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Disagreeing with the Economists

I’m bearish on the economic situation. Apparently, I see it as even bleaker than the economists giving speeches (subscription):

Wells Fargo, a conference sponsor, expects the United States to lose 5.5 million jobs before the economy recovers in the second half of 2009, making this the worst recession since the 1930s. The United States lost about 2 million jobs in 2008.

The University of New Mexico Bureau of Business and Economic Research, another sponsor, believes New Mexico lost jobs in the fourth quarter of 2008 and will lose more jobs for at least the first three quarters of this year.

“New Mexico’s economy is not yet in a recession,” said BBER economist Larry Waldman, who defined a state-level recession as two consecutive quarters of declining employment. “(But) it’s coming.”

That would make this the first time New Mexico has joined the United States in a recession since the 1950s, according to the BBER.

Even so, BBER expects the state recession to be mild. Waldman said job growth should average a negative 0.2 percent in 2009. Personal income, which grew an estimated 5.4 percent in 2008, should grow only 1.9 percent in 2009.

Waldman said Albuquerque lost jobs in the third quarter, probably lost jobs in the fourth quarter and may not see job growth until early next year. Data for the fourth quarter is not yet available.

He said Santa Fe could rebound as soon as the second quarter of 2009 after spending three quarters in a recession.

They’re not painting a pretty picture, but they’re more optimistic than I am. See, I don’t think it matters how much money the government throws at the economy over the next two years. We’re not going to see a rebound until 2012. Heck, we’re not even going to hit bottom until second quarter of 2009.

Why? Simple, people are scared, and more importantly, they are debt laden. So, if they start earning more or receiving tax rebates, they are going to either save them, or use them to pay down debt. The result of this is the we will continue to see a decline in consumer spending.

By the third quarter of 2009, expect all of those people laid off in 2008 to see the end of their unemployment benefits and severance packages. That’s when the real hurt will begin. The fourth quarter holiday season of this new year will significantly top the losses of this last one, and in the first two quarters of 2010, we will see even greater layoffs and bankruptcies.

But, then again, what do I know. I’m not an economist. Have a great day.