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The Recession Journal
The Latest Recession News Analysis & Opinion

Would you like to know how bad the recession is going to be? Will it be a US Recession or maybe engulf the whole world and become a Global Recession? Mild? Severe? Are you trying to find out more about The Great Recession? Need details on the Financial Crisis? Do you have an opinion on these subjects or more questions than answers? You've come to the right place. This is The Recession Journal.

- By popular request, we have listed NBER Official US Recessions on the Welcome Page -

List of US Recessions

Post-1900 US Recessions:
Sep 1902 - 23 Months, May 1907 - 13 Months, Jan 1910 - 24 Months, Jan 1913 - 23 Months, Aug 1918 - 7 Months, Jan 1920 - 18 Months, May 1923 - 14 Months, Oct 1926 - 13 Months, Aug 1929 - 43 Months, May 1937 - 13 Months, Feb 1945 - 8 Months, Nov 1948 - 11 Months, Jul 1953 - 10 Months, Aug 1957 - 8 Months, Apr 1960 - 10 Months, Dec 1969 - 11 Months, Nov 1973 - 16 Months, Jan 1980 - 6 Months, Jul 1981 - 16 Months, Jul, 1990 - 8 Months, Mar 2001 - 8 Months, Dec 2007 - 18 Months .... 2016?

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Financial impotence in the Atlantic


The author calls this - Financial Impotence, referring directly to the shame of having failed to be appropriately masculine. The inability to provide financially for my family is located precariously near the inability to sexually satisfy a mate. Men, to be real men, should be able to do these things, and when we can't - we aren't going to talk about it.
47 Percent of Americans cannot come up with $400 for an emergency, without selling something or borrowing. That was my family from 2010 until a few months ago. The article reminds us that during our personal boom-bust cycles, we go into debt during the bust, but do not save during the boom - we spend. Without details, that sounds irresponsible.
During the first 6 months of my family having an income that actually went beyond our minimal basic needs - we spent like crazy. Why? Because over the course of the last few years of subsistence living, everything we owned was broken, held together with tape, and on it's last legs. Our coffee maker leaked water all over the counter, the car had no air conditioning (In Phoenix Arizona), the computer that generates income had to be restarted several times a day - we didn't spend on lobster dinners and movie memorabilia, we spent because our daily tools were falling apart.
Second Point - and this may be my main point - is why do middle class white Americans get into this kind of trouble? They make a very good income, but the expenses are right in line with it - so even those who are above middle class cannot come up with emergency money? Easy - because we believed the lie that we would do better over time. We were told that hard working college educated white males could expect to increase their income over the prime working years (like our Father's did), so if we can barely make the payment on that great house you buy when you are 35 - that's fine. By 45, you will be earning so much more, and you got into that house at the right time, so it's value went up, your earning went up, and now the extra money is in savings.
That didn't happen. No one got a raise in the last 15 years, except the CEO. We did the math and got into the best house we could afford, with very little margin for error, but 5 years later, we didn't have a bigger check. Didn't see that raise 10 years later, either. Housing increases floated us, but that went bust, and there was nothing left.
We did what we were supposed to do - I was a middle class white male, military veteran, good State University education, technical and sales skills, joined the workforce, got married, bought a house, stuffed money into the 401(k), and bought the best house I could barely afford. Just two years later, I was homeless with a baby. I didn't have any savings, because I put everything I had into getting that home and making the payments. I was told, and believed, that this was the right thing to do, because I could count on making more in the near future.
The only ones who got a raise, were the Owners. Those who had jobs were lucky, so they didn't complain when the workload doubled, and their wages remained static. That double productivity on half the payroll expense went straight to the bottom line, and was distributed to shareholders, who liked the new arrangement. We are in our 6th straight year of staggering profits and stagnant wages. Those who managed to keep their houses, and appear to be doing well, are only keeping their nose above water. They look good to the already-drowned.
America will not recover without a Raise. Wages need to go up. Maybe all those unions we complained about in the 80's for being greedy and corrupt, were the only people looking out for the workers. I've never been in a Union, but I've lived in the post-union workforce, and I got screwed. I'm betting that you've been screwed, too.
Maybe Union empowerment isn't the answer, I don't know. But the only way we can start to find the right solution is to talk about it. If you can't afford a $400 emergency expense, ask your friends and colleagues if they can. Pass around an article like this - hey, it's 47% of us, it's me, is it you?  You probably aren't alone.
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Years of The Recession

Years of "The Recession"

The Recession Years

The Recession Journal on Livejournal has kept track of every year of global and US recession since 2008! the_recession has the timeline of The Great Recession and more. Read and discuss the years of recession with us. Share your thoughts. Tell your story.

