Tuesday, May 5, 2009

The recession is over -- we can all go out and spend money

Yeah, sure. Recent news articles paint a rosy picture of the end of the current recession. According to the New York Federal Reserve "there is almost no possibility that the economy will be in recession by the middle of this year according to the Fed's model, which has accurately predicted the last 7 recessions, back to 1960."

Without going to the "experts" what do the most relevant statistics say?

Although the next release of the Employment Situation is scheduled for May 8th, 2009, as of April 3, 2009, nonfarm payroll employment continued to decline sharply in March (-663,000), and the unemployment rate rose from 8.1 to 8.5 percent. Payroll employment has decreased by 3.3 million over the past 5 months. In March, job losses were large and widespread across the major industry sectors. There were 13.2 million unemployed workers in the U.S.

On a seasonally adjusted basis, the CPI-U decreased 0.1 percent in March after rising 0.4 percent in February. The index for all items less food and energy increased 0.2 percent in March, the same increase as in February. So despite the current recession, we still have a small increase in inflation. The housing price index continued to decline in March.

Bankruptcy filings in the federal courts rose 31 percent in calendar year 2008, according to data released today by the Administrative Office of the U.S. Courts. The number of bankruptcies filed in the twelve-month period ending December 31, 2008, totaled 1,117,771, up from 850,912 bankruptcies filed in CY 2007.

I don't want to paint a totally gloomy picture. But it is unreasonable to suppose that this long standing problem will not be resolved in one or two more months. It is time to be prepared and continue to avoid debt, prepare for emergencies and rely on counsel from the Prophets of God.

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