Economy

[Surefire]

Interesting results. But what I expected.

Few are picking the extreme (great depression). Most are picking central answers (moderate recession to soft depression).

I didn't offer the opposite extreme (no recession or mild recession) since by all accounts most economist already put us at best in a moderate recession.

 

[TremblingBluStar]

I keep wondering how much the media has to do with all this. .

I'd say quite a bit. The rest of it is due to a lack of regulation leading to a great many number of corporate scandals and general politicking actions that favor a small minority over everybody else.

 

[jamestyler]

Last report I heard said 6% in the UK.

Cheers I never trust any government figures - or any figures for that matter as I've been employed on more than on occasion to 'fix' numbers - but it's good to see the official number.

I know there are certain parts of Glasgow that are above 50% living in poverty or out of work which is a worrying figure - and that was March-ish.

 

[Hoser]

Detroit was at 34%, last I heard. The state of Michigan's at 9.6%
Someone just told me that some people are committing crimes for the sole reason of being put in prison, for the food, bed and heat.

 

[CaptJimboJones]

The interesting thing about recessions is that the impact tends to depend on where you live. If you're in Michigan right now, for example, you're in the midst of a very severe downturn. Here in Texas, meanwhile, the state's economy is still growing (albeit much slower than in recent years).

It also depends on what you do for a living. If you're in the health care industry, you probably don't have to worry too much about losing your job. Manufacturing, retail, anything that relies on advertising, etc. - different story.

 

[Surefire]

Now with the Dow below 7,000... does everyone agree with where they voted last time?

Here is an article that suggests things may get worse:

http://biz.yahoo.com/ap/090302/the_d_word.html

 

[Brolan]

Looks like the majority of us were right so far; severe recession. But while I previously thought a depression was out of the question, I believe it is a possibility now.

 

[Holdfast]

Now with the Dow below 7,000... does everyone agree with where they voted last time?

I voted Severe Recession last time, and I'm sticking with that call.

I also don't think the stock market will be hitting fresh record highs until about 2015. That's a scary thought. It will also mean that the market will have effectively stalled (as an overall index) all the way through from end 1999 through to 2015. And by then there will probably be time for another little blip for 6 months, before strong progress afterwards again, so we're probably looking a total of 16-18 years of range-bound trading.

If I'm right about that, thank god I'm not dependent on capital growth in my equity investments any time soon, and please god let dividends hold up!

Still, after that timeframe, either capitalism will have collapsed and we'll all be eating rats for supper, or countries will have run out of money to borrow/print/beg for and so the structural economic problems will finally be remedied.

Long story short, there's more pain coming before the good times return. This is a big recession. But they will return eventually.

 

[PKTrekGirl]

I didn't vote last round, I don't think. But I vote for "Soft Depression". We are already teetering on that where we are right now, and certain industries are there already, essentially in their own sector-wide depression/panic - banking, auto manufacturing, real estate, etc.

I'm an accountant who works in the tech sector of the economy, and I can tell you that NO ONE is hiring right now - all the large tech companies are in hiring freeze/layoff mode. My company (IBM) has laid off 35,000 so far and we will very likely see more.

And accounting jobs even outside the tech sector are hard to come by. And this time of year in particular that is VERY unusual.

Bottom line - it's pretty grim.

 

[Surefire]

Now with the Dow below 7,000... does everyone agree with where they voted last time?

I voted Severe Recession last time, and I'm sticking with that call.

I also don't think the stock market will be hitting fresh record highs until about 2015. That's a scary thought. It will also mean that the market will have effectively stalled (as an overall index) all the way through from end 1999 through to 2015. And by then there will probably be time for another little blip for 6 months, before strong progress afterwards again, so we're probably looking a total of 16-18 years of range-bound trading.

If I'm right about that, thank god I'm not dependent on capital growth in my equity investments any time soon, and please god let dividends hold up!

Still, after that timeframe, either capitalism will have collapsed and we'll all be eating rats for supper, or countries will have run out of money to borrow/print/beg for and so the structural economic problems will finally be remedied.

Long story short, there's more pain coming before the good times return. This is a big recession. But they will return eventually.

Yikes, no record highs until 2015? That would be a huge stall.

I also hope my dividends hold up, and that the new administration doesn't tax dividends to death in the future.

 

[sidious618]

If I had voted in this thread I'd have said severe recession. I have a feeling that'll be what it amounts to. A very light depression at most.

 

[Holdfast]

Bottom line - it's pretty grim.

I don't think anyone's going to argue with you on that one!

... I also don't think the stock market will be hitting fresh record highs until about 2015. That's a scary thought. It will also mean that the market will have effectively stalled (as an overall index) all the way through from end 1999 through to 2015. And by then there will probably be time for another little blip for 6 months, before strong progress afterwards again, so we're probably looking a total of 16-18 years of range-bound trading...

Yikes, no record highs until 2015? That would be a huge stall.

Look at the charts and you'll see why I think this.

Record high around the end of 1999/start of 2000. Then a slump of about 45% from that high through to about 2004 . Then it took until Q3 2007 to return to a high which was around the 1999/2000 high. Now we're more than 50% down from THAT high, and below the previous slump. Even if this isn't a dreaded double-top pattern, we're still going take a long time to more than double the index again. Say 5 years. And if we haven't quite bottomed out and it takes until the middle of the year (a fairly optimistic perspective) then we're looking at 2014 for the next high. I don't think it will be quite that quick, so 2015 is seems more realistic.

So overall stagnation from 2000 to 2015. Not good news for anyone's portfolio! If there's another serious correction at some stage (likely), add in another year or two to recover, so strong growth beyond roughly the 2000 highs will not be until about 2017/2018.

Scary numbers, huh?

EDIT - I should point out I'm mainly thinking from a FTSE perspective, though the broad point is translatable to the Dow.

I also hope my dividends hold up, and that the new administration doesn't tax dividends to death in the future.

Taxing dividends is the devil's work.

 

[Surefire]

^Agreed regarding dividend taxes.

Curious what types of dividend stocks and ETFs you think may weather this recession/(possible) depression.

For me, I see the necessity items possibly being able to get through this-- for example PG (Proctor & Gamble). Certain strong health care companies may be good plays too.

 

[Augustus]

I don't think this is a depression, it is bad, people are hurting, but I think we will come out of this.

 

[DBR]

^Agreed regarding dividend taxes.

Curious what types of dividend stocks and ETFs you think may weather this recession/(possible) depression.

For me, I see the necessity items possibly being able to get through this-- for example PG (Proctor & Gamble). Certain strong health care companies may be good plays too.

Some commodities, energy, ag, Canadian banks.

Though people waaay smarter than me are saying cash is king right now.

 

[Holdfast]

^Agreed regarding dividend taxes.

Curious what types of dividend stocks and ETFs you think may weather this recession/(possible) depression.

For me, I see the necessity items possibly being able to get through this-- for example PG (Proctor & Gamble). Certain strong health care companies may be good plays too.

The usual cyclical defensives are probably best, but really, these days, who the fuck knows whether they've got debt up the wazoo hidden away in some complex credit default swap?

Hindsight is 20:20, and I wish I'd pulled everything out of the market a while back and kept it in cash (spread across enough banks to be safe if one went bust).

But if we're looking towards the future, any company with a relatively steady income stream and without excessive debt is a no-brainer right now. The sell-offs have been indiscriminate bloodbaths across the board and a lot of good companies have been unfairly mullered and are ridiculously cheap.