Is the US heading for Recession

Very well said.:thumbsup:

Good thing is, there is a conservative left - true Christians who believe in peace, love and prosperity as Jesus would have taught us today. But that rank is very few. Just as Islamist are hijacking Islam, I am sure there are Jihadi Christians too.

We need a separate thread that touches economics, politics and society around this book and beyond. Hypewaders, can you do the honor? Possibly we can put this under Business & Economics as, at the end of the day, it is the Economy that brings either misery or peace.

I have a different angle. Several vectors that would come from Science and Engineering (Science is long term, Engineering is short term). I can contribute how we are losing S&E talent in favor of lawyers, politicians and religious whacks which is affecting wars, and loss of good paying jobs and social stability in general.

It is all related. Convergence of these factors probably brought down Greek and Roman Civilization. Add that to Jared Diamond's assertions, you have a making of a global disaster.

 

Excerpts from: "The Second World: Empires and Influence in the New Global Order"

**China has absorbed Taiwan and is steadily increasing its naval presence around the Pacific Rim and, from the Pakistani port of Gwadar, on the Arabian Sea. The European Union has expanded to well over 30 members and has secure oil and gas flows from North Africa, Russia and the Caspian Sea, as well as substantial nuclear energy. America’s standing in the world remains in steady decline.

** [America is] competing — and losing — in a geopolitical marketplace alongside the world’s other superpowers: the European Union and China. This is geopolitics in the 21st century: the new Big Three. Not Russia, an increasingly depopulated expanse run by Gazprom.gov; not an incoherent Islam embroiled in internal wars; and not India, lagging decades behind China in both development and strategic appetite. The Big Three make the rules — their own rules — without any one of them dominating. And the others are left to choose their suitors in this post-American world.

**The E.U.’s market is the world’s largest, European technologies more and more set the global standard and European countries give the most development assistance....With London taking over (again) as the world’s financial capital for stock listing, it’s no surprise that China’s new state investment fund intends to locate its main Western offices there instead of New York. Meanwhile, America’s share of global exchange reserves has dropped to 65 percent.... American soft power seems on the wane even at home.

**Apparently stabilized and resurgent under the Kremlin-Gazprom oligarchy, why is Russia not a superpower but rather the ultimate second-world swing state? For all its muscle flexing, Russia is also disappearing. Its population decline is a staggering half million citizens per year or more, meaning it will be not much larger than Turkey by 2025 or so — spread across a land so vast that it no longer even makes sense as a country. Travel across Russia today, and you’ll find, as during Soviet times, city after city of crumbling, heatless apartment blocks and neglected elderly citizens whose value to the state diminishes with distance from Moscow. The forced Siberian migrations of the Soviet era are being voluntarily reversed as children move west to more tolerable and modern climes. Filling the vacuum they have left behind are hundreds of thousands of Chinese, literally gobbling up, plundering, outright buying and more or less annexing Russia’s Far East for its timber and other natural resources.

**Russia lost its western satellites almost two decades ago, and Europe, while appearing to be bullied by Russia’s oil-dependent diplomacy, is staging a long-term buyout of Russia, whose economy remains roughly the size of France’s. The more Europe gets its gas from North Africa and oil from Azerbaijan, the less it will rely on Russia, all the while holding the lever of being by far Russia’s largest investor....Privately, some E.U. officials say that annexing Russia is perfectly doable; it’s just a matter of time. In the coming decades, far from restoring its Soviet-era might, Russia will have to decide whether it wishes to exist peacefully as an asset to Europe or the alternative — becoming a petro-vassal of China.

**China is pulling off the most difficult of superpower feats: simultaneously maintaining positive ties with the world’s crucial pairs of regional rivals: Venezuela and Brazil, Saudi Arabia and Iran, Kazakhstan and Uzbekistan, India and Pakistan. At this stage, Western diplomats have only mustered the wherewithal to quietly denounce Chinese aid policies and value-neutral alliances, but they are far from being able to do much of anything about them. [Khanna equating India and Pakistan as "regional rivals" is unacceptable as India is emerging as a far, far more powerful state and a global player. It only shows that he has not yet got over a western cold-war bias which has been discarded even by the Bush adminstration. However, the fact that Chinese policies are succeeding, is an incontrovertible fact].

**The rise of China in the East and of the European Union within the West has fundamentally altered a globe that recently appeared to have only an American gravity — pro or anti. As Europe’s and China’s spirits rise with every move into new domains of influence, America’s spirit is weakened.

**The web of globalization now has three spiders. What makes America unique in this seemingly value-free contest is not its liberal democratic ideals — which Europe may now represent better than America does — but rather its geography. America is isolated, while Europe and China occupy two ends of the great Eurasian landmass that is the perennial center of gravity of geopolitics. When America dominated NATO and led a rigid Pacific alliance system with Japan, South Korea, Australia and Thailand, it successfully managed the Herculean task of running the world from one side of it. Now its very presence in Eurasia is tenuous; it has been shunned by the E.U. and Turkey, is unwelcome in much of the Middle East and has lost much of East Asia’s confidence. "Accidental empire" or not, America must quickly accept and adjust to this reality. Maintaining America’s empire can only get costlier in both blood and treasure. It isn’t worth it, and history promises the effort will fail. It already has.

**Would the world not be more stable if America could be reaccepted as its organizing principle and leader? It’s very much too late to be asking, because the answer is unfolding before our eyes. Neither China nor the E.U. will replace the U.S. as the world’s sole leader; rather all three will constantly struggle to gain influence on their own and balance one another. Europe will promote its supranational integration model as a path to resolving Mideast disputes and organizing Africa, while China will push a Beijing consensus based on respect for sovereignty and mutual economic benefit. America must make itself irresistible to stay in the game.

