Media, Pols Talking Us Into A Recession?

Media types–you know who you are–and certain politicos have such a vested interest in hyping the current economy as dogmeat, there’s a good chance we’re talking ourselves into a recession. Investment banker Mark Dufilho of Houlihan Lokey said much the same during a Dallas Capital Markets Update this morning at the Belo Mansion. Though it’s “a little shaky” the U.S. economy still has legs, Dufilho said, there’s still a ton of capital out there looking for a home, and business/finance deals are still getting done. However, he added, “USA Today runs a story every day on whether we’re headed into a recession. You try to tell them, if they keep running that story, there will be a recession!”

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Comments

26 responses to “Media, Pols Talking Us Into A Recession?”

  1. Josh says:

    Gwyon, you should’ve just posted “first!” which is the equivalent of what you just did…

  2. Former middle class says:

    You know, leave it up to an investment banker to pooh-pooh how bad the economy is for the common people…. he and the likes of him are nearly as culpable for the current situation as is the lame duck president. Investment bankers and Wall Street with their what have you done for me this quarter mentality have ruined the American economy while at the same time taking billions in greed driven profit. I’m unimpressed that there is capital out there looking for a home and there are still business/finance deals getting done. I have a $150,000 home in the suburbs that i will be lucky to be able to sell without a loss, when and if i am able to retire because of all the foreclosures in the neighborhood, I’m going into debt deeper and deeper just to pay for my gas to commute because DART keeps pushing the arrival of the train in my community back while they wonder where that billion went and the price of groceries continues to skyrocket because somebody in washington decided it would be a good idea for all the farmers to plant corn for ethanol instead of food thereby driving up the price of every food item that has any corn connection…. And there is a very real possibility that my college educated kids will never have economic or employment stability because the attitude (driven by the Wall Street “we don’t care what you make, just make it cheaper with fewer people so we get our dividends crowd) of employers that the American worker is simply another resource to be used up and cast aside. Forgive me but there is a very real economic crisis killing America’s middle class. It isn’t just media speculation and politicians that are fueling this.

  3. Trey Garrison says:

    “You know, leave it up to an investment banker to pooh-pooh how bad the economy is for the common people….”

    http://www.youtube.com/watch?v=-y5eBRWQerY

  4. Bobby Ewing says:

    So housing sales down by a record level, personal debt at a record high, the dollar at an extreme low, oil prices at a record high…all of this is simply the economy on healthy ground? I guess I need an economics lecture…someone help me.

  5. Trey Garrison says:

    Housing sales are down FROM record levels.
    Personal debt is not at an all time high.
    The dollar being at a low is only bad from a certain perspective.
    Oil prices are retreating from highs.
    IJS

  6. Former middle class says:

    And can somebody explain to me why $749,000 mortgages need a bailout? Try to live within your means people… and if you have to work in California…. rent an apartment.

  7. Unfortunately the middle class squeeze has been on for some time now, not just with the slowdown. Housing was experiencing a bubble and eventually had to come down as did tech stocks post-dotcom.Low interest rates for such a protracted period, while stimulating growth, also encouraged excess risk-taking with ample financial liquidity chasing lower returns. The financial sector was encouraged to find higher returns elsewhere–found them and lost them. The Fed has given a partial bailout thanks to Wall Street and to reduce economic anxiety. Be concerned about Wall Street not learning its lesson thinking the Fed will bail them out in a pinch. The government stimulus will add to debt burdens, and foreign creditors are coming to the rescue.

    Take a deep breath, as economic cycles do what they will always do. Look at the real economy. It grew 4.5% in 3rd Q 2007 and estimated at 1.5% 4th Q. I see these as signs of macroeconomic corrections with some individuals (the middle) taking more of the hit.

  8. the amanda says:

    $749K in CA is equivalent to $150-160K here, with the same rules, etc. Lenders in states such as NY, VA, CA, NV, etc., were under PRESSURE from a DEMOCRAT congress and house to indulge these exotic loans…the NINJA (No income, no job, or assets…) and the like. Sorry for your trouble “former,” I hear Russia has a lot of opportunity right now.

  9. Trey Garrison says:

    Well said, Jennifer.

  10. Julie says:

    Former Middle, don’t try to explain our middle class problems to people who aren’t middle class (or–more commonly–don’t think they are). They cannot relate at all.

    They won’t get it until the US absolutely collapses into a third-world country (handful of wealthy, masses of poor)…and they THEY will be the ones asking, “what happened??”

  11. MushMouth says:

    I love, just love this great parody you guys have. Whoever this “Trey Garrison” character really is “he” IS BRILLIANT!

    Bravo!

