Thursday, July 10, 2014
In 1Q, the US had negative GDP of -1.1% that was ultimately adjusted Down to officially -2.6% for the January-March months
"Everyone" blamed it on weather
So understanding full well that two quarters in a row of negative growth equals "official" recession, how is the data from 2Q shaping up?
Well.. Of course figures can be manipulated and contrived but still, don't expect a GDP growth miracle.
It is the slowest growth in 2014 and biggest miss of expectations since Dec 2013. Wholesale sales also fell back, missing expectations at +0.7%, to the slowest since Feb
Just another tea leaf at the bottom of a cup of soothing oolong which says within a couple weeks, the Administration, the financiers and puppet-string media can't pretend all is rosy recovery...
That in itself should be as refreshing as a mint julip
So what will it look like when the recession is made 'official'?
Its just been one never-ending economic sludge slog and how dramatically you felt it was based on whether you were employed, your expenses and how quickly you were/are burning through your savings and retirement nest egg (assuming you even had one)
But let's get beyond that. What will things look like when summer hits autumn and reality seeps in..
Obviously for one, expect those monthly job hiring figures to begin plunging as companies and corporations use the downturn as they always do, to shed salary 'weight' and maximize profits..
And companies only exist to appease n' please their shareholders.. no one else..
If the big corporations are successful in getting this 'downsizing' ball rolling (these things are usually coordinated behind the scenes to prevent fired employees from playing one corp off another for better wages), then expect another round of massive layoffs..
And ultimately some companies will use the economic conditions as the perfect time to file for protective bankruptcy, which allows them to close stores and shed more jobs without as much negative taint..
Just meaningless words but with the same goal-- retard/stifle wages..
So whether this upcoming recession looks and feels as bad as the 2007 one really depends a lot on how profitable it is for companies to dump people now or wait till after Christmas when there will be a better gauge to see how long the recession will last..
Of course with all that precious taxpayer money going into the stock market so the rich can get richer and companies can appear strong on paper, the economic benefits of a recession could put the Dow over 18k before the year is out..
Just depends on how much cash corporations wish to keep on the sidelines vs in the market..
It also has to do with interest rates..
They can't be kept at zero forever and negative interest as introduced a month or so ago in Europe has never ever been attempted before so if its brought to US banks it will do nothing but dramatize the pain when the Fed finally gets the courage to raise rates...
Banks and other borrowers of benefit will have a brutal time repaying and then you will really see economic ripples permeate every aspect of society down to the bottom..
And from that we could ultimately be looking again at late 1970s Carter era interest rates for mortgages, auto loans, credit cards, etc..
There are a lot of ways corporations and Wall Street profit off a recession but have held back because for them, there was still profit to be made and gained through the propaganda lie of 'recovery' and all that feel-good hokum..
When 'official' recession hits, everyday people finally embrace it and tighten purse strings knowing its going to last more than a couple months, then business will kick into recession-mode
And new movies to see at the theater every week and new CDs to buy or illegally burn, and all those fun autumn/winter holidays to come..
One will not have to work hard to find distraction unless..
Well.. Unless the victim of the upcoming recession is you.
Posted by Susquehanna at Thursday, July 10, 2014