Where is the recovery?

I work for one of the top 3 AE firm in the US. We just had round three layoff this week. Remember those shovel ready jobs? they don't exist. We do gov, commercial, state, infrastructure, facilities, etc etc etc. The only projects keeping people are military. There is no work, 10-20-30 yr employees just let go. At first we thought is was the less productive folks but now they've let some real talent go. How's that for "forward looking" and "recovery"? It's hard to find anything to be optimistic about seeing old friends suddenly out of work.

Edited by uburack, 10 April 2010 - 06:02 PM.

I'm starting to feel the same way, I had a post about a double dip being very possible...

As they say unemployment is a lagging indicator... I don't really see recovery in the market as a whole.... I'm an employee in a industry that is growing around 8-20% or so I'm told. That is the "mobile internet" area... This gives me some comfort, because most of the development we work on now, won't end up in products for another 2.5 years, so I think our business is somewhat stable for this year. However, high tech hiring is picking up a little it could easily fall apart again... I do believe government infrastructure spending will continue by hiring private companies, as well as medical facilities. However, for the majority of companies who are focused on the American consumer, I feel that they feel tapped out...... Barry

As they say unemployment is a lagging indicator...

I do believe government infrastructure spending will continue by hiring private companies

Barry

That's just it. WE are the guys who would be doing the infrastructure projects, if there were any. Also, the layoffs have been in recent weeks. Friday we saw some great people let go. I'm not an expert but I would expect AE to be somewhat of a forward indicator. Just a little bummed this weekend.

I have good long term contracts and long term ground water monitoring projects - but nothing new coming in - no real estate transfers of commercial real estate requiring environmental assessments. (I own an environmental engineering company). The NE usually fares better than the rest of the country BUT my state depends on Fairfield county for most of its revenue - and that's the wall street boys who lost their jobs. Manufacturing is all but shut down, and insurance industry is laying off and moving all OUR records processing to INDIA. How do you all like the idea of your medical records and SS numbers processes in INDIA? But - shopping mall parking lots are full around here and JoAnne Fabric was packed when I took my sewing machine over for servicing. CT owes more than 60 billion in unfunded liabilities to union retirees and the largest collective employee here is the state of Connecticut and the towns and the teachers. All union and all union contracts mandate health insurance so Aetna and BCBS should be OK as they have taxing authority through property taxes and income taxes for their profits- so much for free markets. There are a few vacant homes in my neighborhood - which is a bit troubling as I live in one of the most desired areas in my town and we have around 150 homes in various stages of foreclosure, bankruptcy, or tax lien status (population 30,000) but I fear it will get much much worse. I don't think we have seen the second stage of this recession and the next drop down will see state and local government bankruptcies as well as many homes occupied by people who aren't paying their loans but its better to keep someone in the house rather than have it empty. Mary Anne

For me, there is only one way to really see what is real and what is illusion in regard to "recovery" and that is through state sales tax revenue. . .

State and local sales-tax revenue fell more sharply in the fourth quarter of 2008 than at any time in the past half century, and has continued to erode through the beginning of 2009, according to a report released Tuesday.

http://online.wsj.co...9974418909.html

For me, there is only one way to really see what is real and what is illusion in regard to "recovery" and that is through state sales tax revenue. . .

General Sales Tax
General sales tax growth was negative 2.8 percent, leading to the ffth consecutive quarter of negative sales tax growth. General sales tax revenue fell $2.1 billion from $73.8 billion in 2008:4 to $71.7 billion in 2009:4. Sales tax revenues were down 7.4 percent to $283.6 billion in the 2009 calendar year, from $306.3 billion in the 2008 calendar year.

http://www.docstoc.c.....sed-3302010)/

This overall does not look good... I have had a few considered wealthy. Those making over $175K say they need to cut back quite a bit on spending... The problem in their case is alternative minimum tax is taking too big of bite from their income and they cannot spend anymore... Most of their cases they overspent on large homes so they have bigger expenses than they have coming in.... I'm not one off them.... However, I have a family of 5 and we homeschool.... It looks like from the thread here the employment situation will be getting worse, and we are in for the next leg down.... Let's see if our government can concentrate of job creation for once versus just thinking job creation will happen.... Barry