The Recession 2008 Recession 2008. The Recession 2009 Recession 2009. The Recession 2010 Recession 2010. The Recession 2011 Recession 2011. The Recession 2012 Recession 2012. The Recession 2013 Recession 2013. The Recession 2014 Recession 2014. The Recession 2015 Recession 2015. The Latest Recession Recession 2016 Recession 2016.
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Global Financial Crisis-Like China Trade Data

Abysmal Import and Export Data out of China in 2016

Year-over-Year Chinese exports sank by 11.2% and imports tanked by 18.8%, in January, posting far, far worse declines than expected by most, who according to Reuters, were generally looking for a 0.8% fall in imports and a 1.9% decline in exports.

And now, most recently in February, Year-over-Year Chinese exports show a further 25.4% slide from the same month last year, while February's imports slid 13.8%. These figures were also far worse than the declines forecast by most analysts. According to Reuters, the February YoY drop in Chinese exports was the worst YoY showing since May, 2009, during the depths of the 08-09 Global Financial Crisis.

... Air is most definitely coming out of China's tires
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From RT

Increasing Risk of New Global Depression 2016

Sherle R. Schwenninger, World Economic Roundtable at New America/The Nation Magazine, joins Thom. Economists - the people who study this stuff for a living - now think that the world is teetering on the edge of yet another big recession. Slowing growth in China - plummeting stock prices - and sputtering growth in Europe - they say that all of these things are warning signs that the fundamentals of the economy are weak - and that we could be heading for another big collapse.

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Collapse? Maybe not.

I've noticed two things about modern discourse: People like to say that collapse is imminent, and they like comparing politicians to Nazis.

I don't think collapse is neccesarily imminent, and as for politicians - they remind me more of WWI generals: born-to-rule posh boys a la Kitchener who still think they're on the playing fields of Eton, wrecking and destroying the lives of millions with the stroke of a pen.

Another apt comparison, especially ideologically, is to Stalin-era Communists - they really don't seem to care about the damage done, it's all worth it, in their mad rush to their theoretical utopia of perfect liberal capitalism. And every economic challenge they face and question asked of them has the same answer - more hardship for the people and even more money for the elite. Tax not low enough? Have a bailout! Just cut the benefits of the mooching masses to pay for it - after all, they're not wealth creators like you! Interest rates can't go any lower? Just charge the suckers for the privelige of using your bank - after all, it's not like they have a choice! People in Greece are starving? They obviously need more austerity! And so forth.

So. If these guys are like global Stalinists, then what's next?

I think at some point we'll see some Kruschev type reforms. Kruschev came after Stalin and liberalised things a bit, but his personality wasn't suited to the job and he was thrown out.

We can see Kruschevism taking place at the higher reaches of the IMF, with this very orthodox body calling for reduced austerity. Austerity is the equivelant of Stalin's Ukraine policy, of starving people to pay for "development" and "trade". It was a massive failure which left millions dead and weakened the USSR's defences against invasion - Ukrainians didn't just collaberate with the Nazis for no reason, they did so because as far as they were concerned, nothing could be worse than what they had already endured under Stalin. In the same way, people are beginning to literally go over to our enemies in no small numbers, partly because we don't provide a decent life or any kind of meaningful existance for our people - so they seek at least a meaningful death elsewhere.

Ultimately Kruschev failed and was ousted by a bloodless, buraucratic coup in the Politburo. The cabinet and the military lost confidence in him and replaced him with a realistic hard-liner. I wouldn't be surprised if we saw something like that in the West.

Or the wheels might come off the whole thing. Brexit combined with a humiliating military climbdown could lead to a chaotic collapse of both NATO and the EU, with various horrible people ending up in power and the West completely broken. We'll just have to see what happens. But I wouldnt' be at all surprised if things went on in this dysfunctional half-assed way for another 20-30 years. After all, we're not really remotely in as much trouble as the Soviets were back then, and they went on until 1991.
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Are We Going Into Recession?

Are We Going Into Recession?

Is the US in Recession? New Global Recession?
going into a recession image

These are the questions that are on everyone's minds, and often the tips of their tongues, whether spoken, or not. It's 2016, and indeed, recession thoughts - and some increasingly nervous talk - are happening not just in the usual suspects (Japan, Argentina, etc.), but just about all over the world .. in fact, "Are we in recession" and "Are we going into a recession" and increasingly "Recession 2016", and even something like "Recession through 2021", are understandably highly searched topics quite literally on the world wide web.

