Today, Yahoo! Finance decided to prominently feature this article, an article that makes some interesting points in the debate over whether we are headed towards recession.

Some of the stats:

• The jobless rate dipped from 5.1% to 5% in April. But part-time jobs due to economic reasons (aka people can’t full-time work) rose from 4.4 million a year ago to 5.2 million.
• We’ve lost 260,000 jobs this year.
• Consumer spending has slowed to 1% growth, the slowest since 2001.
• Consumer borrowing grew rapidly in March and continues to grow

As you may have guessed, this analysis of the economy is bleak, and the author’s claim is that the positive signs we’ve seen recently are merely covering up the general weakness of the economy.

I still believe we’re going to have a far clearer picture when we know GDP growth for the April-June quarter. As the market fluctuates, expect the media to overly panic about recession or to overly rejoice about avoiding the bullet.

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Filed under The Economy

The news and blogosphere continue to have an evolving debate over the condition of the economy. Joe Markman at MSN Money and James Pethokoukis of U.S. News and World Report both give optimistic assessments of the economy.

Markman asserts that the economy has not crashed as the bears have feared (i.e. the economy still grew in Jan-March, though only by 0.6%) and that money is flowing back into the economy. Pethokoukis points to statements from the White House’s Chief Economic Advisor Edward Lazear and to Wal-Mart beating expectations as indicators that the economy isn’t going to hell.

Of course, it wouldn’t be a debate without a lot of people claiming the opposite. The Big Picture blog makes the assertion that there’s often positive signals and growth before an economy falls into recession (wait, wouldn’t an economy always grow before it shrank though?). But a far more sobering picture is painted by the Economist of the housing bubble. Here, let me give you a quote from the article:

Mr Bernanke’s maps use figures from the Office of Federal Housing Enterprise Oversight (OFHEO). Its statistics have broad geographic reach and track repeat sales of the same house. The monthly national index suggests average prices have fallen only 3% from a peak in April 2007, and the quarterly figures are still positive. But OFHEO’s figures include only houses financed by mortgages backed by the government-sponsored giants, Fannie Mae and Freddie Mac. They leave out the top and bottom of the market—where prices rose fastest during the bubble and where the mortgage mess was most severe.

The article states that investors expect a 11-13% correction of housing prices (prices will keep dropping and foreclosures will keep rising), but some of the hardest hit states, like California and Flordia, could see another 25%.

Regardless, the debate continues, and we’re not going to know for another 3-6 months what direction the economy will take. Even then, there could always be a sudden nosedive.

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Filed under News and Analysis

79%, to be precise, believe we’re in a recession now. According to the CNN/Opinion Research poll, this is up from 46% six months ago and 2/3rds of respondents back in February.

This is in contradiction with the technical definition of a recession, which is two quarters of negative GDP growth (simplified: the economy shrinks twice in a row). It grew last quarter, but only by 0.6%. Still, that’s growth, and it means we’re in a slowdown, not a recession.

So why does perception beat reality? Is it just a misunderstanding of the definition. No, I think this quote from the CNN piece sums it up pretty well:

“You probably don’t have 79% of economists saying that we are in a recession,” said Jeoff Hall, chief U.S. economist for Thomson Reuters. The country has “lost 260,000 jobs (in the first 4 months of 2008), so for those people it is not a recession, it is a depression.”

It’s about personal impact. And right now, high gas prices, job cuts, and uncertainty are playing their role. Perception can sometimes be stronger than reality. And sometimes, I think we need to change the definition of recession.

Two questions for the readers out there: Do these numbers surprise you? And do you think we should look into how we define a recession? Voice yourself by posting a comment!

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Filed under News and Analysis

Former Fed Chair Alan Greenspan spoke in a television interview this morning, and he had some interesting comments. From Reuters and Bloomberg:

“We’re in a recession,” Bloomberg news agency reported Greenspan had said in a television interview. “But this is an awfully pale recession at the moment. The declines in employment have not been as big as you’d expect to see.”

