2008 vs 1992

Today’s chart porn (below) comes from the NYT: A Revival of 1992’s Glum Mood.

The current situation was summed up by David Leonhardt:

"Economists argue about the reasons for the great wage slowdown —
technology, globalization, health care costs, the decline of unions,
the rise of the new wealthy — but it clearly seems to have made people
feel more vulnerable to small economic swings. In the latest New York
Times/CBS News poll, only 19 percent of those responding said the
country was headed in the right direction. That was the lowest
percentage since the early 1990s.

This glumness is especially striking because perceptions of the
economy usually lag behind reality, and the reality hasn’t deteriorated
much yet for most families
. But as in 1992, said Alan Blinder, a former
vice chairman of the Federal Reserve, “people are more sour about the
economy than the data would seem to warrant." (emphasis added)

Leonhardt comes very close to resolving the conundrum, but alas,
he gets it wrong in the end. At the very least, he fails to consider an
alternative explanation: The measured economic readings — inflation, growth, unemployment, job creation, real income — are far less accurate than many people perceive them to be . . .


Courtesy of NYT


Economic Scene: A Revival of 1992’s Glum Mood
NYT, SECTION C – PAGE 1   January 16, 2008

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  1. Eric Davis commented on Jan 16

    Nice Chart P@rn

  2. red95king commented on Jan 16

    Great charts. As an I.T. professional my economic viability has declined every year since 2000 (small wonder). I finally gave up and changed careers in 2006.

  3. LFC commented on Jan 16

    So the employment rate for men under the “Bush Boom” barely recovered and is now slipping back? No wonder his cheerleaders were continually trumpeting the unemployment rate. The data sounds so much better if those lazy asses who can’t get a job in 6 months aren’t counted.

  4. lurker commented on Jan 16

    With inflation up big time and house values dropping through the floor is it really a surprise that normal non-CEO americans feel poorer and scared of a recession? Wake up and smell the generic home-brewed non-SBUX- priced free MCD java…

  5. Pool Shark commented on Jan 16

    It’s now 2:45 and the DOW is up around 100 points.

    Queue MS for his daily rant about the end of session BS rally, etc., etc., etc…

  6. cinefoz commented on Jan 16

    The free flow of information, and the massive amount of it that is available to the average person is the secret to quick turns and quick recoveries. Today, the average person knows as much about the nature of the economy as those in ivory towers and wall street magnates.

    There will always be panics and runaway markets. The effects will pass far more quickly than in pre-internet days because there are far fewer secrets than before. Personal mystique and economic cults of personality are relics of the past.

    That being said, dumbass financial moves will always be with us. In a couple of years another can’t lose idea will create a brand new bubble. Woo Woo. I can’t wait.

  7. michael schumacher commented on Jan 16

    >>Something is rotten here……..just like the impending rally as well.


    Posted by: michael schumacher | Jan 16, 2008 2:30:35 PM>>

    You need to be a little quicker PS

    as in In and out…

    But you knew that.


  8. Stuart commented on Jan 16

    I’m thinking one of the big insurers rolling over should complete the comparison quite effectively.

    MBIA’s Surplus Notes Plunge to 89.50 Cents – Investor
    Wed Jan 16, 2008 3:02pm EST

    NEW YORK (Reuters) – MBIA Insurance Corp’s recently issued $1 billion of surplus notes plunged on Wednesday to about 89.50 cents on the dollar from 95 cents on the previous day, according to a portfolio manager.

    The notes, issued by the embattled bond insurer to shore up capital and preserve its crucial triple-A credit rating, had already fallen about 4 cents on the dollar on Tuesday, said Wayne Schmidt, senior portfolio manager at AXA Investment Management.

    Surplus notes, unique to insurers, can bolster MBIA’s balance sheet since they can be classified as equity.

    MBIA Insurance is a unit of MBIA Inc (MBI.N: Quote, Profile, Research), whose shares have plunged in the past year amid speculation the company does not have enough capital to cover losses on bonds it insures. For details, see [nN11285877].

    On Wednesday, MBIA Inc’s shares were down more than 11 percent at $14.19.

