I am stunned every time people/investors react in “Surprise!” to a bad set of economic data.

Hasn’t anyone been paying attention? Its a severe recession!

We have constrained credit availability, a deleveraging of managed assets into the teeth of a difficult deflationary cycle. The over-extended consumer has finally collapsed as credit has disappeard, and their stocksand homes devalue. The illusion of prosperity, caused by years of living on borrowed money, rather than organic growth, has finally been revelaed.

NY Times:

Thursday brought a hat trick of grim economic news: New-home sales fell to their slowest pace on record, businesses cut their orders and jobless claims continued to rise. Taken together, the three reports released by the government painted a picture of an economy that continued to slide as falling consumer spending and rising unemployment amplified the effects of a yearlong recession.

The Commerce Department reported that American businesses ordered fewer durable goods like computers, construction equipment and vehicles in December, cutting the prospects for growth as companies braced for a difficult 2009. Orders of durable goods fell 2.6 percent last month, to $176.8 billion. It was the fifth consecutive month of declines, after a 3.7 percent drop in November as the country slipped deeper into a recession now nearly 13 months old.

Excluding transportation, new orders of durable goods orders fell 3.6 percent. Excluding orders for military equipment, durable goods fell 4.9 percent. For all of 2008, orders fell 5.7 percent, a decline topped only by a 10.7 percent drop in 2001.

Here’s another shocker for those of you living in caves: Today’s GDP report is going to suck. But isn’t this already factored into equity prices?

Other than our pal Larry, is there anyone still waiting for Goldilocks to arrive?

>

Source:
Latest Reports Indicate Economy Is Getting Worse
JACK HEALY
NYT, January 29, 2009

http://www.nytimes.com/2009/01/30/business/economy/30econ.html

Category: Economy, Markets

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

42 Responses to “Who is Surprised the Economy Is Bad & Getting Worse?”

  1. ben22 says:

    BR,

    Exactly!

    The gasps every time a bad number is released.

    The “worse than expected” or “higher than expected” lines are so lame!

    I did catch something funny though on CNBC the other day, I had the tv on and Mark Haynes (Haines?) was interviewing someone and he made the comment about this being an average recession. Mark cut the guy off and said this is not an average recession and if you can’t understand that why are we talking to you. I got a laugh out of that, they guy got pretty quiet after.

    GDP lower than expected, or maybe we will have to wait for that a little while, today’s number could be, just bad, and then of course get revised lower.

    I find these sort of comments to be just as laughable as the calls for the S&P to be at 1300 or higher by year end.

    David Bianco….

  2. ben22 says:

    I sure hope BB is ready to start buying up some treasuries b/c in looking at the quotes coming out of Davos the folks that have been buying them are none too happy with us.

    The WSJ gave some data yesterday on how China had unloaded Fan/Fre debt recently, what’s next???

  3. jpm says:

    Other than our pal Larry, is there anyone still waiting for Goldilocks to arrive?

    Obviously, as any aficionado of fine children’s literature can tell you, the wolf is still waiting for Goldilocks.

  4. Bruce in Tn says:

    I still see the Luskins and the Boyers of the world with the same message, but what I wonder about is not that they are wrong, that this is a severe recession, possibly the start of another great depression, but the WHY they keep saying it puzzles me. I mean, it is not as though their message goes out into a vacuum. Certainly they understand that their comments are recorded. And Luskin has already gone BK managing money in the tech bubble.

    …So WHY do the pollyannas do what they do??

  5. Bruce in Tn says:

    And David Kotok, who appears on CNBC, and who was bullish at Thanksgiving. (I posted a Cnbc video of Thanksgiving, and he expected a recovery in 2000, and a brisk economy in 2010)…

    He admitted his 70/30 stock to bond ratio had been recently readjusted to 50/50. Yet, here, without careful management, even a 50/50 stock to bond could lose BOTH ways if one take their eye off the ball…everyone who reads TBP sees easily how this could be..

    I was pretty harsh on him, I admit, but this was a money manager who seems to be just looking for business and a little oblivious of what was going on…and I admit, I am just a small businessman who has managed my own investments and probably been more lucky than good. But I just expect people to shine in their chosen job, I encourage it at the workplace every day, and when it looks to me like you are a dog in the traces and don’t want the lead position anymore, it bothers me..

