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Thread: It's all YOUR Fault! : Warnings of consumer-led recession

  1. #1
    Elite Member Mr. Authority's Avatar
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    Default It's all YOUR Fault! : Warnings of consumer-led recession

    Economist warns of consumer-led recession
    Tightening credit, slumping auto sales, retailers missing sales and profit targets has analysts ringing alarm bells
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    BARRIE MCKENNA

    * E-mail Barrie McKenna
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    August 15, 2007

    WASHINGTON -- The U.S. economy may be on the brink of its first consumer-led recession in nearly two decades, according to Merrill Lynch economist David Rosenberg.

    "There are plenty of signs now suggesting that we may be in the early stages of a consumer-led recession for the first time in 17 years," Mr. Rosenberg warned in a report to clients.

    "The future is very likely in the hands of the consumer on Main Street, USA, and the latest signposts are not encouraging."

    He and other economists point to several alarm bells for the world's largest economy: Banks are tightening consumer lending standards, auto sales have slumped to a nine-year low and key retailers keep missing their sales and profit targets.

    Wal-Mart Stores Inc., a bellwether of the U.S. consumer, cut its profit forecast for the year yesterday, citing economic pressures on shoppers in the United States, Canada and Mexico.

    "It is no secret that many customers are running out of money toward the end of the month," said Wal-Mart chief executive officer Lee Scott.

    Wal-Mart posted a profit of $3.1-billion (U.S.) or 76 cents a share in the second quarter ended July 31, up from $2.08-billion or 50 cents a year earlier.

    The housing slump also hammered Home Depot Inc., the largest U.S. home improvement chain.

    Profit fell 15 per cent to $1.59-billion or 81 cents a share in the second quarter. Sales dipped 1.8 per cent to $22.18-billion - the first drop in more than five years.

    Canada too is feeling the impact of slowing U.S. consumer demand.

    Canadian exports fell for a third straight month in June, according to figures released yesterday by Statistics Canada.

    "U.S. housing market woes are spreading to the broader economy, and American consumers - a key engine of world growth in recent years - will feel the greatest effects," according to a report by Export Development Canada.


    Economist Clément Gignac of National Bank Financial now rates the odds of a U.S. recession next year at 50-50, up from 35 or 40 per cent just a couple of months ago.

    "The bursting of a housing or capital market bubble is likely to bring on hard times," Mr. Gignac predicted.

    The silver lining for Canada is that healthy public finances, strong exports of natural resources and more conservative mortgage lending practices make a recession there less likely.


    Mr. Gignac puts the odds of a Canadian downturn in 2008 at 30 per cent.

    Investors shouldn't count on the prospect of a sharp interest rate cut by the U.S. Federal Reserve Board to stave off recession, Mr. Gignac warned. Interest rate relief will take anywhere from six to 18 months to take effect.

    U.S. consumers are tapped out after leveraging the rising value of their homes during the long housing boom, Merrill Lynch's Mr. Rosenberg said. Real estate gains were responsible for roughly 40 per cent of consumer spending while the economy expanded, and now "the wealth effect is heading into reverse," he explained.

    Christian Weller, a senior fellow at the Center for American Progress, said it's now apparent that the unwinding of the housing boom has "spilled into the wider economy."

    He pointed out that wage growth has been meagre, job growth has stalled, family debt is near record highs and mortgage foreclosures are rising.

    Banks are also making it tougher for homeowners to borrow. The Fed's July survey of loan officers showed that banks have made it harder to get almost any type of mortgage.

    And what's happening in the United States may spill over to much of the rest of the world.

    Global economic and trade expansion could slump in 2008 because of the credit crunch sparked by the collapse of the U.S. subprime mortgage market, according to a report by the World Trade Organization.

    Global goods trade growth for 2007 will slow to about 6 per cent from 8 per cent last year, the WTO said in a 119-page report.

    "If the problems in the subprime market continue or are aggravated, we're looking perhaps at a bigger impact on economic growth and trade growth next year," Robert Teh, acting director of the body's economics division, told the Associated Press.

    He insisted it was too early to forecast a global economic slowdown.

    WAL-MART STORES INC.