You see folks... this IS the recovery. You are seeing now. This is all you are going to get as its the back end of the stimulus wad thats already been shot. So where to now ? Heres where: 1) Foreclosures start another massive wave. This will be compounding many problems out there as the marlet is already saturated with unsold and empty homes. And then there are huge amounts of homes held off the market by banks. Theres another 2 million foreclosures coming according to RealtyTrac. 2) The CEO insiders who have been selling this whole rally, begin to make more cuts. This time its into the bone of businesses who not only thought they were lean, but were ready for a pick up of some sort globally. Not only does the pick up not happen, but it gets worse. Why ? Just look at the massive amount of debt worldwide, and especially in this country. States have unfunded liabilities to the tune of $65 billion. the US Fed has unfunded liabilities of $70 TRILLION. Corporations have huge loads of debt, consumers have several trillion of debt, and banks have so much debt its being hidden by the Fed, so it can't be revealed. everybody owes someone money. Those someones expect to be paid. 3) So next comes inevitably higher reward for those risky borrowers in the form of higher interest rates. And for people trying to sell more debt, like the US, there will be no choice but to raise rates. I dont see the dollar as being a problem. I see many currencies having tons more trouble, but the higher interest rates have to come. Only one Fed official GETS this. and it aint Bernanke. 4) The deflationary problems we are seeing are a result of all of this debt that is simply imploding. It aint never going to be paid back so the underlying assets become essentially worthless. I mean just one example, what the heck is a commercial property worth if the vacancy rate skyrockets, the debt payments can't be made, and then the borrower essentialy defaults ? Zero, Zip, nada. Its the same thing for homes, and many businesses. So you think home prices can't keep falling ? Wanna bet on that ? The only thing slowing home prices from falling is the lack of transactions. Prices wont fall fast because few people can afford to be a borrower, and at least 30 percent of people are stuck in their homes because their mortages are are underwater. Its too painful to sell. And they can't because they'd be wiped. So they are debtridden and stuck. Those people aint moving. It doesn't matter how much Bernanke pushes banks to lend. There are farr fewer buyers, and a whole lot of people who simply can't sell. And also now there is a massive glut of inventory to be filled only by essentially first time home buyers, or the few people who have good enough credit to actually move and buy something. This is a decades long debt overhang. Think Japan but far worse. 5) Cars- 10 million units is it. We aint going above that for a long long time. People can't afford them,they can't get credit, and also there are too many manufacturers, so whats going to happen is another round of shake outs. China, and other developing countries ? fuggedaboutit. They will supply their own, and make further in roads with vehicles and companies that produce Tata like cars for the masses who MIGHT be able to afford $5000. GM, ford, Chrysler, Toyota, Honda, Nissan, Hyundai, all can't afford to sell or be profitable selling $5000 cars. Their overhead and massive production lines can only survive on $20,000 to $30,000 vehicles. This is secular folks. Not temporary. 6) Oil - The millions more cars coming on line worldwide, will more than off-set the 5 to 6 million fewer vehicles americans buy in terms of affecting global oil consumption. The global rate is now fast enough to keep the need for all know oil production to stay at least at 80 MBPD, which is basically peak, and will never be exceeded bc new sources can't come on line fast enough to replace existing sources that are in secular declines on their production rates. Once a field is tapped and peaked, it aint coming back. So oil prices will keep creeping up, and the US to survive will HAVE to build far more efficient vehicles, hybrids, electric cars etc to be able to absorb the even higher priced gas that will be coming to american shores. 7) Military - The costs are unsustainable. The world policing is unsustainable. Our debt makes it unsustainable, so as we have to massively change our strategy and basically scale back, we will see more countries exert pressures both political and financial that will increase risks for global producers, and primarily see a massive spike in many commodities due to a far less "world friendly" shipping lane eveywhere now that we can't have our military presence as it used to be. Obama scaling back the Nukes is but the tip of the iceberg in what we will need to scale back military wise. We simply can no longer afford, and have essentially been borrowing massive amounts of money to fund what we have now. again, this change is secular. Its laughable to think we can run $2 trillion dollar deficits and not expect massive cuts to eventually come somewhere with the military spending being one of the biggest line items in the budget. 8) Resources - fresh water, food, basic commodities. 6 billion people growing to 9 billion in no time, is going to tax the worlds finite supply of many basic necessities. Unless many governments start massively controlling birth rates, and with the trillions of debt worldwide that prevents deeper funding needed to penetrate and develop harder to reach resources, the globe has essentially reached its human limit in terms of what can be supported. The globe may have many natural resources but humanity has tapped itself out of capital funding resources and the ability currency-wsie to pay it all back due to human limits in communication, transportation, education, and the spreading of wealth that is largely concentrated among the top 1% or less of the population. They aint sharing and couldnt and wouldnt share it fast enough even if they could be forced to. Greed is the reason. And survival. It was hoped democracy could be spread to support this, but we are finding that it is too costly. (wit: Irag and Afghanistan). So this is the recovery before the next step down. Countries like Iceland, Greece, Argentina, and many others are imploding due to the debt loads, and simply is the sign of the declining ability to sustain the lifestyles that people at all levels have worked toward in the past 3 decades. Yep we have peaked. for now. And maybe for the next 100 years. Or at least until we can figure out a new energy source that replace and be far less expensive than oil.

This overall does not look good... I have had a few considered wealthy. Those making over $175K say they need to cut back quite a bit on spending... The problem in their case is alternative minimum tax is taking too big of bite from their income and they cannot spend anymore... Most of their cases they overspent on large homes so they have bigger expenses than they have coming in.... I'm not one off them.... However, I have a family of 5 and we homeschool....

It looks like from the thread here the employment situation will be getting worse, and we are in for the next leg down.... Let's see if our government can concentrate of job creation for once versus just thinking job creation will happen....

Barry

The problem is, this has been a liquidity driven rally. As long as funny money continues to be either directly or indirectly poured into this economy, we will likely continue to move up. Yeah, sure we'll pull back here and there, enough to
shake out the retail investor or get beared back up, but the long term trend is still up.

As a few people here have mentioned, the rally will likely stop when the unemployment rate drops or inflation reappears on the horizon as rate tightening will be likely.