Wednesday, October 01, 2008

It's almost official-- recession is here

HT: The Economist's blog (which gives HTs to other econ bloggers).

Manufacturing sector reporting a real slowdown, the worst since October 2001. Consumer spending in Quarter 3 is also projected to have contracted quite a bit. The most since 1991. Here's a graph which:
"If accurate, this will be the first decline in PCE (personal consumption expenditures, 74% of our GDP) since Q4 1991. This is strong evidence that the indefatigable U.S. consumer is finally throwing in the towel."

James Hamilton says:
"the purpose of the bailout proposal still being debated in Congress is not to prevent a U.S. recession-- the recession is a done deal. The purpose is to try to prevent the recession we're already in from being transformed into a severe contraction."

The above is an example what bothers me the most about the talk in the past couple days. There's talk of "This bailout isn't enough," "won't fix the problem," "isn't great but will help us for a while." Paul Krugman is the best example of this:

"The true cost (of the Dodd-Frank-Paulson plan) to taxpayers will probably be close to zero, and it would buy some time. But I’m not passionate about this. The real financial rescue still lies in the future, probably under the Obama administration. "
What exactly is the real financial rescue going to look like? (In my mind it looks like higher taxes and dramatically reduced spending... a balanced budget would be best best to rescue my son's future).


Keith Walters said...

We may be in a recession but apparently prostitution is booming ( In 1929 the coped by jumping out of their office windows in our post-sexual revolution culture they are coping by jumping in bed. I think the FP post is kinda interesting.

JTapp said...

If this were anything like the Great Depression, then people would still be jumping off buildings.

Yep, there's always an increase in demand for "vice" during a recession. Drinking, drug use, etc. tend to go up as well.

Keith Walters said...

I agree there is definitely no comparison between the two. In Lexington the hit on the housing market has been almost unnoticible and I think that while certain sectors may be feelng the crunch most beople I know have continued spending as usual. Yes, there are big issues involved with the whole thing but I think walstreet's itchy nerves is causing it to shoot the market in the foot.