Economists React: ‘Looking for a Bunker to Hide in’

The sharp jump in the unemployment rate — from 4.7% to 5.0% — may be the most alarming feature of this report. Single-month increases that large occur only rarely and most often near business cycle turning points. Indeed, the last time the unemployment rate rose 0.35 in a single month was September 2001. Tellingly, the jobless rate also jumped 0.3% in January of 2001, just before the business cycle peak in March 2001. –David Resler, Nomura Securities

The rise in the unemployment rate is very disturbing. Over the last year, the unemployment rate has risen 0.6% points from its low and since 1949 the unemployment rate has never risen by this magnitude without the economy being in recession (this period covers ten recessions). Other economic indicators such as jobless claims and ISM for December are more consistent with sharp slowdown than with recession, but we now put ourselves on recession watch. –Bear Stearns

This data shows an economy slowing sharply — the first quarter of 2008 is shaping up as a negative quarter for GDP growth — and the risk of recession is rising sharply. At least a rate cut by the Fed on January 30 is a cast-iron certainty, and a move is now a strong possibility. –Nigel Gault, Global Insight

December’s bleak jobs report represents the siren call that this business cycle is just about over. We’re about to tilt over to the other side of the economic curve and begin the downswing. The only real question now is whether the economy will contract for one or two quarters. One thing is fairly certain, though. The Federal Reserve rate is now compelled to cut rates by a at their January 29-30th meeting — and they may even move earlier than that! –Bernard Baumohl, Economic Outlook Group

2007’s job gain was only about 60% of 2006’s job growth. And job creation has been even slower in more recent months. Some, but not all, of this softness has been due to the decline in housing and the turmoil in the financial markets. More important, the pace of job creation over the past year will be revised down when benchmark revisions are made in February… The slack in the labor market is growing rapidly and will force the FOMC to act again at the end of the month. –Steven A. Wood, Insight Economics

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http://blogs.wsj.com/economics/2008/01/04/economists-react-looking-for-a-bunker-to-hide-in/

I don't see anything - anything - that can rescue us.

this situation has me deeply concerned.

While this household had a nice garden last summer and we preserved lots of food, we are going into a 'if it is on sale and a staple product (coffee, beans, meat, etc.) buy it and fill the shelves'.

I stocked up on canned goods, for the most part...heavy items that would rise in cost due to shipping...fruits, because our fresh fruit is going out of sight, the usual they raise prices on if there's a hint of a shortage...coffee and sugar. I also stocked up on paper products and laundry soap.

I should have enough to make it to next summer when the prices will/should drop.

but by what mechanism do you see prices dropping next summer? I see nothing.

This is not meant as an attack (I think you have a good strategy), I just don't see what's going to pull us out of the downward spiral once it starts.

I was referring to making it to next summer because that is when we are able to pick up local produce or grow our own. We have a great farmers' market, which is not only better produce, but healthier for you.

In the winter months, we have price spurts that cause us to leave the produce in the coolers, as we'll go without rather than pay those prices. With the high gas prices, shipping and heating of the grocery stores take their toll. I feel sorry for the grocers, as their hands are tied. We demand the produce, but then won't pay the prices, which causes losses that can only be covered by higher prices. It's a vicious cycle.

I am very apprehensive about the economy and am doing whatever I can to prepare for a depression or near-depression. If it doesn't happen, I have my grocery shopping done.

You didn't ask for this, but I will add a few thoughts about getting thru hard times:

Cooking from scratch is a good place to start, as well as finding innovative ways to use leftovers. Soups and casseroles are also a good way to stretch the food dollars. Stop eating out, except for special events. Switch from soda pop to water. It's better for you and a lot cheaper.

Use coupons. My sister once read that if you used coupons and bought your groceries on days when you could get double values for all coupons, you could save enough at the end of the year to buy 4 tires for your car. She didn't really need to save the money, but she took it on as a challenge and said she actually had enough for 3. We think that a quarter off for this item, or fifty cents off for another sounds like too much work and not worth the effort, but it adds up quickly. I may go back to it, as you can now print a lot of coupons off on the computer.

There are hints on the Internet that might help you. I don't know how young couples can afford to feed their families with these prices. As a child, I lived on a farm and my mother was very conservative. She raised almost all of our food, only needing to buy sugar, flour, yeast, condiments, etc., as we had milk, meat, eggs, and every veggie and fruit you could imagine. She was an excellent cook and we never wanted for food. I learned a lot from her and believe that knowledge will help me if we have another depression.

The whole mess is a house of cards.

and any men who hold onto it.

We've been through this before. Some of us know what causes it every single time. We also know how to cure it, every single time. The problems are two: we have to fight tooth and nail to fix it and a generation that has no experience of the snake oil that gets sold to people to cause a boom and bust cycle is a sucker for it all over again.

it will take many years and more likely decades before our former economy might be reinvented. Super Strong WH and Congressional leadership is a must with concern for our entire nation and ALL of its people coming before concern for the filthy GD rich individuals and corporations.

it's not good for the country.