The unusually dramatic headline comes from the New York Times. Note this drop was a not a surprise to some analysts such as Gary Shilling, who predicted a marked fall in retail sales, which when you allow for the fact that gas and food are not terribly discretionary, implies much greater declines in apparel and […]
Read more...Brad Setser and Nouriel Roubini have collaborated in research and publishing on currencies but since are working independently. Roubini issues a grim outlook for China (“Roubini Foresees Chinese Hard Landing“). A cornerstone of Roubini’s analysis was that China was export-dependent and exports are falling fast: Note that China is an economy is structurally dependent on […]
Read more...It looks like the perenially optimistic analyst community is finally getting the message that the recession will be nasty. From Bloomberg: Analysts are slicing profit forecasts for U.S. companies in the fourth quarter and 2009 as third- period results miss projections at the highest rate in almost 11 years. “Estimates have been coming down with […]
Read more...One thing I never understood was the assumption among some marketing mavens I know, that certain types of consumer expenditures were simply never going to be cut. Confidence was particularly high regarding how women spent money. “Oh, lipstick always does well in recessions, it’s a cheap pick-me-up.” “Women don’t cut back on hair color” (meaning […]
Read more...Edmund Phelps, a Nobel Prize winner, casts doubts on Keynesian remedies because Keynes himself came to question them. This Financial Times piece provides no answers but raises some interesting questions. But sadly, there may be no answer for the first question he asks: What theory can we use to get us out of the impending […]
Read more...For those living abroad, Small Business Administration sponsors a variety of loan programs that are administered through banks. Despite the name, SBA loans are typically used by the larger end of small businesses, one that might be on the cusp of getting a conventional bank loan or might qualify but find the pricing unattractive. The […]
Read more...A report in the Wall Street Journal today focuses on how even the affluent are reining in their spending, but what I found most intriguing was that the well-cultivated American habit of shopping as self validation appears to be undergoing a sea change. From the Wall Street Journal: The twin currents of an economic downturn […]
Read more...The Wall Street Journal provides yet another indicator of strained consumer budgets. More and more are having trouble paying their utility bills, precisely when the service providers are getting tougher about collections: Utilities are becoming more aggressive about collecting money from delinquent customers, leading to a surge in service shutdowns just as economic woes are […]
Read more...The consumer credit retrenchment is coming even faster and harder than many anticipated. Big box retailers look likely to get coal in their stockings for Christmas as reduced consumer credit limits cut directly into sales. From Bloomberg: Home Depot Inc., Sears Holdings Corp. and other retailers may lose as much as 8 percent of their […]
Read more...We featured reports earlier this year on plant closings in China, and the suffering in manufacturing areas is becoming more acute as the global downturn cuts into Chinese exports. Reader Michael sent us this report on China’s toymakers, but it also stresses that China may be more vulnerable to a global financial shock than advanced […]
Read more...San Francisco Fed president Janet Yellen is concerned about recent economic data and recommends more action to save homeowners from foreclosure. From Bloomberg (hat tip reader Dwight): Federal Reserve Bank of San Francisco President Janet Yellen said recent data on the U.S. economy is “deeply worrisome” and the government should consider new ways to help […]
Read more...Consumers are in a newly austere mood, and those who have lived beyond or at the edge of their means may be forced to retrench whether they want to or not. The New York Times reports that credit card issuers are cutting back on their lines of credit and special offers. Since debt-fueled consumer spending […]
Read more...One of our pet themes in recent weeks is that the fall in trade traffic, indicated and possibly overstated by a dramatic fall in the Baltic Dry Index, is due at least in part to difficulties in arranging and getting other banks to accept buyers’ letters of credit. For those new to this topic, international […]
Read more...We discussed that EU financial institutions may be at risk if capital flight from emerging economies continues. Europe will also suffer along with developing markets for another reason: they also have strong trade links. From Bloomberg: The European economy’s close ties to emerging markets are turning from a blessing to a curse. Already skirting recession, […]
Read more...We have noted before that the officialdom in the US has been remarkably less than candid (one might say outright dishonest) in discussing the likely trajectory of the financial crisis and economic growth. No one is willing to state the obvious, for instance, that banking crises lead to reductions in living standards, even though consumers […]
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