Is This a Recession

Data from around the world strongly point to global GDP now falling to at or below 2.5% annually per-capita, a rate that historically has always been associated with global recession. Economic forecasters, who are notoriously often behind the curve when it comes to economic sea changes, are now rushing to further downgrade their global growth forecasts for 2016: Citi's now calling for 2.5% or less YoY global GDP Feb 25 2016: Citi Sees Global Recession, Dovish Fed, IMF set to downgrade again: Feb 24 2016: IMF says it may further cut global growth forecast, Feb 18 2016: OECD Cuts Global Growth Forecast and Warns of Growing Risks, and Jan 6: World Bank Again Cuts Global Growth Forecasts, with the World Bank implicitly conceding in their latest forecast for 2016 global GDP that in 2015 the world was already right on the cusp of a global recession.

In the US Recession 2016 May Already be Here
First, I really do not know why so many are surprised by this. We've had a pretty good run, considering that just a few years ago we were quite literally facing down a second Great Depression - which many, including myself, now refer to as satisfactorily meeting any reasonable definition of economic depression, or at the very least, Depression Lite. And after six years of technical economic recovery in the US, however feeble and wanting, that's typically a pretty long time to go without a new recession.

Want more proof that the US is on the verge of, if not now already in, a US recession?

Indicators That The US may Already be in Recession

Just Today's Headlines List:

  • This morning Morgan Stanley put out an alert advising its clients on FORD & GENERAL MOTORS! GM, Ford Fall as Morgan Stanley Analyst Cites Recession Risk.

  • In January US Sales of New Homes Fell 9.2% overall - and plunged in the very important West! US new home sales tumbled 9.2 percent in January as purchases plunged in the West

  • SERVICE SECTOR IS NOW CONTRACTING in the US! This last bullet point can not be overstated. While manufacturing has been in recession for a year now, recession naysayers have continuously pointed to the service-side of the economy (which in the US is a much larger share of economic growth than manufacturing) as their proof that the economy at large is and will be holding its own, and that despite a pronounced, pervasive and persistent decline in manufacturing, the rest of the economy was above all that. This time, they have been saying, is different!

Service Sector Decline May Be Signalling US Recession Underway

Let's look a little closer at Markit's Services Flash PMI. Graph provided by Markit.
pmi services index vs gdp image
Above: Markit's Flash Feb 2016 PMI Highlights Risk of Imminent 2016 US Recession

Here's what Markit had to day about their February Flash Services PMI

It’s clear that business confidence in the service sector has faltered significantly, reaching the lowest level in five-and-a-half years in February.

Optimism about the outlook has been on a downward trend over the past two years, with worries about the global economic outlook, financial market volatility, the presidential election and interest rate policy all taking a further toll on business morale in February. Full story: here.

Of all of our recent US Recession 2016 Coincident Indicators, Markit's Flash Service's fall into contraction ranks among the most cautionary.

Remember Subprime? Recession 2007-2009?
And then there's also this. We learned on Monday that more US subrpime borrowers are delinquent and at risk of going into default on their auto loans. In fact, in January it hit a level last seen in 2010, when the US was struggling to break free of the clutches of the Global Financial Crisis and Great Recession.

subprime auto loan delinquency index

In addition to the new cycle high in subprime auto loan delinquencies, even more concerning may be that the default rate also hit a new cycle high, at 12.3%, up from December's 11.3%, for a full 100bps increase in a single month!
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The Yield Curve has been a favorite tool of economic forecasters in the US, having accurately foreshadowed seven of the last seven NBER official US recessions. But something funny happened in the past few years: the Fed has embarked upon extraordinarily unconventional policies to artificially anchor the short end of the curve to at or near zero, known as ZIRP (Zero Interest Rate Policy).

Some believe that this perversion of the normal way of things has masked the true slope of the yield curve all of this time, and recently Bank of America came up with a way to track the slope, sans Fed manipulations. Their model, showing an OIS (Overnight Indexed Swap) adjusted to reflect what it would actually be at, has fallen into 100% US recession alert territory, and became a headline story on Bloomberg yesterday.

As Bloomberg writes

Figuring out whether the U.S. economy was headed for trouble used to be easy: all you had to do was look at the bond market.

Not anymore.

Now, that same market has become so distorted by years of near-zero interest rates that Wall Street’s biggest bond dealers are drawing wildly different conclusions as they try to come up with alternatives...

“We truly are in new territory,” said Mark MacQueen, the co-founder of Sage Advisory Services Ltd., which oversees $12 billion from Austin, Texas. “Looking back at the history of the yield curve and comparing it to today is dangerous.”

Normally, when longer-term yields are higher than shorter-term yields, it suggests investors see growth in the economy, and as a result, demand extra compensation for the risk that inflation will erode the value of their fixed-rate payments over time.

Story: Bond Traders Led Astray

negative yield curve US recession 2016
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2016 Recession Despite 'Strong' US Consumer

This morning on Squawk on the Street, Deutsche's LaVorgna explained to CNBC's audience that the bull case for the so-called resilient US consumer fending off the current developing recession is, simply, bull.