  12. Ed Wallace says:

    Are we in a recession? No one knows and it often takes a year or more for a recession to have been officially declared. Are we headed towards a recession? Again, there is no real consensus.
    As for point of reference, I recently wrote an article for Businessweek online (http://www.businessweek.com/lifestyle/content/jan2008/bw20080110_329443.htm) about the future of automobile sales in America once the Baby Boomers retire. In researching the information to document that story, here are a few important facts from the Department of Commerce, the Federal Reserve and the Bureau of Labor Statistics.
    Average GDP growth over the past seven years averaged 2.65%. During the period of 1994 to 2001 it averaged 4.09%. The amount of kids under thirty with college degrees still living with their parents has nearly doubled over the last seven years, giving this generation the title of the Boomerang Generation.
    Job creation from 1994 to 2001 averaged 1.75 million per year, but since 2001 it is averaging 369,000. 28% of all new jobs created since 2001 are in government, a higher percentage of new jobs are in the exciting and challenging career of bartending and waiting tables. The two areas of exceptional job growth for high paying wages have been in healthcare and consumer lending. Of which the later is now in decline.
    Household debt has almost doubled in the last seven years, ($7.65 trillion to $12.8 trillion) while the personal savings rate has been a negative .5%. Average household income in America has dropped $1,100 against core inflation, (From $49,163 to $48,023) which does not include energy, gasoline or food costs.
    Oil has dropped in the past week on certain days and risen on others. As a real comparison, oil sold for barely over $50 a barrel a year ago and is somewhere around $91 as of this morning.
    As a point of reference to “The Amanda”, the problematic loans that are now troubling the financial markets internationally were created from 2003 to 2006, or during the period of a Republican Congress and White House. However, those loans were driven by business decisions and were not politically based.
    I agree with my friend Glenn Hunter that with enough bad news the media can talk the public into a recession as a form of a self-fulfilling prophecy.
    In Texas, our foreclosure rate on homes dropped by 7% last year and three of our cities have been named by Forbes as the best places to find work in 2008.
    The reality is that America could fall into recession, but Texas is bypassed. Historically this has happened a number of times when high oil prices bring job creation to our state, while the rest of the country suffers.
    Ed Wallace
    570 KLIF AM
    Fort Worth Star Telegram

  13. Bethany says:

    So Texas will be skipped? Whew! I don’t have to care about the rest of the freakin’ nation.

  14. Ed’s right. The Texas energy sector is doing well as is a growing wind (renewables) industry. A local entrepreneur that supplies steel for new transmission pipelines of gas and oil (produced here and in Okla.) are upgrading aging energy infrastructure and providing small steps toward “energy security.” Only with the higher prices are these capital projects feasible. Higher oil prices will encourage more energy-efficient autos. It’s our flexible, shapeshifter economy at work.

    (and BTW personal income rose last year 6.1% thru November. Again, macro numbers, don’t tell the personal micro-story.)

    Yes, the media needs to be responsible with this one and not just go for the easy headline.

  15. Ed Wallace says:

    Jennifer,
    I believe you are right about wage increases for 2007, (I’ve read figures as low as 5%) but remember it is factored against inflation and the net increase in pay over the higher costs of all goods was just .9%. This is according to the Bureau of Labor Statistics.
    That’s not enough to post an increase over 2001.
    Ultimately, the real question as to a recession happening is dependent on what day consumers reverse their buying habits and pay down debt instead of expanding their credit lines.
    Ed

  16. Billusa99 says:

    Well, Jennifer, you certainly have the “Innovative writing services” part down pat. You realize, of course, that you risk writing us out of a recession, don’t you?

    Thanks Ed; always well researched and informative!

  17. OK, I did hear this a.m. on KERA that the government estimates the 4th Q growth rate at 0.5% rather than the 1.5% stated earlier by a Wall Street Journal economist’s estimate. That’s a bit less colorful, huh?

  18. Bobby Ewing says:

    Trey…gotcha…consumer debt according to the Fed is not at an all time high…just staying about even with the record level set a year ago: http://www.federalreserve.gov/releases/housedebt/
    Oil…up again in the last few days. And rising. I guess if it were a true recession oil would be falling…
    And why is a dollar losing value a positive? I am curious (and learning). Thanks.

  19. Jennifer Warren says:

    The dollar losing value is not all positive. Exporters have gained but to the detriment of importers–the Wal Mart camp and other consumer goods products, etc. We will experience higher prices eventually if the dollar stays too low too long. “Exports are 12% of the economy, and are growing at a 13.6% rate,” per a WSJ economist, offsetting housing industry losses. The other problem with the dollar falling too low, our foreign creditors want to hold more of other currencies like the Euro or yen to diversify their reserve portfolios. These dollarholding countries help support our debt, and lower our interest rates through their demand for dollars. That said, the dollar is still, for now, the world’s reserve currency, with some tarnish to its reputation. Global financial markets are making once-thought fundamental economic equations display new twists.

  20. Ed Wallace says:

    Let me correct one thing, Texas foreclosures were down by 4.6% last year, not the 7% I originally stated. We are still bucking the national trend. Sorry for the error.
    Houston Chronicle http://www.chron.com/disp/story.mpl/business/5493847.html
    Ed

  21. Bobby Ewing says:

    Can someone please answer a dinner table question: what determines the value of the dollar? I don’t mean a general answer such as “the markets determine the value”–but rather how is it “priced” versus other currencies. Thanks!

  22. Jennifer Warren says:

    The Chicago Fed has a really good primer on the dollar and foreign exchange relationships
    http://www.chicagofed.org/consumer_information/strong_dollar_weak_dollar.cfm

    There may be other leads there too.

  23. Spikey says:

    Great Post, this stuff really is the next wave of the future.