I note how carefully they avoided saying that if we had followed Bush's plan to invest the SS trust fund in the stock market it would be gone now........
Recession Watch: March
- Thread starter Godwynn
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I note how carefully they avoided saying that if we had followed Bush's plan to invest the SS trust fund in the stock market it would be gone now........
Some themes I've been watching closely including US baby boomer activities, deflation/inflation trends, consolidation, protectionism and the global political climate they create.
Here's an interesting look into the numbers on boomers...
The US baby boomer
If we include the 1st quarter of this year, close to $20 trillion has been lost during this bear market (primarily by boomers). Tack onto this the flow of income from the workforce is declining at a near-record rate, as well.
Total personal income, excluding government benefits (unemployment, old age security, disability etc), has contracted by $234 billion since peaking 6 months ago (a 4.5% decline at an annual rate). Wages have deflated at a 2.7% annual rate, interest income declined at a 12.9% annual rate (a record) and dividend income at a 15.6% annual rate. Without the 14% annualized increase in government benefits, the situation would be even worse. In fact, 16.5% of personal income now is attributed to government handouts of one form or another, which is an all-time high (at least back to 1959 when the data was first published). Unprecedented stuff.
So what does all this mean?
It means despite the fact that payrolls have plunged more than 4 million so far this cycle, over the past year, employment for those 55 and over has actually risen 1.8%.
So by not retiring it's created employment problems for those between 16 and 24 years of age which has declined 5% in the past year. Those between 25 and 34 have seen employment drop by 4%. The boomers are refusing to leave the work force and the net result is highly negative for the younger segments, whose unemployment rate has jumped to nearly 22% (versus 5.6% for boomers). To make matters worse 1 in 20 boomers are taking a second job.
Looks like the boomers are chasing income in the jobs market at an unprecedented rate due to the gaping hole created in their balance sheet.
The US consumer balance sheet:
Here's an interesting look into the numbers on boomers...
The US baby boomer
If we include the 1st quarter of this year, close to $20 trillion has been lost during this bear market (primarily by boomers). Tack onto this the flow of income from the workforce is declining at a near-record rate, as well.
Total personal income, excluding government benefits (unemployment, old age security, disability etc), has contracted by $234 billion since peaking 6 months ago (a 4.5% decline at an annual rate). Wages have deflated at a 2.7% annual rate, interest income declined at a 12.9% annual rate (a record) and dividend income at a 15.6% annual rate. Without the 14% annualized increase in government benefits, the situation would be even worse. In fact, 16.5% of personal income now is attributed to government handouts of one form or another, which is an all-time high (at least back to 1959 when the data was first published). Unprecedented stuff.
So what does all this mean?
It means despite the fact that payrolls have plunged more than 4 million so far this cycle, over the past year, employment for those 55 and over has actually risen 1.8%.
So by not retiring it's created employment problems for those between 16 and 24 years of age which has declined 5% in the past year. Those between 25 and 34 have seen employment drop by 4%. The boomers are refusing to leave the work force and the net result is highly negative for the younger segments, whose unemployment rate has jumped to nearly 22% (versus 5.6% for boomers). To make matters worse 1 in 20 boomers are taking a second job.
Looks like the boomers are chasing income in the jobs market at an unprecedented rate due to the gaping hole created in their balance sheet.
The US consumer balance sheet:
- Households own $20.5 trillion of residential real estate (even after the value destruction of the past three years)
- Households own $8.8 trillion of stocks (despite the vicious bear market).
- Households own a record $7.7 trillion of deposits and cash (earning next to nothing in yield)
- Households own $4.1 trillion of consumer durable goods (stuff).
- Households own $1.6 trillion of corporate bonds.
- Households own $960 billon of municipal securities.
- Households own $920 billion of agency paper.
- Households own $273 billion of Treasury notes and bonds
Hmmm... Connecticut is looking at early retirement packages to save money. I think others are as well. But isn't that typically a penny wise pound foolish approach? And if it's taken, which would be done by boomers, wouldn't that mean a lot of boomers looking for jobs, not just holding them?
According to the numbers that's not the case and even when they're being let go they're getting hired first. No surprise there though.
Integral
Can't you hear it?
The 'final' report for 2008Q4 GDP came out last week. Here is the breakdown by component...
Components of GDP, nominal
GDP.....14200.3.....100.0%
PCE.....9927.9.....69.9%
PDI.....1906.1.....13.4%
GCE.....2911.4.....20.5%
EX.....1741.7.....12.3%
IM.....2269.7.....-16.0%
Components of GDP, real (chained 2000 dollars)
GDP.....11552.1.....100.0%
PCE.....8170.5.....70.7%
PDI.....1596.....13.8%
GCE.....2094.7.....18.1%
EX.....1454.9.....12.6%
IM.....1819.4.....-15.7%
I don't have exact figures, but my guess is that since December, GCE has increased by about 3-5%, PCE has dropped perhaps 2-3%, and PDI has decreased by about 1-2% (all numbers relative to their proportion to GDP).
Components of GDP, nominal
GDP.....14200.3.....100.0%
PCE.....9927.9.....69.9%
PDI.....1906.1.....13.4%
GCE.....2911.4.....20.5%
EX.....1741.7.....12.3%
IM.....2269.7.....-16.0%
Components of GDP, real (chained 2000 dollars)
GDP.....11552.1.....100.0%
PCE.....8170.5.....70.7%
PDI.....1596.....13.8%
GCE.....2094.7.....18.1%
EX.....1454.9.....12.6%
IM.....1819.4.....-15.7%
I don't have exact figures, but my guess is that since December, GCE has increased by about 3-5%, PCE has dropped perhaps 2-3%, and PDI has decreased by about 1-2% (all numbers relative to their proportion to GDP).
Godwynn
March to the Sea
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