We don't need the consumer to be negative for the economy to go into recession, or for that matter for equities to fall thirty percent... What drives business cycles is the investment side: capital spending and inventories.. the 2001 recession consumer spending was positive.. 1990-91 (recession) remained positive... this notion that the consumer has to be negative (for a recession) is a complete falsehood.

If you look at high-yield spreads, they've typically led in each of the last three downturns

If you look at market-price signals, whether it's sensitive materials prices, whether it's high-yield spreads, … or even the slope of the yield curve, every market is basically telling you there is a growth problem.

We have nominal growth that's under 3 percent Q4 over Q4. In that kind of world, you're not going to grow corporate profits very much. People are focused on the labor market, which is a backward-looking indicator, and I'm concerned that we're going to continue to slow.

I'm not saying there is a recession. What I'm worried about is, when you have an economy that is growing as feebly as it is for as long in the business cycle as it's been — and it's only being driven by only one sector, meaning the consumer — we're more prone or apt to get hit by some negative, exogenous shock.

From CNBC Deutsche Bank's David LaVorgna: All markets point to 'growth problem' Video
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Confirming other indicators we are following for the ongoing development of an official (NBER confirmed) recession in the US in 2016, expert market technician Carter Worth points out several patterns that accurately predicted the last several recessions in the United States, that are flashing red again now.

"This is not a good setup. It's very hard to reverse it."
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China Banking Crisis Risk Grows

Kyle Bass, founder Dallas, Tx-based Hayman Capital, and one of the few to correctly anticipate the U.S. Subprime Mortgage Crisis, sent out a note to clients on Wednesday warning that China's

"Banking system losses - which could exceed 400 percent of the U.S. banking losses incurred during the subprime crisis - are starting to accelerate...

"Similar to the U.S. banking system in its approach to the Global Financial Crisis (GFC), China's banking system has increasingly pursued excessive leverage, regulatory arbitrage, and irresponsible risk taking

According to Bass
What we are witnessing is the resetting of the largest macro imbalance the world has ever seen... Credit in China has reached its near-term limit, and the Chinese banking system will experience a loss cycle that will have profound implications for the rest of the world.

China's banking system has exploded to $34.5T in assets over the last decade, from just $3T. Consequently a loss of even just 10% could in theory wipe out $3.5T. By comparison, U.S. banks shed roughly $650B of equity during the 2008 Global Financial Crisis, or less than one-fifth the amount of losses that would be seen if Chinese banks lose merely 10% of theirs.

In an even more dire note, Bass opines that China will find itself printing over $10T worth of yuan to recapitalize in the face of the crisis, depreciating more than 30% against the US Dollar. Such a depreciation could have very negative consequences for the US economy, by forcing King Dollar even higher, and making it even more difficult for US international businesses to make money - thus having to resort to what they always do in a severe slowdown: mass layoffs, characteristic of just about every US recession in the modern era.

China is now the second largest economy in the world, bested only by the United States. As Bass reminds us, "What happens in China will not stay in China."

Some of the content above was sourced from CNBC and Bloomberg.
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2016 Recession Risk?

Try 2016 Global Financial Crisis Risk

In some of the clearest parallels yet to the start of the 2008 Global Financial Crisis, global stock markets continue plunging early this week in the face of a stench that the markets are running from just about as fast as orderly possible.

Overnight Monday US/Tuesday morning Europe:

  • Japan's Nikkei closed down over 900 pts (nearly 5.5%)

  • Yields on Japanese 10-year treasuries went negative for the very first time

  • CDS Spreads* on Deutsche Bank spiked to 236bp - higher than any point in the Global Financial Crisis

  • $7T of global government debt with yields below zero

* credit default swap (CDS) is a financial swap agreement that the seller of the CDS will compensate the buyer (usually the creditor of the reference loan) in the event of a loan default (by the debtor) or other credit event. This is to say that the seller of the CDS insures the buyer against some reference loan defaulting. The buyer of the CDS makes a series of payments (the CDS "fee" or "spread") to the seller and, in exchange, receives a payoff if the loan defaults. It was invented by Blythe Masters from JP Morgan in 1994. (Wikipedia)


TOKYO, Feb 9 Japan's Nikkei share average posted its biggest daily drop in nearly three years on Tuesday, with banks taking the brunt of the sell-off, while a stronger yen dragged down stocks across the board. Story


Updated on February 9, 2016. The yield on Japan’s benchmark 10-year government bonds fell below zero for the first time, an unprecedented level for a Group-of-Seven economy, as global financial turmoil and the Bank of Japan’s adoption of negative interest rates drive demand for the notes. Story

Financial Times

Investors flock to CDS amid fear over banks’ bonds Joe Rennison in New York.

