When will this wretched Economy bottom out, and how will we know?

[Warph]

When economy bottoms out, how will we know?
By ALAN ZIBEL, CHRISTOPHER LEONARD and TIM PARADIS, AP Business Writers Alan Zibel, Christopher Leonard And Tim Paradis



When will this wretched economy bottom out?

The recession is already in its 15th month, making it longer than all but two downturns since World War II. For now, everything seems to be getting worse: The Dow is in free fall, jobs are vanishing every day, and one in eight American homeowners is in foreclosure or behind on payments.

But the economy always recovers. It runs in cycles, and economists are watching an array of statistics, some of them buried deep beneath the headlines, to spot the turning point. The Associated Press examined three markets — housing, jobs and stocks — and asked experts where things stand and how to know when they've hit bottom.
None of them expects it to come anytime soon.

JOBS
HOW BAD IS IT?: The U.S. unemployment rate hit 8.1 percent in February, a 25-year peak. The nation has lost 4.4 million jobs since the recession began in late 2007.
The job cuts began early last year, as the housing and construction industries slowed down. The collapse of the financial industry in the fall battered white-collar workers. Soon, layoffs spread across industries and income levels.

HOW MUCH WORSE COULD IT GET?:   The darkest days for the job market are almost certainly still ahead. With spending weak and credit markets stalled, experts think the economy will probably shed a total of 2.4 million jobs this year. That would mean an unemployment rate above 9 percent.
That would easily surpass the 2001 and 1990-91 recessions but trail the 10.8 percent rate of December 1982. Those expectations could be optimistic: The government's "stress tests" to check the strength of banks' balance sheets assume a 10.3 percent rate.
The job market will probably be weak for years, even if the economy starts to turn around next year. The unemployment rate may not fall back to its pre-recession level of 5 percent until 2013, according to Moody's Economy.com.

WHERE'S THE BOTTOM?: Economist Sophia Koropeckyj, a managing director at Moody's Economy.com, is keeping an eye out for two signs — an inching up in companies hiring temporary workers and a rise in the number of hours worked by those who have managed to keep their part-time and full-time jobs.
When business conditions improve, employers hire temporary workers first, she said, and a pickup in permanent hiring wouldn't be far behind. Koropeckyj estimated that could come in mid-2010.


HOUSING
HOW BAD IS IT?: The median price of a home sold in the United States fell to $170,300 in January, down 26 percent from a year and a half earlier, according to the National Association of Realtors.
But that figure masks the complexity of the market. Price drops have been far steeper around Phoenix and Las Vegas, where new homes sprouted everywhere during the housing boom, than, say, in Detroit, where economic problems predate the recession.
And even within a single metro area, price declines vary sharply. Faraway suburbs, where many buyers stretched to qualify for mortgages, have been hit harder than city centers.
This housing crash has spread pain more widely than any before it. Home prices fell about 30 percent during the Great Depression, according to calculations by Yale University economist Robert Shiller. But the nation was less concentrated in urban centers then. And a much smaller proportion of adults owned homes.
Other housing downturns in recent decades have been regional. This one is truly national. Prices in the fourth quarter of 2008 fell in nearly 90 percent of the top 150 metro areas, according to the Realtors group. And 5.4 million homeowners, about 12 percent, were in foreclosure or behind on mortgage payments at the end of last year.

HOW MUCH WORSE COULD IT GET?: The Federal Reserve estimates home prices could fall 18 to 29 percent more by the end of 2010. Declines will probably be less severe in cities with healthier economies that don't have a glut of unsold homes, like Tulsa, Okla., and Wichita, Kan.
The nation's overall economic health is vital to the health of housing. "History tells us that as long as we're losing jobs, that's not good news for the housing market," said Nicolas Retsinas, director of Harvard University's Joint Center for Housing Studies.

WHERE'S THE BOTTOM?: Susan Wachter, a professor of real estate at the University of Pennsylvania, is watching the backlog of unsold homes. At January's sales pace, it would take about 9 1/2 months to rid the market of all those properties. A more normal pace would be six months.
Once foreclosures level off and the backlog is cleared, Wachter says, the housing market can begin to recover. But even with the Obama administration directing $75 billion in bailout money to stave off foreclosures, most economists don't expect home prices to bottom out before the first quarter of 2010. And don't expect an explosive rebound: Price increases will probably be modest when they come.


