it hits .. its going to be subprime x 10 .


and believe me its going to hit!

good new does'nt sell newspapers:2 cents:

economy is doing great in the states. Pick up some stock, this is the time.

I can't speak for the States but in the UK the rising cost of everyday food items (bread, fruit, eggs, milk) has reached the level in the last year where you really notice it even if you earn enough not to have to worry that much. There really is a pinch coming on over here, you can feel it.

We're not even in a recession yet by one typical definition (2 quarters of shrinking GDP). Even if GDP is down it has to be so until June or so and that, being a future event, is still unknown too. Obviously there is a a lot of bad news out there especially fuel and food prices, banking in general, liquidity issues at financial institutions, equity prices and of course housing. Unemployment is slowly getting worse.

No, I don't think it is "really bad". It's just that it has the potential to become "really bad". Right now it is just getting worse and hurting some people more than others. The only person I know who has lost a job found another that was higher paying within 2 weeks. The major complaints I hear right now are fuel prices and housing losses and most with housing losses are not too concerned as they don't have to move so mentally they are looking at paper losses. I am starting to hear some people talking more and more about their stock market losses.

Its funny.I am sorry to say but you are really naive people. Read some FEDs reports - your economy is about to hit the floor and consequences will come pretty soon.
US are in recession already as Robert Zoellick said yesterday for Reuters

The economy is that bad. But people are just using other forms to pay with . This is why the visa ipo makes sense.

UK economy is booming the U.S problems are not really damaging it. The rest of europe is being hit harder but not nearly every country..

-----------> yes

Tony's question was whether thing ARE "really bad"; not whether they might or will become so. I think the answer is no as far as whether they *are* really bad already. Whether it might becomer "really bad" is a completely different question. Currently some things are bad, some not, some just fine. fuel and food inflation is pretty bad and hurting low end consumers.

You point out that the economy is "about to floor" according to FED reports. The FED forecasts a slowdown and not a recession. Their latest report releases last month forecasts growth of between 1.3 and 2% this year. I'm not saying I believe the FED. I've been more bearish than them for quite a while. But the official FED forecast last printed is for a slowdown not a recession.

Even if there is a recession a recession to me is not "really bad" in and of itself. I've been through 2001, 1990, 1980. 1980/82 was "really bad". 1991 and 2001 weren't in my opinion "really bad".

So are we "already in a recession"? According to the typical definition you have to have 2 consecutive quarters of GDP shrinkage. 4th quarter, 2007 was positive. If real 1st quarter GDP growth is negative then we are still not in a recession. We are not in one until both 1st and 2nd quarter real GDP growth was negative.

So then the next question is whether we are in the first quarter of a two quarter long or more period of contracting real GDP. We very well might be. It's going to be awfully close.

What is "really bad"? I'd say 8% reported unemployment is pretty bad and that 10% is really bad. i'd say reported real GDP contraction of over 5% is "really bad". I don't think shrinkage of 2 or 3% is all that terrible. That would make 1974 bad, 1980/82 really bad, 1991 not all so bad and same with 2001.

The Bank of England will warn today that credit markets have "deteriorated again" and that there is a serious danger of further writedowns by the banks, with the difficulty of securitising loans and mortgages posing a particular problem for the property market and the economy as a whole

...

Darling slashed the GDP growth forecast for 2008 to 1.75-2.25 pct from the 2.00-2.50 pct he had stated in the pre-budget report in October, which in turn had been revised down from 2.5-3.0 pct previously.

The downgrade brings the Treasury closer in line with the Bank of England, which last month forecast GDP growth will dip to 1.75 pct this year.

sorry for even taking a part in this duscussion - you always know the best and thats the reason why you get where you are.

Greenspan article in Financial times today.
http://www.ft.com/cms/s/0/edbdbcf6-f...E%3Cspan%20id=

"The current financial crisis in the US is likely to be judged in retrospect as the most wrenching since the end of the second world war. It will end eventually when home prices stabilise and with them the value of equity in homes supporting troubled mortgage securities."

:1orglaugh:1orglaugh:1orglaugh

He appears to be writing of the "financial crisis" and not "economic crisis".

:1orglaugh:1orglaugh:1orglaugh

I dunno - people crowding into an AYCE beef resto doesn't seem like a good way to judge the economy except to say it's looking worse.

Look at the fancy/smancy restaurants in ATL (Seeger, Joel, Element, Soto) and you see them closing and/or the chef's leaving for greener pastures.

But you also have people recovering from their Christmas purchases so they THINK they have more to spend because there's more on the CC balances. Not to mention every bank I have a CC with has offered me 0% interest for a specific period of time - only makes sense to use them and keep the $$$ in 3%+ MM. :)