    “The investor community has some serious concerns about MBIA,” Schmidt said. “There’s got to be some concerns of either default or somebody calling something in that would cause that kind of decline,” he said, referring to the surplus notes.

    (Reporting by Neil Shah; Editing by Jonathan Oatis)

  9. BR commented on Jan 16



  10. Marcus Aurelius commented on Jan 16

    Okay. I missed lunch. Tell me some statistics that say I’m not hungry.

  11. techy2468 commented on Jan 16

    OMG the fed has said good things…now the market will go up..

    there will be rate cut and the market will go up…

    its all not fair…because i want to make money being only short.

  12. Pool Shark commented on Jan 16


    Actually, I am buying here; but not what you might expect…

    btw, “shut up”?

    Rather infantile comment don’t you think?

  13. michael schumacher commented on Jan 16

    and how is that any different than your post??

    None whatsoever.

    Oh and Techy…….you THINK you know me.
    Wrong…..but keep thinking that as the rally here fizzles (yet again)

    Honestly each and every rally off the August lows has failed…….and you still believe it’s just a matter of time before the next whoosh up.

    Good luck with those buys….I hope you flipped them quickly


  14. Mongo commented on Jan 16

    The only thing (besides You Can Never Have Too Much Chart and Info Porn) that comes to mind here is — uh, didn’t everyone have to get through the 1990-91 period to get to 1992? Isn’t it a little early to be thinking about what things were like after that particular ‘downturn’?

    I understand that wasn’t really the point of the post, but this is a meltdown in progress. We haven’t gone through our ’90-’91 period yet… though I expect what’s to come may make us yearn for those years…

  15. JohnR commented on Jan 16

    Good point that the economic data reported so far may not be picking up the real economy that people intuitively report to opinion pollesters.

    I get so tired of reporters and business boosters indicating that people are stupid or misinformed–in fact the people’s perception is economic reality. As Keynes noted, perception of economic reality is as least as important as economic reality. If most people think a company is insolvent, then it is insolvent.

    The latest Economist had an article reporting that its index of the number of articles in NYT and Wash Post using the “recession word” is way up.

  16. dblwyo commented on Jan 16

    Well implicit in Barry’s post is the idea that people might actually be right. Consider what’s been the l.t. story on creating net new jobs (> 150K/month), wage growth etc. If you dig into it you’ll find that net net we’re not ahead of the game in terms of creating new jobs. And the share of wages in total GDP is the smallest it’s been in decades. Leonhardt was headed in the right direction but needed to take another few big…big steps. As an attempt to do just that though in the context of some other things here’s a look at long-term employment trends: http://tinyurl.com/2rno9w

    And for a look at earnings and profits that includes a look going back to the 60s or better on shares of the economy try this: http://tinyurl.com/2j297q

    Both will take you to backup posts as well if you wanna kick around the data.

  17. anon commented on Jan 16

    “Great charts. As an I.T. professional my economic viability has declined every year since 2000 (small wonder). I finally gave up and changed careers in 2006.”

    I’m in Pharma. Used to be as rock-stable as Ford in the 1970’s. Now, M&A and belt-tightening is the rule. It’s a highly specialized discipline, so the instability is very frightening; every time the “music stops” , there may be one fewer seat.

  18. Short_US commented on Jan 16

    Politics aside, is it a coincidence or something more that the ’92 “mood” and the current “mood” are by-products of Bush presidencies? (I know, Bush I only had four years, but still . . . )

  19. cinefoz commented on Jan 16

    When I said “bottom”, I didn’t mean that stocks will go for the moon and get there next week. Rather, I meant that the limit to down is here.

    Indices might lolligaggle about at this level for a few days. Historically, markets bounce for a while on big bottoms.

    Unless the Fed screws up or a 6 mile wide meteor strikes somewhere important, the market is BACK!

  20. Johnny Vee commented on Jan 16

    Maybe the data is Bullsh!t?

  21. Winston Munn commented on Jan 16

    Would you guys that want to rant at each other about what great traders you are please do so over on Yahoo Message Boards.

    It really isn’t contributing to the discussions here.