STOCKS
HOW BAD IS IT?: The Dow Jones industrial average and the Standard & Poor's 500 index have lost more than half their value since the stock market peaked in October 2007. It's the worst bear market since the aftermath of the crash of 1929, when the Dow plunged 89 percent and the S&P 500 index tumbled 86 percent.

HOW MUCH WORSE COULD IT GET?:  Analysts generally think Wall Street has endured the worst of the bear market. But many of those same analysts never thought the market would fall this far.
Jack Ablin, chief investment officer at Harris Private Bank in Chicago, said the Dow could fall to 6,000 if the economy slows much further and unemployment rises well past the current 8.1 percent. He pegs the likelihood of that at about 30 percent. Others are more pessimistic. Bill Strazzullo, chief market strategist for Bell Curve Trading, contends the Dow might fall to 5,000 and the S&P to 500.


WHEN WILL THE BOTTOM COME?: In downturns over the past 60 years, the S&P 500 has hit bottom an average of four months before a recession ended and about nine months before unemployment hit its peak.
Investors will be looking for turnarounds in housing, lending and employment, plus signs that consumer spending has picked up. Then market players would be more likely to move their money from safe havens, such as gold, back into stocks.
Other investors may look to obscure indicators such as the Baltic Dry Index, which tracks the cost of shipping iron ore, grain and other materials. Rising rates can indicate demand for raw materials is increasing, which suggests a strengthening economy.
But most of all, traders are waiting for a sudden spasm of selling known as capitulation. That wrings fearful investors out of the market, and as they rush out, bargain-hunters rush in. Capitulation would trigger a huge plunge in prices and frenzied trading volume.

Many market experts say the bottom of the stock market could come in the second or third quarter of this year. And the recovery, whenever it comes, could be as breathtaking as the fall: Since 1932, the S&P 500 has gained an average of 46 percent in the year after stocks have hit a bottom.

[Teresa]

How will we know?  Now THAT is a loaded question on many levels..
And I have been thinking about this off and on for awhile today.. So Thanks a whole hell of a lot Warph for making me work outside today mumbling and grumbling with my blood in a boil..   


First....
President Obama has presented the most irresponsible budget in US history. His fiscal year 2010 budget projects federal spending of $3.5 trillion and a federal deficit of $1.75 trillion. In other words, 50 percent of the government's budget consists of red ink. And Americans are angry that sub-prime borrowers took mortgages they couldn't afford ??

The bald faced fact is that the US government is going to have to borrow–or print–half of the money it intends to spend in Obama's first budget....This fact has fallen through the cracks as the Liberal media and rags like  New York Times front page headlines scream out...  "A Bold Plan Sweeps Away Reagan Ideas."
It sure as hell does sweep away Reagan ideas.
No Reagan budget ever 'presumed' that the federal government could borrow half of its annual expenditures.'

So Yesssirreee...Obama's budget deficit for 2010 alone, way over exceeds the total of "Reagan Deficits" for Reagan's two terms of office.!

okay ... let me continue thinking out loud...
hmmmmmmm  how do we know we hit rock bottom?

No home, no job, no food on the grocery shelves. Roaming zombies, looting, burning, the end of civilization as we know it.
Next up, the credit card meltdown, together with the commercial property debt coming due.
You'll know when criminals are running rampant in the streets, banging your door down to get your food, as well as soldiers patrolling the streets to stop them... and possibly you if you are considered "armed".. with an "unlawful weapon"
( remember that our 2nd amendment is at a crucial cliffs edge here,) 
There will be martial law, and we'll all be turned into prisoners..............
that's when you'll know it's "bottomed out."

But then again............................
I'm thinking...... **I know..it IS scary that my thoughts are still in drive*** 

Divided States of Communist America...maybe that is Obama's plan.

Only a fool would think he doesn't have some sort of plan in that     ""experienced  community organizing mind"  of his..

I think his plan is to change our beloved America into a BIG COMMUNIST COUNTRY!
Obama isn't going to fix anything or do anything to benefit our economy, housing, health care, unemployment or anything else. He's flushing and scraping the entire Capitalistic system that operates our government, in which he now controls.
He is going to continue to snow the American people, through the media, as he and other Washington politicians, CHANGE AMERICA, into a big communist government country, dictated by Obama, with socialistic policies and laws.