  6. rob says:

    @Bruce in Tn: Have you noticed the publicity that BR got for being right about the down turn? Roubini? etc? They “media value” has gone through the roof! (Too the point that I hope BR doesn’t get too distracted from the great job he does with his economic assessments!) But these guys were the “bad” guys that rail against the crowd and represent the doom and gloom clan. So if you are the guy that calls the turn around “publicly” then you’ll look like da man when it finally does turn around. Most aren’t as smart as Jim Cramer where they profess both sides of the fence and they can later pick and choose the best option. Also most of the players haven’t ever seen anything like this and have been brainwashed into only upside bias. I heard a ridiculous quote the other day on the MSM, a trader was quoted as “Hopefully things will turn around soon so we can get back to making money.” WTF! A trader only makes money when it’s upward? Maybe they only make easy money but it is too tough when you actually have to work for the money! Ok ok… too much coffee for me this morning! AS AN ASIDE – has anyone else gotten advanced order restrictions on SPY? One of my brokers is Etrade and they have done away with trailing stops, etc on SPY.

  7. Greg0658 says:

    I’ll correct the facts …
    Goldilocks and the 3 Bears – Goldilocks tried all the bowls of oatmeal, broke the chairs and ruffled all 3 beds before falling asleep.

    Little Red Riding Hoods grandma got eaten by the wolf – but if I remember correctly somehow he coughed her back up.

    Kid stories to get ya outta bed to school and back.

    http://en.wikipedia.org/wiki/Little_red_riding_hood

    Memories – I didn’t get it exactly right – but then again like everything there is more than 1 version. In two a hunter cuts the wolf open and saves them aka plots twists. Another grandma is put in the closet.

    The 3 bears in 2 variants scare her away or eat her.

  8. Michael Cerulean says:

    Was anyone else shocked by Charlie Gasparino’s piece on Larry Kudlow’s show last night? It looks like the “Bad Bank” plan has now blown up. And it appears perhaps the mainstream press is missing the most important piece of the puzzle…

    http://www.sliderontheblack.com/politics-money-and-markets/bad-bank-plan-blows-up-because-us-banking-system-is-bankrupt/

    Why isn’t anyone talking about the IMF’s FSAP Audit of the U.S. Financial system? Bush fought it for years, and finally acquiesced on the stipulation that the final results could not be released until he had left office.

    The piece linked above raises some interesting issues.

    It’s starting to look like our little “Tax Cheat” Treasury Secretary isn’t “pulling the strings,” instead he’s dangling at the end of one… the IMF’s.

    Michael

  9. Beauty (and ugliness) is in the eye of the beholder…

    “Its important to choose not who you think is the prettiest girl, but who the judges will think is the prettiest girl.” ~ John Maynard Keynes

    Cheers…

  10. OkieLawyer says:

    Report just released: -3.8%. Not as bad as expected.

  11. lg71050 says:

    CNBC began the hour after Kudlow last night with the chyron “War on the Wealthy!” with the announcer intoning, “We knew it was comng!” Hilarious.

    As for Roubini, themanwhopredictedthefinancialcollapse, look for nothing but doom and gloom from him from now on regardless of the evidence now that he has an image and a celebrity to support. After all, Becky Quick says he’s a rock star!

  12. flipspiceland says:

    @Rob: Why else would they be clapping at the Open and Close of trading every day on the NYSE??

  13. Bruce in Tn says:

    One technical question Barry…

    Has the GDP price index ever been negative before?

    http://online.barrons.com/public/page/barrons_econoday.html

    Just wondering..

  14. dead hobo says:

    Some people say the economy sucks. Others say the economy sucks dog di*k. I prefer to be an optimist. Besides -3.8% is potential rally news given that Yahoo was forecasting -5.5%.

  15. albnyc says:

    The “expert” consensus has been consistently and totally wrong since this drama began, so why should we expect anything less (more?) now? The future will be different than most are currently predicting (bleak), which is a cause for perverse optimism.

  16. Transor Z says:

    Here’s a sentiment indicator for you, Barry. Passed a Johnnie Walker billboard this am showing a line graph that cliff drops out of view – but reemerges into the positive with Johnnie walking on the positive side like he’s on stairs up from the basement. Tagline: Keep walking.

  17. Bruce in Tn says:

    Well, I guess I should have expected this…the government counts excess inventories as growth, and this is why the GDP was a little better than expected…why, oh why, am I not surprised?

    http://www.marketwatch.com/news/story/Q4-GDP-falls-38-inventories/story.aspx?guid=%7B913CEBDA%2DAE34%2D48A8%2D84CC%2D80ECCBA1B6E6%7D

    “WASHINGTON (MarketWatch) – The U.S. economy contracted at a 3.8% annualized rate in the fourth quarter but the decline would have been worse except that the government counts an unwanted buildup of goods on store shelves as growth….”

    And these are the people Leisman expects to save the economy..

  18. dead hobo says:

    Transor Z,

    Re your reference to Mr Walker:

    Mr Daniels and is also quite the economist and an optimist of great stature. So is Mr Ripple.