    Close: $43.82 (U.S.), down $2.35

    HOME DEPOT INC.

    Close: $33.52, down $1.72
    reportonbusiness.com: Economist warns of consumer-led recession

    So you see, It's our fault! It's our fault that we don't make enough wages to buy crap from the big-box stores, it's our fault that our jobs were shipped overseas, it's our fault that the top 2% get all the tax cuts, and it's our fault that we have to buy food, get gas for our cars, and pay our rising energy bills. It's ALWAYS BEEN OUT FAULT!!!

    Now that I got that out, who are these economists kidding. It's the corporations and US govenment's fault for the upcoming recession. I myself am feeling the pinch of not having the disposable income I once had a few years ago. I have no hope in the future of our wages either.

  2. #2
    Elite Member AuGusT's Avatar
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    I have never been able to figure out y the tax law in US is opposite frm the rest of world.
    Everything is making way for the China.Acc to the reports China will overtake US in 2030's.
    More bad time ahead,m afraid.

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    Elite Member crumpet's Avatar
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    Well, I know I do my part to keep the economy going, dammit! I've got the receipts to prove it. Wheeee!

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    Elite Member Grimmlok's Avatar
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    YEah, it's all our fault that wages have been static for 20 years while the cost of living has risen astronomically... unless you're a failed CEO of a corporation, in which case you get 400 million for NOT DOING YOUR JOB.

    It's our fault HMO's and insurance companies have been charging out the ass because of a lack of gov. regulation.

    its our fault banks can fleece us with user fees while reducing services thanks to a lack of gov. regulation

    it's just all our fault, isn't it?
    I am from the American CIA and I have a radio in my head. I am going to kill you.

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    Elite Member McJag's Avatar
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    We need to support the economy-let's get out there and SHOP!
    I didn't start out to collect diamonds, but somehow they just kept piling up.-Mae West

  6. #6
    Elite Member Grimmlok's Avatar
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    Live beyond your means! Get more credit cards! Get a sub-prime mortgage!
    I am from the American CIA and I have a radio in my head. I am going to kill you.

  7. #7
    Elite Member nwgirl's Avatar
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    Interesting. Reminds me of an abusive SO. Can't ever take the blame - it's always got to be someone else's fault. Of course, don't look at the fact that everything in this country has gone downhill or been pushed aside in the name of the almighty profit and now they're just reaping what they've sown.
    "The difference between genius and stupidity is that genius has its limits."

  8. #8
    Hit By Ban Bus! AliceInWonderland's Avatar
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    fuck you Walmart!

    & *applause* to Grimm!

    I, for one, haven't been able to go grocery shopping in weeks, literally.










    thats all i have to say

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    And on top of that we have our new bankruptcy laws and the business friendly Supremes. The average Joe will have a tough time dodging his debt. Unfortunately many consumers used their homes as personal ATM machines and that's really going to come back to bite them in the ass. Their homes are going to be worth less than what they owe because they took out the equity when their home values were high. Alot of the consumer spending that drove the economy for years was all done on credit.
    If you can't be a good example -- then you'll just have to be a horrible warning

  10. #10
    Elite Member Mr. Authority's Avatar
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    Quote Originally Posted by PaintTheTownRed View Post
    And on top of that we have our new bankruptcy laws and the business friendly Supremes. The average Joe will have a tough time dodging his debt. Unfortunately many consumers used their homes as personal ATM machines and that's really going to come back to bite them in the ass. Their homes are going to be worth less than what they owe because they took out the equity when their home values were high. Alot of the consumer spending that drove the economy for years was all done on credit.
    Exactly. An economy can't surivive off debt and credit. that's what the Wall Street thought and look at what's happening to them, low confidence in stockholders. It's a double-edged sword to see the "trickle-down econonmy" backfire; to see the corporations worried about what they've done is payback, but in the end it's us (the consumers) that get the brunt of the corporations failures.

    Luckily I don't depend on credit, but there are many others that use credit just to pay for food or gas. Those are the ones that are going to be hit hard the most.

  11. #11
    Elite Member darksithbunny's Avatar
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    Blame me too. I still can't afford to buy a house.

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