Merrill Lynch: Recession in the US 'has arrived'

[GrGr]

BBC


Recession in the US 'has arrived'

Merrill said Friday's employment figures confirmed the recession
The feared recession in the US economy has already arrived, according to a report from Merrill Lynch.

It said that Friday's employment report, which sent shares tumbling worldwide, confirmed that the US is in the first month of a recession.

Its view is controversial, with banks such as Lehman Brothers disagreeing.

But a reserve member of the committee that sets US rates warned that it could do little about the below-trend growth expected in the next six months.

"I am concerned that developments on the inflation front will make the Fed's policy decisions more difficult in 2008," Charles Plosser, president of the Federal Reserve Bank of Philadelphia said.

He was referring to the problems faced by the US Federal Reserve, which might want to cut interest rates to avoid a recession, but is worried about inflationary factors such as $100-a-barrel oil.

'Significant decline'

An official ruling on whether the US is in recession is made by the National Bureau of Economic Research, but this decision may not come for two years.

The NBER defines a recession as "a significant decline in economic activity spread across the economy, lasting more than a few months".

It bases its assessment on final figures on employment, personal income, industrial production and sales activity in the manufacturing and retail sectors.

Merrill Lynch said that the figures showing the jobless rate hitting 5% in December were the final piece in that puzzle.

"According to our analysis, this isn't even a forecast any more but is a present day reality," the report said.

'Actual downturn'

But NBER president Martin Feldstein denied Merrill's claims.

"I think we're not in a recession now," he told CNBC.

"But I think there is a serious risk that it could get worse and we could see an actual downturn," he added.

Merrill said that the current consensus view on Wall Street that there is a good chance of avoiding a recession is "in denial".

It also objected to the use of euphemistic terms for the state of the economy.

"To say that the backdrop is 'recession like' is akin to an obstetrician telling a woman that she is 'sort of pregnant'," the report said.

Housing figures

There were further signs of the housing slowdown that has sparked off the problems in the US economy in home sale figures.

Pending sales of existing homes fell 2.6%, according to the National Association of Realtors, which saw its pending sales index drop to 87.6 in November, 19.2% below the point it was at a year ago.

The figures were better than expected, however, because October's index reading was revised upwards from 87.2 to 89.9.

Meanwhile, US phone giant AT&T said it was now disconnecting a growing number of home phone and broadband customers for failing to pay their bills.

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heh, so the recession will not be officially official for another two years?

 

[miketheidiot]

i'd tend to agree, if we aren't in a recession, we're about as close as we get.

 

[IAteYourMother]

good. recessions are a normal part of economic progress

 

[reeserock]

Sucks for the lower middle class who are right on the edge of success and failure.

 

[theeedude]

I just got a job offer for a 35% raise today 🙂 Perfect timing again, right before a recession. I got my current job in fall of 2000 right before tech bubble burst. 😀

 

[compuwiz1]

Bankruptcies are about to spike. With this many foreclosures and auto repo's happening, many people will go bankrupt just to avoid being sued for deficiencies on the difference between what their forclosed property sold for and what was owed. Next couple years are gonna be interesting. This is prime time for opportunists with money.

 

[miketheidiot]

Originally posted by: senseamp
I just got a job offer for a 35% raise today 🙂 Perfect timing again, right before a recession. I got my current job in fall of 2000 right before tech bubble burst. 😀

lucky bastard. you must be one of thoseleading indicators.

 

[Jadow]

Aww F it.

If we have a recession, it'll be a mini recession like we had back in 2002, we'll be out of it before we even realized we were in a recession.

Buying stocks on the cheap FTW. Buffet Style!

 

[theeedude]

Originally posted by: miketheidiot

Originally posted by: senseamp
I just got a job offer for a 35% raise today 🙂 Perfect timing again, right before a recession. I got my current job in fall of 2000 right before tech bubble burst. 😀

lucky bastard. you must be one of thoseleading indicators.

Yep, I'll let ya'll know next time I change jobs so you can short the sh!t out of the stock market. 😀

 

[MonkeyK]

If unemployment is an indicator of recession, then what will happen as a large number of military reserve and national guard troops return from Iraq.
This is not something that will resolve quickly.

 

[Slew Foot]

Originally posted by: compuwiz1
Bankruptcies are about to spike. With this many foreclosures and auto repo's happening, many people will go bankrupt just to avoid being sued for deficiencies on the difference between what their forclosed property sold for and what was owed. Next couple years are gonna be interesting. This is prime time for opportunists with money.

Not yet, a couple years will be prime time, save money for then.

