Tag: Recession

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Fragile and Unbalanced in 2012 – Nouriel Roubini – Project Syndicate

The outlook for the global economy in 2012 is clear, but it isn’t pretty: recession in Europe, anemic growth at best in the United States, and a sharp slowdown in China and in most emerging-market economies.

……Adjustment of relative prices via currency movements is stalled, because surplus countries are resisting exchange-rate appreciation in favor of imposing recessionary deflation on deficit countries. The ensuing currency battles are being fought on several fronts: foreign-exchange intervention, quantitative easing, and capital controls on inflows. And, with global growth weakening further in 2012, those battles could escalate into trade wars.

via Fragile and Unbalanced in 2012 – Nouriel Roubini – Project Syndicate.

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Romer: Expectations Wallop Needed to Avert 40-Year Recovery

The Federal Reserve should set a “nominal target” for growth in the nation’s gross domestic product that is well above its current low rate for coming out of a recession, said Christina Romer, now an economics professor at the University Of California, Berkeley.“One thing I think it would do is pack a really big expectations wallop,’’ said Romer, speaking at the Super Bowl of Indexing wealth management conference here. “A new operating strategy is something that could really break through and affect people’s behavior.” Such a “new operating strategy” is needed to get the economy on the kind of course normally seen after a recession. In the first nine quarters after the 1982 version, the economy grew at an annual rate of 6.3 percent. In the first nine quarters of this edition, the rate has been 2.4 percent, barely at the nation’s historical rate of growth. And if a new approach is not taken, it could be decades before the nation is back at full employment.

via Romer: Expectations Wallop Needed to Avert 40-Year Recovery.

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OECD Sounds Warning on Global Economy

The OECD now forecasts the eurozone economy to be in a six-month recession lasting through the first quarter of 2012, followed by a slow recovery that will leave the 17-nation bloc with only 0.2 percent growth next year. Despite the OECD’s warning, European markets enjoyed one of their best sessions in weeks amid hopes that radical plans were being readied for the Dec. 9 meeting of EU leaders in Brussels. The Stoxx 50 of leading European shares ended 3.6 percent higher at 2,208.89.

via OECD Sounds Warning on Global Economy.

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Consumers May Be Spending More, but They’re Not Happy About It – Real Time Economics – WSJ

The percentage of Americans saying they were cutting back on their spending rose from 66% at the start of the year to 72% in September, where it has stayed for nine straight weeks. Spending, however, was up 5% in September from a year ago…..[it could be] that, more than two years into an anemic economic recovery, Americans are simply settling into a new routine, somewhere in between the forced austerity of the recession and the heady days that came before. Asked by Gallup whether they are watching their spending “very closely,” 88% of Americans said yes. That figure has hardly moved in two years.

via Consumers May Be Spending More, but They’re Not Happy About It – Real Time Economics – WSJ.

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Global Liquidity ‘on the Cusp’ of Drying Up – WSJ.com

“Global liquidity has fluctuated wildly over the past five years and we are on the cusp of another retrenchment,” [Bank of Canada Governor Mark Carney] said in the text of a speech, which was focused on global liquidity, to the Canada-U.K. Chamber of Commerce in London.

Mr. Carney, who was appointed chairman of the Financial Stability Board at last week’s G20 Summit, said market volatility is increasing and activity declining as global liquidity shrinks. “The effect on the real economy will soon be felt,” he said. The Bank of Canada expects the euro-area to experience a brief recession.

via Global Liquidity ‘on the Cusp’ of Drying Up – WSJ.com.

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Income Excluding Government Transfers Drops Again – Real Time Economics – WSJ

Friday’s Commerce Department report shows that personal income indicator has declined for three consecutive months — at a 2% annual rate. In the past, such steep drops in that category have been followed, three-quarters of the time, by a recession, according to Mr. Rosenberg’s [David Rosenberg of Gluskin Sheff & Associates Inc.] research. So while consumers boosted spending in the third quarter, they pulled it off by dipping into their savings and spending government dollars, not by earning more money at work. Mr. Rosenberg says stagnant wages, plunging consumer confidence, and low expectations for wage growth are a recipe for a dramatic drop in consumer spending in coming months.

via Income Excluding Government Transfers Drops Again – Real Time Economics – WSJ.

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Roubini: Moving From the Post-Bubble, Post-Bust Economy to Growth | Credit Writedowns

It is not only the U.S. economy that is in peril right now. …Europe is struggling to prevent the sovereign debt problems of its peripheral Euro-zone economies from spiraling into a full-fledged banking crisis… Meanwhile, China and other large emerging economies… are beginning to experience slowdowns…Nor is renewed recession the only threat we now face. Even if a return to negative growth rates is somehow avoided, there will remain a real and present danger that Europe and the United States alike fall into an indefinitely lengthy period of negligible growth, high unemployment and deflation, much as Japan has experienced over the past 20 years following its own stock-and-real estate bubble and burst of the early 1990s.

via Roubini: Moving From the Post-Bubble, Post-Bust Economy to Growth | Credit Writedowns.

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Median U.S. Household Income Continues to Fall after the Recession – Financial News

Gordon W. Green Jr. and John F. Coder, former Census Bureau officials, wrote a report based on Census data that explored household incomes during and after the recession. They found that starting in June 2009, at the official end of the recession, up to June 2011, the inflation-adjusted median household income fell 6.7 percent to $49,909.

This is a significant drop from the 3.2 percent decrease experienced between Dec. 2007 and June 2009–the official period of the recession as determined by the National Bureau of Economic Research.

Researchers found a possible reason for this is a freeze in pay, which has remained stagnant or even dropped in many cases–a large number of people who lost their jobs during the middle or end of the recession remained out of work for months and took pay cuts in order to be hired again.

A separate study conducted by Henry S. Farber, an economics professor at Princeton, revealed that people who lost jobs in the recession and later found work earned an average of 17.5 percent less than they had in their old jobs.

via Median U.S. Household Income Continues to Fall after the Recession – Financial News for the Best Bank Rates | Go Banking Rates.

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