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Posts Tagged ‘durable goods’

A Great Depression Homeless Camp

A Great Depression Homeless Camp. Looks a lot like a modern day homeless camp doesn’t it?

The US Bureau of Labor announced the United States created 255,000 jobs in July. While good news, and rightly praised by the pundits, there is trouble hiding behind those numbers. The US durable goods sector went into recession early last autumn, while the entire manufacturing sector followed by November. That’s over 12 percent of the economy. Here’s what isn’t well known.

The entire economy has followed the durable goods sector into recession in each of the last recessions since and including the Great Depression. Historically, it takes sixteen to eighteen months for the rest of the economy to follow durable goods. So we’re most likely looking at a recession hitting somewhere between October of this year and June 2017.

Given that 99 percent of all income growth from 2009 to 2014 went to the top 1 percent, an historic record, the next recession will likely be more severe than the last. That’s because the great middle class will historically have fewer dollars to spend during the coming recession, which means the demand for goods and services will be depressed at levels not seen in decades.

This is the fourth longest economic expansion on record, and also among the weakest when it comes to job and wage growth. The US experienced higher monthly job growth in the economic expansions of the 1960s (170,000 per month), 1980s (230,000 per month) and the 1990s (200,000 per month), despite a smaller population, smaller GNP, and less worker productivity. Those expansions also featured real wage growth, especially during the 1960s. The current boom period has seen only 184,000 jobs created per month. Contrast that with the much maligned President Carter. Job growth of 206,000 per month occurred under Carter, with a population 2/3’s the size of today, and a GNP roughly 40 percent of today’s economy. Wage growth was consistent under Carter.

In addition, the most recent housing bubble will burst, as it always has done when recessions hit. Typically, when a recession occurs along with a bursting of a bubble, things are significantly much worse than without a bubble.

So, given the bubble, and historic income and wealth inequality, we should be looking at a whale of recession that is coming down the pike at hurricane speed.

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New orders for durable goods fell 4.2 percent last month. Orders have dropped two out of the last three months. When the orders for durable goods drops, it can herald the beginning of the end of whatever business expansion we’re in. It’s the scary canary in the economic coal mine. However, falling orders for durable goods does not necessarily signal the beginning of the end, but it is always the first step.

Durable goods are those things that ordinarily last three or more years, like pipes, computers, cars, toilets, stereos and stuff like that.

We should keep an eye on financial events as they unfold because the next recession could come quickly and with savage intensity since the rich are getting an ever greater share of the total national income through their political power over Republicans and Democrats alike. The one percent heisted 93 percent of the total national income growth from 2009 to 2010, and it is likely their share is about the same for the 2010 to 2011 fiscal year. That means there’s less money among the 99 percent to demand the goods and services necessary to keep the economy floating and to increase the number of jobs, while the rich have more money and political clout to demand and get legislation that redistributes even more income into their already fat wallets.

So hold on to your jobs, because the recession could be coming soon. Oh, and by the way. We’re still in the Second Great Depression that began in December 2007.

Click here for the full durable goods story

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A Bad Omen? Is the Economy Heading for Recession?

Orders for durable goods took a hefty 4 percent drop in January. Durable goods are things made to last three or more years, like washers, dryers, stereos and cars. The first stage of a recession always occurs in the durable goods sector. However, that stage always begins when employees see their hours reduced, which would be the next step if orders don’t pick up.

click here for the full story

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