Is Joseph Stiglitz vying for the "Dr. Doom" Title?

Twas the week before Christmas and the news was all barren. Out came Joseph Stiglitz with some views he was wearing. Oh hark oh Angel, may we contract? Does this mean I should take all of my presents back? Oh food stamps, oh foreclosure, how long must ye be bearing? On Geithner, on Summers, BLS, spin some stats! This ain't good news, can I have my taxes back?

Stiglitz Says U.S. Should Prepare 2nd Stimulus:

The world’s largest economy isn’t likely to expand fast enough to create jobs for new entrants into the labor force or compensate for increases in productivity that will reduce demand for workers, Stiglitz told reporters in Singapore today.

Recovery? Economic Growth? My Ass!!

The excellent blog, My Budget 360, has a very interesting and important article today entitled 10 States with Underemployment Rates of 20+ Percent. Manufacturing Sector Employs Same Number of Workers that we did in 1940. It is a hard hitting piece that amplifies concerns raised here on many occasions regarding the ill-effects of globalization. And they have some nice, powerful graphs in support of their arguments.

For instance, on the underemployment issue, consider this data:

One thing that is clear is the employment situation is in a major funk. 10 states now have underemployment rates of over 20 percent. We are talking about Great Depression statistics here:

state unemployement

Krugman Defines a New Economic State - Purgatory

Good job Krugman. On George Stephanopoulos' show, Krugman amplified a much needed new term for the state of the economy, purgatory!

We've got a problem with terminology because we usually say either the economy is in recession or the economy is recovering.   Either you're in hell or you're in heaven.   And the trouble is we're actually in purgatory.   We're actually in a situation almost for sure GDP is growing; almost for sure the business cycle leading committee will eventually decide the recession ended this summer.   But almost surely also we're still losing jobs.   The unemployment rate is going to continue to rise.   So we're in that infamous jobless recovery state.

Study shows economy twice as bad as first reported

It looks like you weren't crazy after all. This Depression really is as bad as it seems.

(Bloomberg) -- The first 12 months of the U.S. recession saw the economy shrink more than twice as much as previously estimated, reflecting even bigger declines in consumer spending and housing, revised figures showed.

The Commerce Department’s Bureau of Economic Analysis actually went back and revised their economic figures all the way to 1929, although most of the revisions are since 1997. So as not to bore you with too many details, I'll keep this short and sweet and only touch on the highlights.

February 14th, 2008 – Paulson: (the economy) "is fundamentally strong, diverse and resilient."

United States GDP, Q2 2009 in at -1%

I know it sounds like an oxymoron, but this number is actually better than expected news.

The estimates were -1.5%. From the BEA:

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- decreased at an annual rate of 1.0 percent in the second quarter of 2009,
(that is, from the first quarter to the second), according to the "advance" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP decreased 6.4 percent.

Ok, now let's go digging into the details.

Firstly, what is GDP?

GDP = private consumption + gross investment + government spending + (exports − imports), or, GDP = C + I + G + (X − M).

So, why was the drop only -1% instead of the -1.5% expected?

The Wall Street Journal Argues for Brown Weeds

Here on the Economic Populist, dueling posts of green shoots, i.e. the recession is at a bottom and recovery will happen and brown weeds, i.e. it's getting worse and is most assuredly not a recovery, has been going on for some time.

Well, the Wall Street Journal, that holy bible of finance readers everywhere has stepped in and pronounced the ground salted and barren.

In the article, WSJ points out the average length of unemployment is higher than it's been since government began tracking the data in 1948.. The article then goes through the jobs numbers and shows why the real rate is much worse than what is being reported.

Canada, Recession and European Depression

Canada has announced in glorious fanfare (sic) that their economy is now tanking as badly as the United States.


The world’s eighth largest economy shrank at a 5.4 percent annualized pace in the first quarter, Statistics Canada said June 1, the most since 1991. Gross domestic product will shrink 3 percent this year, the central bank predicts. That would be the biggest drop since 1933, according to Statistics Canada.

The U.S. economy shrank at a 5.7 percent annual pace in the first quarter.

What is interesting, most reports on Canada is tout stability, banking sound, weathering out the crisis well and in economic recovery.

You must check out this blog, News from 1930.

UPS 1st Q Profit Down 55%!!

Yahoo Finance is reporting that the 1st Quarter profits of UPS are down 55% as revenue dropped 13%, compared to a year ago.

The results missed Wall Street expectations, and UPS provided an outlook for second-quarter earnings that was below analysts expectations. UPS shares fell.

"Clearly, these are extraordinary times," Chief Financial Officer Kurt Kuehn told analysts in a conference call.

The first-quarter profit was 40 cents a share, compared to year-ago earnings of 87 cents a share.

I would expect that things will continue to slowly spiral downward as the recession and the deflation we are now experiencing continues to deepen. The only positive here is that the falling volumes will further reduce our demand for imported oil.

40% of the World's "Wealth" Wiped Out Now - Davos Super Rich, China, Russia Blame the United States

blogging stocks, covering Davos, has an amazing quote:

An almost incomprehensible destruction of wealth has taken place. Stephen Schwarzman, Chairman of The Blackstone Group said that "40% of the world's wealth was destroyed in the last five quarters". Let me repeat that: "40% of the world's wealth has been destroyed in the last five quarters."

At a meeting in Davos, Switzerland, world leaders met to discuss the condition of the world. Putin of Russia said: "the existing financial system has failed." Growth was based on greed. One partner printed money and consumed wealth while the other manufactured cheap goods and saved money. These comments were swipes at the United States and China.

Uh, I believe much of that was fictional money to begin with...let's talk derivatives, hedge funds, housing bubbles....