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.
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?
Latest Reports Indicate Economy Is Getting Worse
NYT, January 29, 2009