Deutsche, which has one of the weakest capital ratios among large global banks, led a rout in global bank stocks on Monday, and CDS on the company blew out to 236bp, wider than at any point during the 2008 financial crisis...

CDS is also suffering from a pro-cyclical effect. As bank debt feels pain, investors seek to protect positions by buying CDS. That in turn sends a signal that investors think there is a higher likelihood of default, pushing CDS spreads wider, compounding the problem. Story

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Citi: World Economy in 'Death Spiral'

Global Recession Headline Story

Some analysts — including those at Citi — have turned bearish on the world economy this year, following an equity rout in January and weaker economic data out of China and the U.S.

"The world appears to be trapped in a circular reference death spiral," Citi strategists led by Jonathan Stubbs said in a report on Thursday.

"Stronger U.S. dollar, weaker oil/commodity prices, weaker world trade/petrodollar liquidity, weaker EM (and global growth)... and repeat. Ad infinitum, this would lead to Oilmageddon, a 'significant and synchronized' global recession and a proper modern-day equity bear market." Full article here (CNBC)

Citi has not been mincing their words or holding back punches when it comes to their take on the economic landscape in 2016, vocally sounding alarm bells for the increasing risk, if not likelihood, that the slump becomes a full-on US recession and global recession this year. Two weeks ago while in Davos, Citi's Buiter then also warned that the entire world is in fact already teetering on the edge of global recession that could persist throughout 2016 and even into next year, joining the ever growing list forecasting growth recession or worse.
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The trend over the past several weeks to months has increasingly been one of flashing orange to red about employment prospects worldwide, including - not excluding - the largest economies, like the United States, heading into the new year.

Recession 2016 Leading Indicator - Mass Layoffs

The following partial list, compiled by Chris Marenson over at Seeking Alpha, really illustrates what a nasty trend we have been seeing as of late.

Mass planned closings, layoffs and redundancies compiled since Jan 1st

It is very apparent looking at the above list that the strongest drivers of  the US econony since the end
of the Great Recession: Energy, Finance and Tech, are now largely rolling rolling over.
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Income Inequality

How many everyday people experience recession even without recession in one gif.

#plutocracy #incomeinequality Cynical, but some truth?https://media.giphy.com/media/3o7ZeC2C6WBLzdwAQE/giphy.gif

Posted by Recession Journal on Thursday, February 4, 2016
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New Global Banking Crisis Risk

Banking & Financial Crisis Risk Rising

European Banks at the Epicenter of Potential New Financial Crisis

European banks more than others are already showing signs of stress in the face of not only China, collapsing oil, but now, unintended consequences of the increasing number of central banks implementing Negative Interest Rate Policy, or NIRP.

European banks near 'terrifying' crisis

With European banks sitting at multiyear lows, one widely followed market watcher said some of the biggest ones could go bankrupt...

Former hedge fund manager and Goldman Sachs alumnus Raoul Pal said his scenario is one most investors aren't looking at right now.

Pal said the banking issues have the potential to overtake risks associated with China's growth slowdown and cheap oil.

"So many of these [bank stocks] are falling so sharply. I think people haven't even caught up with what is going on... "I look at the big long-term share charts of them, and I think this looks very terrifying indeed. I have not seen anything like this for a long time."

For Pal, negative interest rates are the chief reason why the bank stocks are in trouble. (Full video here

Also from CNBC:
Here’s what is rocking European banks ahead of earnings
Italy: Bad loans Italian banks faced intense market pressure in January due to concerns about their still very high levels of bad debts. These fears were ignited when the European Central Bank requested further details on nonperforming loan portfolios..

Germany: Record loss for Deutsche Deutsche Bank, Germany's largest bank, reported Thursday that it had a record loss for 2015...

UK: China exposure Outside of Asia, British banks are among the most exposed in the industry to Hong Kong and mainland China. This increases their vulnerability to the slowdown in the world's second-biggest economy and the disruption in its equity market. Full story here
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Business Loan Demand Now Contracting

US Recession 2016 Leading Indicator: Red

2016 US Recession Flag Flashing Red as Business Loan Demand Tanks

business loan demand contracting recession 2016 indicator
Above: Loan growth among large firms is declining for the first time in several years

Business demand for loans declined for the first time in four years, according to the just released Federal Reserve Senior Loan Officer Survey. Loan demand dropped by double digits among all size businesses, from small mom-and-pops to the largest of corporations.

According to Paul Ashworth, the Chief Economist at Capital Economics:

The weakening in demand for business loans suggests that the growth rate of actual commercial and industrial lending will grind to a halt this year..

Furthermore, banks reported that the weakness in demand for loans from businesses was primarily because the latter were scaling back their investment plans... That suggests any rebound in investment in equipment in the first half of this year will be muted at best. With the mining, manufacturing and agriculture sectors all hurting, we hadn't expected much from business investment this year, but the drop off in loan demand is worse than we would have expected.

