The US Economy is in Recession

No one wants to say it, preferring to call it a slowdown. But I’ll say it:

The United States is in recession now.

Last week, MarineMax – the largest recreational boat dealer in the United States – said earnings would come in at 45 to 65 cents. In January…January, mind you… it said it would earn USD$1.40 to USD$1.50. Last November – only five months ago – it forecast USD$2.05 to USD$2.15.

The reason: Call it fallout from the housing boom. CEO Bill McGill made no effort to hide behind any fig leaves in his conference call: ‘While most of our customers [have] the ability to purchase a boat, they have lost their appetite to pull the trigger when uncertainty enters the equation.’

What uncertainty? ‘Perceived loss in value of their home, the loss in the investment property value, or the perceived or actual trickle-down effect that the housing market may have on their own business or their financial picture.’

Note to sellers of big-ticket items: Batten down the hatches, boys!

Last month, I met with John Williams, the sharp economist behind Shadow Government Statistics. Williams is one of the few economists to call the old hag that is the U.S. economy an old hag.

‘We are in an inflationary recession now,’ he says.

Williams ticks off the data that confirm a recession in progress: Much weaker-than-expected housing starts, retail sales and industrial production.

Also, a weak manufacturing survey, sluggish annual growth in durable goods orders, rising new claims for unemployment insurance, and anemic employment growth.

There is a playbook for dealing with this kind of environment, based on old highlight reels from the 1970s. I can sum it up thusly: Buy tangible things; sell paper.

Chris Mayer
Markets and Money

Chris Mayer
Chris Mayer is a veteran of the banking industry, specifically in the area of corporate lending. A financial writer since 1998, Mr. Mayer's essays have appeared in a wide variety of publications, from the Daily Article series to here in Markets and Money. He is the editor of Mayer's Special Situations and Capital and Crisis - formerly the Fleet Street Letter.

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An abstract of the Global European Anticipation Bulletin is now available online. I have summarized it and linked to it on my site: This issue claims that the “2007 Very Great Depression has indeed begun.” The report chronicles the decreasing role of the US in the field of international trade and wealth production signalling an end to a century-long tendency which began during WW1. It also notes US income disparity is now comparable to what it was on the eve of the Great Depression. But nlike the situation during the Great Depression when the US was in the ascent as… Read more »
Allen jacobsen

Hi Chris Mayer ,
Unfortunately nobody has told the Americans they are in a recession .
The stock exchanges every day are hitting new highs .
Maybe you can ring the chairman of the NYSE and give him the home truths .
He can then let the PIT BULLS know and they all might start going SHORT to bring reality into the markets !

regards ,

Allen jacobsen

Perth Western Australia


For at glimpse of the true value of the DOW see a remarkable study by Mike Maloney – ‘The DOW Is Crashing.’ I have a comment on my blog with a link to the full paper.

The power of Maloney’s method lies in his comparison of the index with commodity indices and of course especially the money-commodity, gold.

Yes folks, all that nonsense you learned in ECON101 about money being ‘symbols’ etc. is yet again being brought back to earth by facts.


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