Thursday, February 7, 2008

Reasons for an impending US economic recession

Trying to assess the situation and further growth prospects of the US economy, the first important fact to see is that the US economic recovery since November 2001 has been by far the weakest in the whole postwar period.

Just a few tidings composed by the Economic Policy Institute in Washington: First, inflation-adjusted hourly and weekly wages today are below where they were at the start of the recovery in November 2001; Second, median household income (inflation adjusted) has fallen five years in a row and was 4% lower in 2004 than in 1999; Third, total jobs since March 2001 (the start of the recession) are up 1.9% and private jobs 1.5% (at this stage of previous business cycles, jobs had grown 8.8%); Fourth, the unemployment rate is low only because several million people have given up looking for a job.

And here are some cursory remarks on our part: First, job growth has steeply fallen during the last three months, from 200,000 in February to 75,000 in May (2006 - report published on Wed 09 August, 2006 -ed.) ; Second, all the job growth has come from the artificial net birth/death model, implying that it is booming among small new firms not captured by the payroll survey, while slumping in existing firms; Third, private household indebtedness since 2000 has soared by 70%. This compares with an overall increase in real disposable personal income by 12%.

ASSESSMENT REPORTS: A weak report about the services sector has caused some experts to declare that the economy has already entered downturn. Recession is here – ECONOMISTS

Recession is the least of our worries. The days of the American empire might be at an end, Fortune's Andy Serwer argues. Play video Bye-bye superpower

Wal-Mart's distress signal: The world's largest retailer leads a parade of sales misses in January, indicating trouble in the U.S. economy.

To understand more on the Reasons (Published : Wed 09 Aug, 2006 -ed.) for an impending US economic recession i.e. US consumer spending, Current credit expansion, The US trade deficit, Debt trap, and House price crash, consult Dr Kurt Richebacher’s assessment report here.

LATEST DEVELOPMENT: Can Malaysia's Economy Withstand a U.S. Slowdown? This is that which warns us of something hateful in the future: ASIAN stocks plunged yesterday, pulled by Wall Street's sharp decline on Tuesday as fears of the US going into a recession intensified, analysts said.

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