In addition to a pronounced slump in actual demand for loans across nearly all businesses, the FRSLOS also found that
"on balance, banks tightened their standards on commercial and industrial (C&I) and commercial real estate (CRE) loans (entering 2016, and)...Modest net fractions of banks stated they expect to tighten their lending standards on C&I loans, moderate net fractions of banks stated they expect to tighten their lending standards on NFNR loans, and significant net fractions stated they expect to tighten their lending standards on CLD and MF loans over the course of this year."
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ZIRP, DERP, they've gone NIRP!

Japan Goes All Japanesa after 5th Recession Since 2008

Japan Turning Japanese - I Really Sink So
The Bank of Japan lowered interest rates Friday. After years of ZIRP, DERP, they've gone NIRP!

“Abenomics” - put in place three years ago - included 'unprecedented' Quantitative Easing, vigourous fiscal policy, and structural reforms. It was sold as the model with which mature economies battling deflation would be able free themselves of the morass.

Alas, Abenomics has shown to be not enough, and Japan is now arguably falling into its fifth or six recession since 2008, alone, depending on how one's counting. Japanese inflation has been nil, and household spending, the bulk of their GDP, has dropped over 4% since 2014. Yeah, that might be a touch recessionary.

Most recently, household spending has fallen 4.4% in the year to December, and factory output fell 1.4% in December, much worse than the market forecast of a 0.3% retreat.

Do Not Fear! NIRP is Here!

CNBC: Bank of Japan adopts negative interest rate policy

The Bank of Japan blindsided global financial markets Friday by adopting negative interest rates for the first time ever,

buckling under pressure to revive growth in the world's third-largest economy...

The BOJ left its program to buy government bonds and exchange traded funds (ETFs) unchanged.

The central bank noted that the Japanese economy has recovered modestly with underlying inflation picking up, along with spending by companies and households.
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China: 'Real Economy' Sound

China shares may be lower, but the 'real economy' is dandy, says China Free Press
China's volatile shares were lower again on Thursday, taking losses this month to about 23 percent or 12 trillion yuan ($1.8 trillion), while state media insisted that the market ructions did not reflect the real economy...

Thursday in the People's Daily, the official mouthpiece of China's Communist Party, laid in to "groundless fears" about the economy, which it said was still propelling global growth, and enjoying rising foreign investment, moderate inflation and prudent monetary policy...
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US Recession by Falling Oil

Well, it's not allll that simple, and James Hamilton over at Econobrowser posits that falling oil prices alone may only be culpable in triggering regional recessions (think oil production heavy economies, like Texas, or North Dakota).

Prof. Hamilton starts out by quoting < Donald Luskin's Jan 7th article in the Wall Street Journal titled 'The Recession Caused by Low Oil Prices'

The global economy is slipping into recession. The evidence is showing up in all the usual ways: slowing output growth, slumping purchasing-manager indexes, widening credit spreads, declining corporate earnings, falling inflation expectations, receding capital investment and rising inventories. But this is a most unusual recession– the first one ever caused by falling oil prices.

Prof. Hamilton reminds us that falling oil prices should in theory, and have in the past, given consumers extra discretionary money with which to spend, spend, spend:

We usually see consumers spend their extra income right away, whereas it takes more time for producers to alter their spending plans. As a result, even if the U.S. was not a net importer of oil, we might still expect to see a short-run positive stimulus from dropping oil prices.

However, he also finds some nuances this time, not expected in classical modeling:

The actual change in overall consumption spending in response to the oil price decline through March of last year was about 0.4% smaller than would have been predicted on the basis of the historical correlations... The conclusion I draw from the seemingly conflicting evidence in the macro and micro data is that each consumer spent more than they would have if oil prices had not fallen, but that there were other macro headwinds at the same time that were offsetting some of the positive stimulus of falling oil prices. (Bolding emphasis added to highlight what my thoughts which I will add below**)

He continues,
But 1986 was a bad time for Texas and the other oil-producing states. Here’s a graph from some analysis I did with Michael Owyang of the Federal Reserve Bank of St. Louis. (LINK)

** Reason for Concern
This is not 1986

I have always believed that lower oil prices do add up to extra money in the hands of the people most likely to need and quickly spend it -elsewhere- but this 'elsewhere' is not necessarily any more beneficial to economic growth than spending it at your local gas station that ultimately also fuels jobs for workers at refineries, drills, the makers of drill bits, etc. etc. etc. ....

In fact, as I highlight above, this is -not- 1986. The US is not in a solid recovery phase from the trough of that cycle, but rather in a growth rate cycle slowdown, at best, and that, in the bigger picture of 1) Still recovering from the Great Recession and Global Financial Crisis of 2007-2012, as well as also navigating what now appears to be a world economy on the cusp of yet another Global Recession 2016 Edition.