  19. Moss says:

    At least the Kudlow creed has been retired. As I have said before Kudlow and his minions can not and will not ever turn negative. He is defined both personally and professionally (I use that term loosely) by his blind adherence to free market capitalism and the notion that these principles will always lead to better times regardless of where we are or what the facts represent.

  20. Imelda Blahnik says:

    Transor Z:

    Shouldn’t that read “Tagline: Keep Drinking”?

    I suppose that’s implied.

  21. Transor Z says:

    @ Imelda:
    The tagline couldn’t be “Keep Drinking” because that would run counter to the “Please Drink Responsibly” disclaimer in small print at bottom that I didn’t mention. ;-)

    @ dead hobo:
    I worked in a liquor store some time back. Ruble Vodka was very popular among the pay-with-spare change set. I think it was a buck a pint or a buck a half-pint. Wolfschmidt nips for .55 (on sale one week for .45) — also a good seller.

  22. Mannwich says:

    Jerry Bowyer. Don Luskin.

  23. Mike in Nola says:

    ben22: I saw that same conversation and it was pretty amusing. I suppose the interviewee was shocked that someone from CNBC would not agree with bullish sentiments.

    Michael Cerulean: It would be interesting to see the reaction if the IMF recommends the same castor oil to us that it prescribes to the second and third world: no bailouts, just start paying your bills in cash.

    As Andy Taboo mentioned the other night, he was surprised at how many were out spending money in Houston a few nights ago. And, as I observed, we don’t always realize the lag between cause and effect. This seems to be esp. true in the non-bubble areas that are just starting to have problems, like Houston where the layoffs are just starting and the paper is starting to carry stories about pet groomers and picture framing businesses on the brink. It was protected throughout last year by good paying jobs in the oil and chemical industries along with construction jobs in the the tail end boom.

    Browsing around the housing market through a chron.com link last night confirmed that most still aren’t getting it despite what looks like a rapidly deteriorating housing market here. I had noticed more for sale and for rent signs in West University, an area on the West side of Rice U that is pretty desirable for those wanting to live close in, but hadn’t systematically looked at the situation.

    There were almost 300 residences for sale in the area of 2 square miles. While this is may not seem a lot to those in the bubble areas, it is a significant increase. The prices indicate that the the sellers largely don’t get it. All but maybe twenty were houses, the cheapest house being a tiny 1000 sq ft place for over 300k. A number of the higher priced ones were pretty new, looking like spec houses that couldn’t be unloaded or McMansions bought or built in the past few years. Some aren’t completed and a couple are just architect’s drawings and a vacant lot. One obivously had only enough furniture to make it look not empty, as well as a mysterious pot of pansies that seemed to migrate between several pictures. Over a third are priced in excess of a million, with some up to four.

    No way to check the age of the listings, but I did find 40 rentals in the same area, all but 5-10 being houses, and many being the same listed for sale. I suppose those listed for rent have been around long enoug that the sellers are realizing they are going to have trouble, esp. the one asking $10k/month. Well, maybe Tom Cruise will be shooting a movie in town and help these people out :)

  24. vaughn says:

    i called the recession start as Nov 2007.
    No Barry. It’s a Depression and we’re in it now.

  25. Mannwich says:

    @Mike in NOLA: Never underestimate the power of denial in human nature. Also, remember, people still partied their asses off in the ’70′s when things are bad (in some cases, even more so). At some point I do think it’s human nature to finally admit that things do indeed suck but we can’t do anything about it, so we might as well go out. People get tired of being depressed.

    My buddy who lives in the Bay Area went out on a Tuesday night in SF and said it was like a weekend night in the city. People were partying their asses off. He and his buddies thought that many of them were laid off workers who just decided to go out and have fun if they didn’t have to work the next day.

    Another anecdote here: I’ve noticed that my little gym here in the TC has been much more crowded during the middle of the workday on a weekday. I suspect that some are un/underemployed and/or are trading down from upscale health club memberships, but in my three years of working out there, I’ve never seen it this busy during the middle of the day. I used to get to the place to myself. Not anymore…….

  26. danm says:

    I’ve been looking at some charts with data going back to the 60s, and was reminded that the market always takes off a few months before unemployment peaks.

    Anyone willing to make bets on when unemployments is going to peak?

  27. Thisson says:

    /agree with Vaughn that this is a Depression with a capital D.

    I’m still very curious about what happens if the U.S. defaults on its debts. I read that 40% of all the federal notes have maturities of <= 1 year? So it has to be continually refinanced. If the world balks, what happens?

  28. Cybernaught says:

    Given stimulus package heavy on spending (rather than tax cuts), unemployment will peak 11/09.

