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HappySqurriel on 10 August 2009
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akuma587 said:
HappySqurriel said:

The value of the stock market is not representitive of the state of the economy good or bad, and movement within the markets in the short to medium term are much more related to emotional speculation than the fundimentals of the economy.

The spin that "Unemployment is the last thing to improve" so any signs of stabilization of unemployment are automatically a sign that things are getting better is 100% bullshit. When you're facing a longer term and deeper economic slowdown there are always plateaus and local mamimums in most economic indicators before something changes (for the worse) and then the indicators all become negative for awhile again. The reason for this is simple, and is (basically) the same reason why people claim unemployment is the last thing to improve ... no one knows what the economy will look like a year from now, and most companies and individuals are likely going to maintain their spending level at their new adjusted level until they see a sign that the recession is truely behind them unless they need to change it. Companies tend to only increase their workforce after they have seen dramatic improvement in their bottom line.

Generally speaking, the massive consumer orgy that drive the American economy is not going to recover until people have access to the extremely moronic levels of credit that were available prior to the beginning of the recession and consumer confidence returns. Right now consumer confidence does not show signs of returning to its previous high levels, and as long as more and more mortgages are underwater it is unlikely that consumers will have access to the credit levels they used to.

In other words ...

The recession is not over, we could easily be in the eye of the storm and after people evaluate the back-to-school shopping season and adjust expectations for the holiday shopping season we could see reduced orders from companies, higher unemployment, and lower profits for companies.

 

That's all well and good, but everything you are saying is way too speculative.  Lets make some predictions.  You tell me where you think GDP growth will be in Q3 and Q4 and where unemployment will be at the end Q3 and Q4.  You act like you know a lot about this stuff, so I am going to put you to some hard numbers that you can't wiggle your way out of to test how valid your predictions and methodology really are.  I'm more than willing to make predictions that you can hold me to.

My predictions:

Q3:

GDP Growth: 3%

Unemployment: Will not go above 10%, will settle around 9-9.2%, maybe lower.

Q4:

GDP Growth: 5%

Unemployment: Will drop down to around 8.5%.  I would be surprised if it went below 8%.

I know enough about economics to know that there is far more to making a prediction than pulling numbers out of your ass, so I don't expect my numbers to be amazingly accurate ...

Now being that GDP shrank at an annualized rate of 1% in July, and same store sales indicate that the back-to-school shopping season will be much more modest this year, I would expect the decline in GDP to be at an annualized rate between 0.75% to 1.25%. On top of that, for the past couple of months the number of people who have been giving up looking for employment because the job market is so bad has been (roughly) equal to or greater than the number of people who lost their job, and I don't see any reason why this will change dramatically in either direction, so I expect unemployment to be between 9% and 10%.

Back to school sales are heavily used by the retail industry to predict how the holiday shopping season will go, and with sales down between 5% and 10% I expect their orders from suppliers and the number of part-time/temporary staff hired will be down from last year; which will work its way up the food chain to suppliers, manufacturers, and so on who feel the pinch. On top of this, I suspect that the year end clearance sales for automobiles will be awful this year because many of the people who would be lured to these sales because of the deals just bought their cars earlier (due to the cash for clunkers program). With this all taken into account I would expect GDP to decline at an annualized rate between 2% and 3%, and for unemployment to inch up to be between 9.25% and 10.25%.