The key words of the quote: at the moment. He’s stated before that he believed the U.S. is in a recession, but this quote makes me think he’s not convinced we’re anywhere near being out of the woods. Those three little words are important.

Do you think Greenspan’s a bull or a bear?

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Filed under News and Analysis

Do a quick exercise. Raise your hand in the air (no matter where you are) if you’ve done any of the following in the last month:

• Cut down on your driving because of the cost
• Stopped or changed a daily ritual like buying a morning latte at Starbucks
• Worked just a little harder at work to keep your job secure
• Intend to use your rebate check to pay off a credit card or mortgage instead of spending it
• Put off on buying that new Flat Screen T.V.
• Pulled some of your money out of the stock market (even if you shouldn’t) to make sure it’s still there three years from now
• Stayed in for dinner more often, or simply just cut your budget
• Know a friend or family member who has lost his or her job

Get the picture yet? I don’t even have to tell you how many people have their hands waving in the air; it is a lot. Clearly the collapse of Bear Stearns, the housing crunch, and increasing job cuts are on everybody’s minds. Nobody’s sure what is going to happen next, but until they know, most people, probably including yourself, are taking steps to minimize the impact of a possible recession on their lives.

Let me make it clear: we are not in a recession yet. We’re in a period of slowed growth, but the possibility of recession looms. Regardless of the definitions, it’s time to do something more than cut your spending. It’s time to arm yourself with knowledge.

This is where BucktheSlump.com comes in. We are a news aggregate, a blog, and a community dedicated to topics and issues stemming from the economic downturn and, yes, the looming threat of recession. If you look at our About page, you will find some of the things we are going to do: bring you the major news and talk on the recession, provide analysis. But we’re out to do more. We’re going to bring in great minds and the struggling worker to share their insight and personal stories. Tips and information on how to better prepare yourself, tools to help your friends, and personal stories from those who have been hurt by the slump and those who have risen from great lows.

We made Buck the Slump for one reason: to help people through this. We hope this information will be useful to you now and in the future, whenever hard times hit. The information we will provide here will be useful you to you for the rest of your life, even long after the economy recovers. So please, visit the site, join the community, or tell your own story to our readers.

In the meantime, if you have any ideas for topics we should cover, important news stories, or ideas to improve Buck the Slump, we encourage you to email us or, better yet, leave a comment.

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Filed under Announcements

Since we’re new, you may not know that we do a daily roundup on the news and blog talk on the recession. Now you know!

So here’s today’s roundup:

• Prolific investor Warren Buffett says (once again) that the economy is in a recession. Of course, this conflicts with how economists and the Commerce Department define recession. He uses his own definition of recession:
  

  I would define that as a situation where people are doing less well than they were three months, six months or eight months earlier and most businesses find themselves in that position too.

  Not exactly an easy-to-measure definition, but I have little right to criticize Buffett.

• The Christian Science Monitor has a new article on the college job market. Specifically, that the college job market has deteriorated. I find this interesting because it was only two months ago when the USA Today wrote that the entry-level market is still very strong. Oh, and according to the Chicago Tribune, college towns seem to be doing fine.
• Apparently, Bear Stearns nearly collapsed twice. You learn some interesting stuff looking through the regulatory records, it seems.
• Finally, Andrew Carroll of the Washington Post has a wonderful suggestion for what to do with your tax rebate: donate it to our heroic troops.

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Filed under News and Analysis, news roundup

Buck the Slump officially launches on May 5th. Things to expect:

• A daily round-up of the talk, news, and blogging around the web on recession related topics
• Analysis
• Information on how to better prepare yourself to succeed during the upcoming recession
• Information on how to help others, because you never know when you will need help.
• Guests posts on a variety of topics related to the economic slump
• Personal stories of people’s hardships and success despite adversity. Learning from the stories of others will help all of us.

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Filed under News and Analysis