  29. danm says:

    So it has to be continually refinanced. If the world balks, what happens?
    ———–
    You offer higher rates and if there are still no takers you just tell government to generate huge defitcits and the Fed just prints new dollars and hands them over. Inflation takes over and rates up.

    All roads lead to Rome.

  30. Transor Z says:

    But unlike the Great Depression, wartime spending is already part of our baseline capacity…

    Rosie the Riveter is already working and the kids are in daycare.

    And there were no plastic credit cards in 1932.

    And the U.S. exported petroleum.

  31. Transor Z says:

    @ Cybernaught: infrastructure projects won’t be “shovel ready” until mid-2010 at the earliest. So stimulus for construction will have very little impact on jobs until then.

  32. Mike in Nola says:

    Mannwich:

    Your experience reminds me of an article on the stress being felt by families of the unemployed finanical workers in the Northeast. They were used to regular fat paychecks and the wives got to be stay at home soccer moms. In this one case they illustrated, the family was lucky they had been relatively conservative and the wife had a profession which she had left and to which she returned to support the family. The husband related that one of his daily routines was going to the gym where he saw a lot of people he knew should have been working.

    Near our apartment and the Texas Medical Center, there is a brand new LA Fitness in a large portion of a brand new office building . I’ve seen them set up on a street corner we pass a lot on weekends soliciting memberships. I wonder how long they will last.

    BTW, hate to show my ignorance, but TC isn’t ringing a bell. Please illuminate.

  33. Cybernaught says:

    I’m figuring “efficiency” and “proper oversight” will get thrown out the window after Q1 comes in. Intense fear does amazing things to people’s values. The current posturing is acclimating folks to trillion dollar interventions – “billions” will soon be so yesterday. By September ’09 I predict the powers that be will be willing to pay people to stand in line to fill out applications for jobs that won’t come on line for 6 months. 11/29 might be a little early, but as you can see from the GDP numbers, federal spending will be what will increasingly drive GDP, not useful production.

  34. Mike in Nola says:

    Oops! Looks like CNBC is calling Class Warfare. Those damned unions caused the depression.

  35. TruthTeller says:

    Barry,

    Where is your piece on the Stimulus fiasco? Don’t be shy now; it’s just not your style. Come out for us taxpayers and call this one a colossal (Democratic) failure.

    The election is over and now its time for bipartisan blah blah and change blah blah. NOT!!

    The stimulus bill is a huge mistake, will not work as written, bloats government spending for which no amount of tax increases could ever pay for.

    You, sir, should be pounding the table and using your bully pulpit to kill this future-destroying time bomb. Your credibility is on the line, Barry. Don’t blow it………(up).

  36. Mannwich says:

    @Mike in Nola: Sorry about that. The Twin Cities. I live in Minneapolis. My gym is very affordable ($40/month) and you get half of it paid for by health insurance (for those who still have it) if you go 12 times/month. I’m guessing with more time on peoples’ hands, they’re working out more and focusing on their health/fitness, which is one thing they/we have some control over……

  37. ben22 says:

    @ Mike in Nola,

    Glad someone else saw that. I thought most people here would have loved it but if you live on the east coast you were probably already at work when it came on.

    The guys face was great after Haynes said that, his mouth just opened wide.

  38. Thisson says:

    @Truthteller,

    If you look under the hood of the stimulus package, it’s mostly a bunch of bullshit spending that in any other time would just be called for what it is — pork.

  39. Mike in Nola says:

    ben22:

    Some of us are mostly being supported by our wives, while trying to get a Texas law license :) Hope it doesn’t take too long. It is getting a little old and she doesn’t want me buying things like big screens.

    Mannwich: I looked in wikipedia, but it felt like cheating. Have only passed through TC on our way to Duluth and the North Shore which is very beautiful in October. And the mesquitos are gone.

    BTW, has Charlie Gasparino redeemed himself or what? Seems to be the only one who gets it about bonuses in financial firms that have had to be bailed out. I see that Dennis doesn’t realize our big banks are insolvent. Not surprised.

  40. batmando says:

    @ Mike in NOLa
    “And the mesquitos are gone”???
    as in migrant workers?

  41. going broke says:

    Surprised? …not really

    Average Joe loses job… $65,000
    Average Joe loses home… $234,500
    CEO’s get their bonuses… $1,000,000′s+

    cost to average Joe… not priceless

  42. Neil C Denver says:

    In a global market economy, it is impossible for ‘each’ American to maintain their standard of living . . . until the all of the world’s citizens approach similar standards with similar ‘global’ purchasing power. Meanwhile, Americans will have to wait for the rest of the world to catch up. And the faster that we can promote growth in the lesser developed countries, the better off the world will be.

    Until then, the best jobs for under performing Americans will continue to be civil service jobs with their above market salaries, defined benefit retirement programs, and low productivity standards.