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A Not-So-Funny Thing Happened on the Way to the Economic Recovery
If this is what a "recovery" looks like, imagine the "economic reversal"
By Bob Stokes
Thu, 15 Dec 2011 17:30:00 ET
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On December 13 the Federal Reserve left interest rates unchanged. The Fed's statement said "the economy has been expanding moderately."
 
On December 15, economic reports included: weekly initial jobless claims hitting a three-and-a-half year low; the Philadelphia Fed's Business Outlook for December surprised to the upside; and the National Retail Federation raised its holiday sales forecast.
 
Even so, a not-so-positive thing also happened on the way to the "economic recovery":
 
"Americans got much poorer last quarter, as their collective household net worth suffered the biggest decline in three years."
New York Times, December 8
 
Other things also happened on the way to economic expansion. For example, tighter budgets have affected the way millions live -- literally:
 
"This year about 30% of adults, 69.2 million people, are living in doubled-up households, compared with 27.7%, or 61.7 million, in 2007..."
Marketwatch, November 22
 
As we marched our way toward economic growth, one other thing also came to our attention:
 
"...the government made gloomy headlines when it released the latest census report showing the poverty rate rose to a 17-year high."
CNNMoney, October 14
 
And there's this thing on the economic recovery road that we've discovered:
 
"Data on sales of previously owned U.S. homes from 2007 through October this year will be revised down next week because of double counting, indicating a much weaker housing market than previously thought."
Reuters, December 13
 
While we're at it: In a time of moderate economic growth, isn't it a bit unusual for Standard & Poor's to downgrade fifteen major U.S. and European banks? That was the headline on November 29, a day after Fitch revised the U.S. credit outlook to negative. On December 14, Fitch downgraded five European banks and banking groups. December 13, the New York Times reported that California "...was about $2.2 billion short of its projected $88.5 billion income and that that would force hundreds of millions of dollars more in cuts to the budget, primarily to state colleges and universities as well as to health care."
 
After reading all of the above, one may just wonder how healthy the "economic recovery" really is.
 
The December Financial Forecast observes: "...trademark signs of deflation continue to support misplaced optimism." 
 

Tags: banks, debt downgrade, deflation, Federal Open Market Committee (FOMC), Interest Rates, monetary policy, U.S. Federal Reserve (the Fed)
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