US on the verge of recession.

[Leftfemme22]

New figures released in the US show consumer confidence has sunk to worrying lows. The knock on effect was felt in Global Stock Markets as billions where wiped off the value of companies listed on several key indexes.

The Iseq suffered quite badly with a drop of 3.2%

Alan Greenspan, the former chairman of the US Federal Reserve, told the Wall Street Journal in an interview published yesterday that the US may already have entered a recession, or will do so shortly.

If America catches cold......never mind sneezes.

[Aindriu]

The same is happening in the UK markets. Looks like it may be 'Global recession here we come'. Unless posters on P.ie know better.

[rockyracoon]

I believe the classic definition of recession requires two consecutive months of negative growth below zero GDP. While the 4th quarter in the US looked bad, we won't know the full story to early/mid summer. Admittly things appear bad at the moment. The finanical turmoil coupled with the permanent increase in oil makes for a tricky situation for the Fed and the ECB in the year ahead.

[kerrynorth]

There is no 'may' about the US being in recession. We had enough data from earlier to make the call that the US entered recession in December. It is only a question of how long it will last. I think we have enough indicators to suggest that it will be in recession for all of 2008 at least.

[sackville]

all that's left is the crash.

[rockyracoon]

There most certainly is a "may" involved in the forecasting of any financial event. While things at the moment are not looking good, there are varying degrees of recession and, as of yet, there is no definitive recession according to classical interpretations.

My money is on a recession occuring in the US. However, many times in the past these recessions have been short lived. By the time the classical defenition had be achieved, the underlying economy has already started a recovery. This time around, the FED has less leverage in fulfilling its dual mandate, imo. Certain sections of the US society is financially tapped out credit wise. The middle classes will be sitting on any monetary assests to see what will happen. The rise in commodity prices limit the scope of action for the FED. For the first time in a 100 years the US is a de facto debtor nation (it doesn't produce enough to cover its global visa bill). All these factors make a prolonged recession more likely in the US imo.

I do not think the EU is in as bad shape. However, we will have to wait and see what impact a US recession, if it is long lived, will have on the global economy. Some predict it will have less impact as emerging markets will counter balance negative growth in the States. As of yet, these are unchartered waters.

[Ponzi]

Freight index suffers biggest two-day fall
By Javier Blas

Published: January 14 2008

The Baltic Dry Index, a gauge of freight cost for raw commodities such as iron ore, coal and grains, has suffered its biggest two-day absolute fall since records started in 1985.
Reflecting a fall in demand for raw material shipping, the index dropped 3.7 per cent to 7,654 on Monday after a 4.6 per cent decline on Friday, losing a total of 679 points in two days.

The index has fallen by about 30 per cent since it hit an all-time high of 11,039 points last November.

http://www.ft.com/cms/s/0/1ce5489e-c...0779fd2ac.html

See those hatches? batten them down.

[kerrynorth]

All the indicators point to a structural faultline in the US unlike previous short lived recessions such as 2001/02. For example both the credit card default and AT&T disconnection data point to structural faults in the US economy that go far beyond any temporary lack of consumer and business confidence post 9/11.

[Aindriu]

The end of capitalism perhaps? Now THAT would be interesting.

[odie1kanobe]

The recession is already there and has been for the last couple of months.

The subprime crises is forcing many businesses to realise how precarious their cash flow and debt position is.

The Chinese, Oil Economies of the Middle East and Other Asian Tigers are starting to buy up US institutions and keep them afloat.

US Foreign policy has always been about the $$$ so now people are playing them at their own game and buying up their industry and their banks.

Its a different game and the US is finding it difficult to counteract.