 

[FoBoT]

my company is preparing to hand out pink slips for the first time in over ten years
the IT dept has been growing double digits (%) for more than the seven years i have been at my current spot,. now they are going to chop chop chop

 

[Engineer]

Originally posted by: FoBoT
my company is preparing to hand out pink slips for the first time in over ten years
the IT dept has been growing double digits (%) for more than the seven years i have been at my current spot,. now they are going to chop chop chop

My company (automotive) closed down 3 US plants last year (out of about 10) and will be closing another this year. Part of the business was sent to Mexico, part lost. Also closed down the Mexican tooling center (which to me was a miracle because I work at the last tooling center, which happens to be located in the US. Experience (and lots of it) for the win in this case).

 

[IronWing]

Originally posted by: MonkeyK
If unemployment is an indicator of recession, then what will happen as a large number of military reserve and national guard troops return from Iraq.
This is not something that will resolve quickly.

And though it may seem very clear
We have no jobs to give you here,
So we are sending you to Vietnam.

And Lydon Johnson told the nation...

 

[techs]

This just in. Merrill Lynch to offer no money down, variable rate mortgages to anyone who can sign their name.

 

[LumbergTech]

i know i have had to cut back my spending..

my girlfriend and i were living pretty well even though we havent finished college yet..

nothing extravagant but had enough money to enjoy life and feel semi-comfortable..

the rising gas prices are really putting a squeeze on our ability to afford the lifestyle that we have had before..

especially now that i have to drive a total of 80 minutes minimum to go to the university im going to..

i feel even worse for those who make a little bit less than us because its gotta be hard when you ride the line..

 

[LumbergTech]

Originally posted by: senseamp
I just got a job offer for a 35% raise today 🙂 Perfect timing again, right before a recession. I got my current job in fall of 2000 right before tech bubble burst. 😀

which means the real worth of that 35% is not actually a 35% increase...good for you nonetheless more is more

 

[WhipperSnapper]

Originally posted by: IAteYourMother
good. recessions are a normal part of economic progress

Part of the "progress" that comes about if your goal is to eradicate the middle and lower-middle classes.

When you consider how global labor arbitrage is transforming this country, you might realize that a depression began years ago but that it's been masked by the housing market and credit card spending.

Are you ready to join the third world?

 

[theeedude]

Originally posted by: LumbergTech

Originally posted by: senseamp
I just got a job offer for a 35% raise today 🙂 Perfect timing again, right before a recession. I got my current job in fall of 2000 right before tech bubble burst. 😀

which means the real worth of that 35% is not actually a 35% increase...good for you nonetheless more is more

I mean 35% over the raise my current company just gave me last month 😀

 

[Vic]

Originally posted by: techs
This just in. Merrill Lynch to offer no money down, variable rate mortgages to anyone who can sign their name.

Uh no... Merrill Lynch's subprime lending subsidiary, First Franklin, is all but imploded. According to ml-implode, they closed a whopping $1.8 million in gross loan volume last month. This from a lender that used to do billions every month. So really, STFU.

 

[HomerJS]

Originally posted by: senseamp

Originally posted by: LumbergTech

Originally posted by: senseamp
I just got a job offer for a 35% raise today 🙂 Perfect timing again, right before a recession. I got my current job in fall of 2000 right before tech bubble burst. 😀

which means the real worth of that 35% is not actually a 35% increase...good for you nonetheless more is more

I mean 35% over the raise my current company just gave me last month 😀

Good for you. Just be alert for your companies health. I have a good job with my company for 10 years making a good salary. We found out two months ago we are being closed and our IT functions are being outsourced to India.

They are bringing 8 of them for every one of us. Sucks but thats the state of our ecomony.

 

[blackangst1]

Originally posted by: Jadow
Aww F it.

If we have a recession, it'll be a mini recession like we had back in 2002, we'll be out of it before we even realized we were in a recession.

Buying stocks on the cheap FTW. Buffet Style!

QFT. All this shit about Great Recession II need to talk to their grandparents or go visit an old folks home to get a REAL account of the DEPression...not to mention some perspective. This aint SHIT.

 

[jman19]

Originally posted by: Vic

Originally posted by: techs
This just in. Merrill Lynch to offer no money down, variable rate mortgages to anyone who can sign their name.

Uh no... Merrill Lynch's subprime lending subsidiary, First Franklin, is all but imploded. According to ml-implode, they closed a whopping $1.8 million in gross loan volume last month. This from a lender that used to do billions every month. So really, STFU.

Could techs be any more ignorant of the mortgage situation in the country right now and how it is impact lenders and the financials buying their debt? Jesus.

 

[Genx87]

Wish I could get paid big bucks to state the obvious. Our economy goes in cycles and it doesnt take a rocket scientist to realize we are on the brink of a slow down.

 

[Genx87]

Originally posted by: miketheidiot

Originally posted by: senseamp
I just got a job offer for a 35% raise today 🙂 Perfect timing again, right before a recession. I got my current job in fall of 2000 right before tech bubble burst. 😀

lucky bastard. you must be one of thoseleading indicators.

Hey I started a job last month that gave me a 30% raise 😀