Fears Rise That Recovery May Falter in the Spring

[alp227]

Source: NY Times

Some of the same spoilers that interrupted the recovery in 2010 and 2011 have emerged again, raising fears that the winter’s economic strength might dissipate in the spring.

In recent weeks, European bond yields have started climbing. In the United States and elsewhere, high oil prices have sapped spending power. American employers remain skittish about hiring new workers, and new claims for unemployment insurance have risen. And stocks have declined.

There is a “light recovery blowing in a spring wind” with “dark clouds on the horizon,” Christine Lagarde, managing director of the International Monetary Fund, said Thursday, at the start of meetings here that will focus on Europe’s troubles and global growth. Ms. Lagarde implored world leaders not to become complacent.

Forecasters have said that the trends point to a moderation of economic growth in the United States, but they still expect the recovery to continue this year. The slowdown in part reflects an unusually warm winter, which pulled forward economic activity, making January and February seem artificially good and perhaps making recent weeks look worse than they truly were.

Read more: http://www.nytimes.com/2012/04/20/business/economy/concerns-form-backdrop-for-economic-meetings.html?pagewanted=all

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If true, it could be another 1980, as in 1980 the unemployment rate began rising up again after decreasing from 1977-79, and Democratic Pres. Jimmy Carter lost to Republican challenger Ronald Reagan (and then US history took an ugly turn from there).

(Graphs generated with http://data.bls.gov/timeseries/LNS14000000)

And given the latest polls have a near-tie between Obama and Romney, I am getting worried now.

[elleng]

1. Polls mean nothing,

rail car-loadings, a leading indicator of economic activity, are up, and I heard Lagarde being cautiously optimistic this week. I don't expect another 1980.
http://www.democraticunderground.com/?com=view_post&forum=1014&pid=102097

[Yo_Mama]

8. Rail carloadings are DOWN 3.1% YTD YoY

http://www.aar.org/AAR/NewsAndEvents/Freight-Rail-Traffic/2012/04/~/media/aar/weekly_traffic_reports/2012/2012-04-19-railtraffic.ashx

Total rail volume is down 2.3% YTD YoY.

Intermodal is up 2.4% so far this year.

I think the rail carloadings are actually improving a bit after reaching their bottom in March, but we'll see.

[elleng]

12. 'Union Pacific Corp. said

Last edited Fri Apr 20, 2012, 12:32 PM - Edit history (1)

Thursday its first-quarter net income jumped 35 percent as the railroad hauled more cars and crude oil. CSX said earlier this week that its net income jumped 14 percent. Both railroads were hauling more containers of consumer goods and both were able to increase rates enough to offset a decline in coal shipments after a mild winter. . .

Both Union Pacific and CSX reported a drop in coal shipments. Winter weather was mild and prices for natural gas, an alternative for power generation, are around 10-year lows. UP's energy shipments declined 8 percent, and CSX reported a 14 percent drop in its coal shipments.

But shipments of more economically sensitive items like cars, lumber, industrial products and crude oil all increased in the quarter. That led officials at both Union Pacific and CSX to express confidence that their companies could offset the decline in coal shipments this year with growth in other areas of their business.

The 15 percent jump in automotive shipments that Union Pacific reported was particularly encouraging. That figure reflects the 13 percent increase in sales of cars and trucks in the first quarter. Analysts are predicting sales of 14.5 million or more this year, which would be the industry's best performance since 2007.

Sohn said the railroads' strong performance, combined with data on trucking and port traffic, all suggest the economy is doing just fine.'
http://www.tuscaloosanews.com/article/20120419/APF/1204191036?p=1&tc=pg

[On the Road]

2. 2012 is in a Different Part of the Economic Cycle

Last edited Fri Apr 20, 2012, 03:43 AM - Edit history (1)

The country formally entered the recession in 1980, and didn't begin pulling out of it convincingly until 1983. In 1980 the prime rate broke 20%, inflation was 14%, and unemployment was over 1O%.

We are going to keep hearing these cries of double-dip recession all way up until the economy is booming again, and right through the boom into the next recession. Dire warnings of being on the brink of an economic catastrophe have appeared every month of every year since at least the 1970s, and probably throughout history. Just like the projections of Dow 35000 and unlimited growth five years ago, it is fundamentally an emotional phenomenon.

There is a paid link in the financial section of many media sites, promoting a seminar, which reads "The Unthinkable Poised to Happen on Wall Street: See Disturbing Evidence." It has been there for about a year IIRC and will be there as long as they keep selling tickets to those seminars.

For decades, recessions and recoveries have been getting slower and more gradual. What I am worried about is that not enough people will realize by November that the recovery really is underway. Emotions and expectations take a while to adapt. Economically, this election is most similar to 1992. GDP growth hit 3.0% coming out of that recession, but it wasn't enough to save the election for Bush Sr.

[Sherman A1]

4. Precisely

This is just sloppy fear mongering. "We could be in for a double dip" or perhaps not.

Things will recover and then they may not.

It may rain today or it may not....

[On the Road]

9. This Stuff Has Been Floating Around Since 2008

Despite the fact that double-dip recessions are not the norm, people were predicting one while the economy was still on the way down -- when no one knew where it would bottom, much less where it would go after that.

Just like the recession, people tend to frame their arguments around their emotions. This is especially true of smart people -- the justifications simply get more sophisticated.

On Edit: On that note, it is interesting how the economic consensus on DU is changing now that the recovery is a Democratic election issue.

[intaglio]

3. Hasn't the NYT been reporting the same thing for months now?

Might it have something to do with Rmoney's lack of popularity?

[liberal N proud]

5. The fear mongering will continue until...

The election next fall, or they accomplish their goal of bringing the economy to its knees again before then.

[harun]

6. +1

[groundloop]

7. I call bullshit. The repubs just HOPE the recovery is faltering.

Once every few months I sit through a meeting in which our VP goes over business forecasts. The economists our company employs certainly don't agree with this doom and gloom.

[bemildred]

10. This is FUD. nt

[magical thyme]

11. strictly anecdotal, but the financial services company that I worked for 2 years ago

just advertised. They are hiring for every shift. And this is coming into their normal slow season!

The traffic outside my door has increased dramatically, starting in March. It's normally dead quiet at this time of year. Yes, the weather has been beautiful, but still. Even when I checked this place out in 4/03, the roads were dead quiet compared to recent weeks.

I went into the local village one evening back in February. I was *shocked* to see the restaurants all busy. Yes, the weather was warmer, but it's also off-season for tourism, which is a major, major industry here.

I'm feeling a tiny flicker of hope that this time there really are a few green shoots out there.