So, yes, while I completely buy the premise that most of the time falling oil is a net plus, I strongly question the premise that these falling, rather, collapsing oil and commodities prices in this broader context of an incipient Global Recession and a still rather large US GDP Gap left in the wake of the Great Recession (ergo, not merely a recession but an outright economic Depression by any reasonable definition), leaves just the normal oil producing region at risk of outright recession. Texas, as a stand-alone, is the 12th largest economy in the whole world, and it is clearly sliding into recession now.
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Archived entry: {As the economies around the world teeter once again, with many already having slipped into "Growth Recession" if not outright technical recession, and with many more looking at the real possibility of outright recession in 2012 and 2013, "the recession" in 2011 was seeming mild by way of comparison to what could be lurking just around the corner.

Will "Recession 2012" look as bad as "The Great Recession" of 2007-2009? Could we skirt by this time without a full-on economic death spiral? Will the economy get better by election day? Or will Obama lose the election for economic reasons? (Presidential elections are usually won or lost for base economic reasons in this country, after all).

Stay tuned. I think it's fair to say that it is going to continue to be a pretty wild ride for the world economy for some time to come.}

Recession 2021
Great Recession 2021
Kondratiev Wave Theory

If a certain economic theory is correct, the US may experience a very greatest recession yet starting in late 2015 or 2016 and finally troughing out by around 2021. If and when this great recession bottoming out in 2021 does occur, it would, by this theory, bring "Spring" anew from the depths of the "Winter" phase.

As noted in Wikipedia:
"Kondratiev identified three phases in the cycle: expansion, stagnation, and recession. More common today is the division into four periods with a turning point (collapse) between the first and second phases. Writing in the 1920s, Kondratiev proposed to apply the theory to the 19th century:

1790–1849 with a turning point in 1815. 1850–1896 with a turning point in 1873. Kondratiev supposed that, in 1896, a new cycle had started.

The long cycle supposedly affects all sectors of an economy. Kondratiev focused on prices and interest rates, seeing the ascendant phase as characterized by an increase in prices and low interest rates, while the other phase consists of a decrease in prices and high interest rates. Subsequent analysis concentrated on output."

Kondratiev's ideas were seriously out of favor with the Soviet government and he was sent to prison, and later death in 1938.

In 1939 Joseph Scheumpeter put forth renaming the cycles identified by Kondratiev as "Kondratieff Waves," to honor him.

If Kondratiev's wave theory is the least bit valid, we should expect to be seeing it play out over the next few years, before finally bottoming out around 2021 after having devoured the United States in a truly great and deep recession. We'll be watching...

Recession 2016
Recession 2016? Did the Great Recession end in the first place? Many think not.

Could Kondratiev be right?

The US economy began slowing down markedly in 2015, reflecting contagion and knock-on effects from the troubled global environment and collapsing world trade.

In 2016 recession is now on the lips of people, everywhere. The situation is starting to look increasingly dire. More and more businesses, and now more consumers, are looking to save money wherever they can.

US Weekly Leading
Economic Index

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6-Month US Recession Probabilities Outlook

risk of recession 2016 chart

State Coincident Index
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As of Dec 2015

Was your state in expansion or recession last year?
Green: Growing
Gray: Flat
Red: Contracting


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What is the
definition of recession?

According to the laypress, and even many economists, a recession is defined as two consecutive quarters of negative GDP (Gross Domestic Product). While this very simple definition is usually the case during recessions, it is not always so.

Most experts now acknowledge that GDP alone is an insufficient determinant of recession.

For one, GDP is often revised several quarters - even years - later, as more complete information becomes available that changes the components of the earlier, initial GDP estimates in what can be very substantial ways.

For another, not all serious downturns exact as serious a toll on GDP. Often, the decline is much more pronounced in GDI (Gross Domestic Income) and/or employment. If the income or employment of a nation is undergoing a pronounced, pervasive and prolonged decline even if for whatever various reasons its GDP may be holding up, is it not foolish to deny that a recession is underway?

For these reasons and others, the NBER (National Bureau of Economic Research), the official arbiter of recessions and expansions in the United States, determines whether or not the US has fallen into recession using a much more holistic approach.

As the NBER explains it:
Q: The financial press often states the definition of a recession as two consecutive quarters of decline in real GDP. How does that relate to the NBER's recession dating procedure?

Most of the recessions identified by our procedures do consist of two or more quarters of declining real GDP, but not all of them. In 2001, for example, the recession did not include two consecutive quarters of decline in real GDP. In the recession beginning in December 2007 and ending in June 2009, real GDP declined in the first, third, and fourth quarters of 2008 and in the first quarter of 2009. The committee places real Gross Domestic Income on an equal footing with real GDP; real GDI declined for six consecutive quarters in the recent recession.

