By John E. Carey
Peace and Freedom
The United States is in a recession and economic storm clouds loom in Asia.
U.S. homeowners have more debt than ownership (equity) causing many to “bail out” on their mortgages. Banks now own more and more houses. To make it easier to buy, the Federal Reserve has lowered interest rates over and over again. The Fed may lower rates again next week.
The dollar is way down compared to the euro — and just about all other reputable currency — and oil prices are up because of this, high world-wide demand and limited refining capacity.
A US banknote is reflected on a euro coin. The dollar found some support Monday, gaining ground on the euro on warnings against excessive exchange rate volatility from European Central Bank head Jean-Claude Trichet.(AFP/File/Joel Saget)
In China, where banks hold over a trillion dollars in foreign exchange reserves, a sell-off of dollars could also depress the dollar further. Fear of such an action alone is enough to make economists wary of pressuring China.
Farmers in the Midwest of America are delighted by high corn prices – much attributable to demand for corn-made ethanol. But the high price of corn is a burden to those trying to feed livestock.
The good news is that it is so expensive to feed cattle right now that the farmers are slaughtering beef at a better than average rate. Beef is cheep just now (but watch out next year).
The price of wheat per bushel has doubled in the last few months. This means bread, pizza and bagels are going up in price. Beer too!
Because of the low dollar, screwy farm prices and high gasoline prices, pretty much everything in the grocery store is costing more.
Retail sales are way down and applications for unemployment are way up.
But recession has a real definition and this, plus politics, has prevented the White House from using “The ‘R’ Word” much.
In macroeconomics, a recession is a decline in a country’s gross domestic product gross domestic (GDP), or negative real economic growth, for two or more successive quarters of a year.
For the U.S., the judgment of the business-cycle dating committee of the National Bureau of Economic Research regarding the exact dating of recessions is generally accepted. The NBER has a more general framework for judging recessions:
A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.
A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough. Between trough and peak, the economy is in an expansion. Expansion is the normal state of the economy; most recessions are brief and they have been rare in recent decades.
So, we at Peace and Freedom believe we Americans are in a recession and we see dark economic clouds world-wide, especially in Asia.
China’s high January and February readings for inflation have increased the pressure on the government to take action to counter price rises. In China, annual consumer inflation jumped to 8.7 percent in February after hitting 7.1 percent in January, the worst in more than 11 years.
But much of the current economic turbulence in China, the communist government says, is attributable to the largest winter snowfall in 100 years. China says their economy will quickly rebound.
Confidence among Australian consumers weakened sharply in March to its lowest level since 1993, according to data released Wednesday, sparking economists’ predictions that the central bank is unlikely to continue a run of interest rate hikes.
The International Monetary Fund has warned Vietnam that its fast-growing economy is overheating. It has advised Hanoi to adopt a more flexible exchange rate regime and to tackle imprudent lending practices by commercial banks, in order to help control inflation.
Vietnam’s Communist authorities are battling to curb inflation, which, driven by higher food and energy prices, hit 15.7 per cent in February and has fuelled labor unrest, especially among factory workers who say they cannot make ends meet.
Japan’s economy has so far shown resiliency, but experts on the world’s second largest economy worry that Japan’s export-led recovery could stall if US economic troubles deepen.
At the U.S. Department of the Treasury, the leadership has confidence that the U.S. economy will rebound in the next quarter.
The U.S. economy is going through a rough patch but, thanks to a government fiscal package worth some $150 billion, should start recovering as soon as the second quarter, a senior Treasury official said on Tuesday.
“The booster shot that’s been given to the U.S. economy is going to boost consumer spending, is going to boost business investment — that will lead to both higher growth and higher job creation,” Robert Kimmitt, Deputy Treasury Secretary told Sky News in the UK.
“Many economists predict, and we agree, that we will see that upturn in the second quarter,” he said.
We’ll have to wait and see.
Our advice is to pay off your credit card debt, reduce spending and hunker down.
The U.S. Treasury building
A Few Ways I Can Tell We Are In A Recession
(These may or may not apply to your neighborhood….)
1. The AA clubhouse starts charging for matches and coffee — and is considering a ‘no smoking’ policy just so the gang can save money.
2. The church no longer supplies a pen near the pile of the collection envelops.
3. People actually born in America are eating at the Peruvian Pollo Chicken restaurant.
4. The neighborhood restaurant no longer has music. Now you do karaoke.
5. You no longer know the pizza man’s name.
6. You’re going to have to use our IRS refund for gas instead of a vacation.
7. A resident of the shelter is wearing a tie and a lapel pin from a bank.
8. A bunch of realtors joined the prayer group.
9. The number of Spanish speaking illegals standing on your street looking for work has doubled.
10. You’re looking for a lock for your gas cap….