Obama and Washington politicians are NOT going to fix America's economics.. Obama and Washington politicians are CONTROL freaks, and that's what they are doing...gaining CONTROL over America and her people.  All poor and submissive to him... his dictatorship... and to his every whim.
Hitler snowed the German people too...just like Obama, and look what happened!

And on a nasty irritated  level......

I realize that this all has been created by the last 35 years of government and big business, both Repub and Demo.
But this last big avalanche of bill signing and ca-trillion "stimulus " crap that we are being buried under is coming from the ones who are parading around the white house now as we speak.

Thanks to all the goofy liberals who voted for Obama.. who keeps the house full of people like the " evil trio"..and lets not forget the Freddie and Fannie scum bags... 
We could have had McCain who would have stopped the spending, Palin who would DEFINITELY helped "Clean house" and would have opened up the oil supply, and none of us would be singing this sad tune.
Oh, but nooooo.... they had to vote in the Empty Suit with his soaring oratories.
A country dumbed down to the point of national suicide.

I hope the Obama voters are not the ones that are whining and wringing their hands. They got their Messiah. They all should  have that warm and fuzzy feeling inside.  .....
I will close my rantings and say  this.............

"The universe is not bigger than we imagine - it is bigger than we will ever be able to imagine"...

Such is this downturn. It is not worse than you imagine - it is worse than you will ever be able to imagine.
Because the last recession of this kind and magnitude was in 1873, more than 3 generations back.

So actually,  we don't have any first-hand information about that anymore that would help us triangulate today's situation.

But I imagine you will know it has personally bottomed for you and your loved ones, when you either starve to death, die from exposure, or die trying to protect your family.

[Warph]

Obama Policies Feed Market Panic
Thursday, March 5, 2009 4:40 PM
By: Greg Brown     


Since Barack Obama was sworn in as president on Jan. 20, stocks have tumbled to record lows — with investors losing an estimated $2.5 trillion in market value.

The trend continued Thursday, with the Dow closing down 281 points, a 4.1 percent drop for the day. Since Inauguration Day, the Dow has fallen 20.4 percent.

All week, negative headlines have competed with the slumping market ticker, including early news Thursday that General Motors might well go bankrupt despite billions in taxpayer loans.

As selling sped up, Citigroup traded at one point under $1 a share, General Electric dipped under $7, GM can be bought for less than a buck a share (a gallon of gas cost more than a share of GM) and international financial names like Barclays saw declines of nearly 30 percent on the day.

"Everybody is so bearish right now that you would expect to be in the midst of a counter-trend rally," Steven Goldman, market strategist at Weeden & Co, told CNNMoney.  "But the implosion in the banking and insurance sectors is just overwhelming."

Obama has moved aggressively on economic and fiscal policies. But investors — if the market is any indication — are giving his initiatives a chilly response.

On Feb. 17, Obama signed a stimulus bill worth $787 billion — the largest spending bill in history. But the Congressional Budget Office indicates only 20 percent of the funds will be spent this year, and the nonpartisan group suggests that the package could do more economic harm than good.

Obama also gave the green light to an omnibus $431 billion House Democratic spending bill laden with close to 9,000 pork-barrel spending items.

Plus, Obama revealed that he plans increase marginal tax rates on those earning more than $250,000.

The new taxes will yield more than $1 trillion in government revenues, but some economists believe the news of increased taxation will suck the wind out of any economic recovery.

In the middle of the market meltdown last thursday, Obama spent the day talking about a massive increase in healthcare spending, including a proposal in his budget that sets aside $634 billion in a 10-year reserve fund to pay for expanded care.

The drumbeat of bad news was too much for stocks, including:

• U.S. bankruptcy filings surging 31 percent in 2008.

• More than 600,000 Americans filing claims for jobless benefits for a fifth straight week, the worst performance since 1982.

• U.S. factory orders falling for a sixth straight month in January, official data showed.

• One in every eight U.S. households with mortgages ended 2008 behind on payments or in foreclosure, reported the Mortgage Bankers Association.

"The auto industry is effectively being wiped out or nationalized, however you want to think about it," Rick Campagna, portfolio manager at Provident Investment Council in Pasadena, Calif., told Reuters.

"Now you're talking about a good portion, if not all, of the banking sector being wiped out. It's just getting relatively dire." 

[Teresa]