Q: Why doesn't the committee accept the two-quarter definition?

The committee's procedure for identifying turning points differs from the two-quarter rule in a number of ways. First, we do not identify economic activity solely with real GDP and real GDI, but use a range of other indicators as well. Second, we place considerable emphasis on monthly indicators in arriving at a monthly chronology. Third, we consider the depth of the decline in economic activity. Recall that our definition includes the phrase, "a significant decline in activity." Fourth, in examining the behavior of domestic production, we consider not only the conventional product-side GDP estimates, but also the conceptually equivalent income-side GDI estimates. The differences between these two sets of estimates were particularly evident in the recessions of 2001 and 2007-2009.

Q: How does the committee weight employment in determining the dates of peaks and troughs?

In the 2007-2009 recession, the central indicators–real GDP and real GDI–gave mixed signals about the peak date and a clear signal about the trough date. The peak date at the end of 2007 coincided with the peak in employment. We designated June 2009 as the trough, six months before the trough in employment, which is consistent with earlier trough dates in the NBER business-cycle chronology. In the 2001 recession, we found a clear signal in employment and a mixed one in the various measures of output. Consequently, we picked the peak month based on the clear signal in employment, as well as our consideration of output and other measures. In that cycle, as well, the dating of the trough relied primarily on output measures.

Q: Isn't a recession a period of diminished economic activity?

It's more accurate to say that a recession–the way we use the word–is a period of diminishing activity rather than diminished activity. We identify a month when the economy reached a peak of activity and a later month when the economy reached a trough. The time in between is a recession, a period when economic activity is contracting. The following period is an expansion. As of September 2010, when we decided that a trough had occurred in June 2009, the economy was still weak, with lingering high unemployment, but had expanded considerably from its trough 15 months earlier.

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What is a
"Double Dip Recession"?

In the most general sense a Double Dip Recession occurs when an economy falls back into contraction for at least a couple of months (usually at least six) after a relatively brief expansion.

By this definition, the recession of 1981-82 which followed a year-long expansion after the very short, two quarter's long 1980 recession, seems to qualify. Also by this broad definition, the 1937 recession that occurred four years after the end of the 1929-1933 recession also qualifies. While each of those were technically "new" recessions, they happened so soon after their predecessors that many people tend to think of the separate 1980 & 1981-82 recessions as one nasty, long recession. Similarly, most people think of the 1929-1933 & 1937 recessions as encompassing "The Great Depression."

Another definition of a "Double Dip Recession" would be that of a recession which technically has not ended, and was only punctuated by a quarter or twos worth of head-fake rise in GDP. Many recessions throughout history have had such false hopes, only to swoon back down into contraction, until they finally came to an end.

List of Recessions:
Post-1900 US Recessions

Mo/Yr Started Duration
Sep 1902 - 23 Months
May 1907 - 13 Months
Jan 1910 - 24 Months
Jan 1913 - 23 Months
Aug 1918 - 7 Months
Jan 1920 - 18 Months
May 1923 - 14 Months
Oct 1926 - 13 Months
Aug 1929 - 43 Months
May 1937 - 13 Months
Feb 1945 - 8 Months
Nov 1948 - 11 Months
Jul 1953 - 10 Months
Aug 1957 - 8 Months
Apr 1960 - 10 Months
Dec 1969 - 11 Months
Nov 1973 - 16 Months
Jan 1980 - 6 Months
Jul 1981 - 16 Months
Jul 1990 - 8 Months
Mar 2001 - 8 Months
Dec 2007 - 18 Months

What is
Gross National Happiness (GNH)?

An alternate measure of a nation's wealth was conceptualized several decades ago as a means of cutting through the overemphasis on materialism of traditional wealth measures, and seeing the bigger picture.

According to GNHUSA.Org

  Gross National Happiness (GNH) is an indicator developed in Bhutan in the Himalayas, based on the concept elaborated in 1972 by the then King Jigme Singye Wangchuck. Since then, the kingdom of Bhutan, with the support of UNDP (UN Development Program), began to put this concept into practice, and has attracted the attention of the rest of the world with its new formula to measure the progress of a community or nation.

GNH is based on the premise that the calculation of "wealth" should consider other aspects besides economic development: the preservation of the environment and the quality of life of the people. The goal of a society should be the integration of material development with psychological, cultural, and spiritual aspects - all in harmony with the Earth.

The Four Pillars of GNH

  • the promotion of equitable and sustainable socio-economic development
  • the preservation and promotion of cultural values
  • the conservation of the natural environment, and
  • the establishment of good governance.


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