Avinash_Tyagi said:
NJ5 said:
Avinash_Tyagi said:
NJ5 said:
Avinash_Tyagi said:
Employment is one of the lagging indicators of a downturn because companies don't start hiring until they see things start to turn around |
Your last statement is true, but it doesn't mean employment is a strictly lagging indicator. In a consumer-led recession, the turn around can't start before unemployment starts letting up. Simple logic there I think.
I really want to know how this recession can end while people are losing their jobs and lowering consumption, with their homes getting foreclosed pushing them even farther into poverty.
IMO there's just one way for the recession to end, and that's for more people and companies to get out of debt (either by paying their debt or defaulting on it, the latter of which will cause the banks and the government to lose a lot money due to bailouts).
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Well a recssion as termed by NBER involves many factors, not just employment:
"a significant decline in [the] economic activity spread across the country, lasting more than a few months, normally visible in real GDP growth, real personal income, employment (non-farm payrolls), industrial production, and wholesale-retail sales."
So it could end even if people are losing their jobs still.
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I agree, but with unemployment so high that has to have an impact on future consumption, wouldn't you agree?
We have literally millions of people going out of work, losing their homes (or having cheaper homes), paying higher interest rates on mortgages and credit cards. Unemployment further pushes this vicious circle, resulting in low sales for retail, manufacturers, who then have to lay off more people...
With consumers accounting for 70% of the US economy I would be very surprised if the recession could end when consumers are constantly getting poorer.
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Well I think this winter will be a good barometer of how much longer this recession will last, if things uptick enough, we could see an end to the recession by early next year. If comsumers are still lethargic this holidy it'll be a sign that it'll be a while yet.
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If the government had done the right thing, this would already be over (the downturn that is).
Unemployment is going to hit some maximum. Let's say that number is 18%. If the government had not bailed anyone out, we would have hit that number very fast. Once all the busneses that suck fail, like AIG, GM, some banks, Chrysler, etc..., what's left will do nothing but get stronger. You no longer have trillions of government dollars feeding dying companies. You now have the good ones left to thrive. You also have openings for new ones.
All companies that survived would be on an upswing at the moment. The way it is now, every employee is worried about getting laid off. Who is going to make a big purchase (like a car or house) if they are scared of possibly losing there job?
If we had gotten to 18% in a month and not 3 years, then we would have 3 years of additional purchasing by the employees and companies who were growing over those three years.
If the government had done the right thing and used the systems we have in place for such issues (the bankruptcy courts), we would be in a much better place.
The way it's going to be now, is we are going to have obligated our self to trillions of dollars in bailout for future generations to pay, years of damaged revenue, and a corporate base where the best companies were not allowed to thrive, weakening our ability to thrive.
All the time, the criminals in office who orchestrated this are telling us they are saving us. It's sickening.