 

Economy Experiences Worst Year Since 2002
By Jeannine Aversa, AP Economics Writer
January 30, 2008

WASHINGTON (AP) — The economy nearly stalled in the fourth quarter with a growth rate of just 0.6 percent, capping its worst year since 2002.

The Commerce Department's report on the gross domestic product, released Wednesday, showed an economy that had deteriorated considerably during the October-to-December quarter as worsening problems in the housing market and harder-to-get credit made individuals and businesses more cautious in their spending. Fears of a recession have grown.

For all of 2007, the economy grew by just 2.2 percent, the weakest performance in five years, when the country was struggling to recover from the 2001 recession. The housing collapse dealt the economy its biggest blow last year. Builders slashed spending on housing projects by 16.9 percent on an annualized basis, the most in 25 years.

''The economy has been subject to something of the perfect storm here. It has been hit by the housing slump the credit squeeze, the subprime slime and stock price declines on Wall Street,'' said economist Ken Mayland, president of ClearView Economics. ''The economy is weathering some pretty stormy seas but it is weak.''

The fourth-quarter's performance was much weaker — half the pace — than economists were expecting. They were forecasting growth to clock in a 1.2 percent pace.

The 0.6 percent annualized increase in gross domestic product (GDP) marked a big loss of momentum from the third quarter's brisk, 4.9 percent showing. The fourth-quarter pace was the slowest since the first quarter of last year.

The GDP figures come as worries mount that the country is on the verge of a recession or perhaps is already sliding into one.

To help bolster the economy, the Federal Reserve was poised Wednesday to again cut interest rates. An afternoon announcement was expected.

The fragile economic situation has spurred rare cooperation among Democrats, Republicans and the White House to quickly enact legislation to stimulate the economy.

GDP measures the value of all goods and services produced within the United States and is the best barometer of the country's economic health.

Consumers whose spending is critical to the economy's well-being tightened their belts.

In the fourth quarter, consumer spending slowed to a pace of 2 percent, down from a 2.8 percent growth rate in the prior quarter. For all of last year, consumers boosted spending by 2.9 percent, the smallest increase since 2003.

Businesses also watched their spending more closely during the final quarter of last year. Fearing a lessening appetite from their customers, they cut inventories of goods. That shaved 1.25 percentage points from fourth-quarter GDP, the most in a year.

Spending by businesses on equipment and software slowed to a pace of 3.8 percent in the fourth quarter. For the year, such spending was up just 1.4 percent, the worst showing since 2002.

Sales of U.S. goods and services abroad also slowed sharply in the fourth quarter. Exports grew at a 3.9 percent pace, compared with a sizzling 19.1 percent growth rate in the third quarter. That strong export growth was a key reason why the economy performed so well as a whole in the prior quarter. For all of 2007, exports grew by 7.9 percent, the slowest in two years.

Meanwhile, inflation picked up sharply during the final quarter. However, for all of 2007, it moderated slightly.

A gauge of inflation linked to the GDP report showed that ''core'' prices — excluding food and energy — grew at a rate of 2.7 percent in the fourth quarter. That was up from a 2 percent rate in the prior quarter and was the biggest quarterly increase since the spring of 2006.

For all of last year, core prices went up 2.1 percent, down from 2.2 percent in 2006.

High energy prices are a double-edged sword. They can put a damper on growth and also stoke inflation, which would be a dangerous combination for the economy.

The inflation figures could complicate the Fed's job of trying to energize overall economic growth while also keeping inflation under control.

Some analysts think the economy is on pace to recede from January through March. Under one rough rule, the economy would have to contract for six months in a row for the country is considered to be in a recession. The odds of a recession have risen sharply over the last year, and analysts increasingly believe the U.S. will be in one during the first half of this year.

The big worry is that consumers will clamp down on spending and businesses will put a lid on capital spending and hiring, throwing the economy into a tailspin.

The collapse of the housing market, soured mortgage investments and much harder-to-get credit are weighing on people and businesses alike. Foreclosures have hit record highs and banks have wracked up multibillion losses. The fallout has shaken Wall Street, catapulted the economy as Topic A among voters and galvanized political figures, including those vying to be the next president.

 

Please Register or Log in to view the hidden image!

Payrolls see first drop in 4-1/2 years

WASHINGTON (Reuters) - U.S. employers cut 17,000 non-farm jobs in January, the first time in nearly 4-1/2 years that U.S. payrolls shrank as continuing losses in construction and manufacturing reflected the economy's waning momentum.

The Labor Department report on Friday came in much weaker than anticipated by analysts surveyed by Reuters, who had forecast 80,000 jobs would be added last month.

The department revised December's new-job total up to 82,000 from 18,000 but cut its estimates for hiring in both October and November, highlighting how hiring was already in decline as 2007 ended.

 

Definition: A recession is defined to be a period of two quarters of negative GDP growth.

Thus: a recession is a national or world event, by definition. And statistical aberrations or one-time events can almost never create a recession; e.g. if there were to be movement of economic activity (measured or real) around Jan 1, 2000, it could create the appearance of only one quarter of negative growth. For a recession to occur the real economy must decline.

Good news is, so far, after every recession, U.S. goes back to the growth rate as if nothing happened....so endure the pain and carry on to the next growth spurt.

 

Either it will last 3 years of average 0.5% growth or the bottom will fall out starting in 2012 - depending on who is the President and if we go to war again.

This time, real negative GDP can be manipulated by borrowing money and Government spending it to make up the consumer loss. Thus we could have high unemployment and yet the GDP will show, it is growing.

America still needs infrastructure repair - so time to spend government money.