  22. Eric Davis commented on Jan 16

    Sorry I switched to bullish Too…. at least for a swing trade… it’s time for a 3-5 day rally… maybe after one more low…

    Financials(not money center) are showing a bounce….
    The Small caps,
    and the retail… for some reason….

    We have had little success breaking through this 1380-1360 level. And bearishness Maxed out yesterday, and As per the crazy thread.. The bulls freaked out Too.(I guess)

  23. Eric Davis commented on Jan 16

    Winston, Hopefull it’s not too much braging. But some of us like to give out our trading sentiment.

    Hopefull, I .. try not to go off in a boastfull manner.

  24. Winston Munn commented on Jan 16

    Eric Davis,

    No, not at all. The trading talk is of value as are trading ideas.

    It is the inane name-calling that gets so boorish and does nothing to forward the discussions.

  25. TDM commented on Jan 16

    “Contributions for government social insurance” are up 5.9% for the year ending Q3. The wage taxes we are reporting and paying to the IRS are growing faster than inflation and much faster than reported wages. Wage taxes have been growing as fast as GDP since 2003. Wage taxes are flat and exclude most of the income over the cap and exclude benefits which are also growing fast.

    Just remember that wage statistics are reported by employers, where wages are a cost. Employers are probably understating wage inflation by at least as much as Barry thinks inflation is underreported.

  26. Francois commented on Jan 17


    I wish Mr. Binder et al. wold just get out of their protected environment for ONE day and talk to ordinary people. Then they would stand a chance of understanding the feeling of gloom and powerlessness.

    How is one supposed to feel:
    -when jobs have no security at all?
    -when a freshly retired person see the price of their medications zoom from 230$/month to 3300$ a month in less than 5 years while living on fixed income?
    -when it does not take much to lose your job while CEOs are entitled to screw up big time and then walk out with sums that defy the imagination?
    -when protections against blatant financial abuses? (ie. credit cards companies, bank fees for everything and nothing, systematic obfuscation of the real costs is a corporate SOP)
    -when one gets sick and have to fight for their health AND the insurance, hospital billing at the same time?
    -When their own government systematically favors those who needs it the least at the expense of everyone else?
    -when the expenses for daily stuff just won’t stop rising while incomes refuses to keep up?

    And some people STILL wonder why the ordinary American doesn’t feel eternally grateful for an “awesome” economy??

    Give me a break!!

  27. I, Hack commented on Jan 17

    The big thing here is the decline in labor force participation for men. That’s the elephant in the room of the “low” unemployment rate. Is anyone dumb enough to believe that the millions who have dropped out of the labor pool wouldn’t be induced back if wages for anyone other than the most highly paid executives were increasing?

    And, of course, the inanity of year over year “core” inflation is worth mentioning. If food and energy costs are increasing consistently, then they’re not volatile, just increasing.

    But according to Ben B, food inflation isn’t “inflationary” because everyone’s gotta eat, so increasing food prices push demand and prices for other goods down. Kafka couldn’t have written a more idiotic sentence from the mouth of a bureaucrat.

  28. Tim Mooney commented on Jan 17

    Barry, It is interesting that the top chart shows wages,”adjusted for inflation” rising since ’96 above the previous range. Shadowstats.com talks about the CPI calculation being changed under Clinton. I’ve been looking for some way to estimate what the cumulative deception is and I think this is not a bad one. I’ll assume we are at the bottom of the channel for real wages, giving a 11-12 percent correction needed.

    Now when I look at a long term inflation adjusted chart of the S & P or Dow I’ll eyeball an 11% droop to correct. That won’t include the earlier CPI “improvements” going back to Reagan, but it helps
    Tim Mooney

  29. screenvestor commented on Jan 19

    Went to hear Michael Santoli of Barron’s speak last week. His opinion is that the closest analogy is 1995. That ’07 resembled ’94 and that ’95 started crummy but ended fine. And we all know what happened in the latter half of the ’90s.

    We shall see.

    He also affirmed my opinion that what we’re seeing now is a kitchen-sink write down. Throw in everything you can so you can be seen as a hero 6 months down the road when things turn out to be less horrific than the current fear/panic would seem to indicate.

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