“[U.S. GDP] contracted at a 6.2 percent annual pace from October through December, more than economists anticipated and the most since 1982, according to revised figures from the Commerce Department today in Washington. Consumer spending, which comprises about 70 percent of the economy, declined at the fastest pace in almost three decades.”
U.S. Economy Shrank 6.2% Last Quarter, Most Since ’82 [Bloomberg]
SocketSite’s Residential Real Estate Outlook For 2009 [SocketSite]

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Comments from “Plugged-In” Readers

  1. Posted by Debtpocalypse

    Looks like reality is gunning to stress-test Treasury’s stress test…..

  2. Posted by tipster

    What a surprise, that the Obama administration has lowered the GDP under the Bush administration. Look for an equally fake dismal report for Q109, the quarter for which no one could possibly blame Obama.
    And then, miraculously, the Obama policies will start “working” and GDP will start to “rise”, as all reasonable judgements on the statistics are relaxed, to paint whatever picture it is expedient to paint.

  3. Posted by anonn

    Kinda like how the Bush administration didn’t use the word “2008 recession” until what, September or August?

  4. Posted by LMRiM

    Contraction in the US private markets has been pretty stunning, as revealed by the performance of our major domestic asset market (housing) and the wipeout in the export economies of Asia and (to a lesser degree) Europe.
    Even though the markets have cost me a bit this year in my trading, I still have to smile. It’s a huge “F U” to clowns like Summers, Paulson, Geithner, Bernanke, Greenspan, et al., who think that the economy is some engine located in the boiler room of the Fed and USG. Tweak a valve here, “inject” a little lubricant there, push the peasants’ “consumption preference” a bit, and voila, the holy grail of “aggregate demand”.
    Stock market (and housing market) performance has of course been a huge “F U” to anyone who believed that the “Feds” would bail everyone out.
    I still remember well when Bernie was saying (in Summer 2007) that recession would be avoided.

  5. Posted by Rillion

    Tipster, they don’t need to fake the reports to make them appear dismal. It is dismal out there this quarter.
    http://www.usatoday.com/money/autos/2009-02-18-new-car-truck-sales-sink_N.htm?csp=34
    [i]”Data collected from dealers suggests sub-9 million SAAR for February,” says Jeff Schuster, forecasting chief for auto consultant J.D. Power and Associates. … That’s well off January’s 9.6 million pace, which had been considered about as bad as things could get. It was the first month with an annualized rate below 10 million since August 1982, says sales tracker Autodata. The last time consecutive months were that low was June-August 1982.”[/i]
    The reality is if you go back and look at the last couple quarters of 2007 and the first half of 2008 the GDP numbers were actually inflated by using a low inflation number. So yeah the Commerce Department has some room to tweak the numbers but that doesn’t mean it still isn’t obvious what is happening in the economy. And right now consumers have hit the brakes on the economy and the wheels have locked up (stupid economy not having Anti-Lock Brakes).

  6. Posted by Debtpocalypse

    Tipster, I’m with Rillion.
    My contacts back into the large-firm, large-billable-hour consulting world suggest that stuff slowed substantially in Q4… but then deteriorated markedly during the first two months of the year.
    A lot of six-figure professionals calling around looking for work and looking for contingent back-up job-leads.
    Neither is in meaningful supply.
    It’s a depression, you know…..

  7. Posted by Mole Man

    There is something to be said for the utility of constructive criticism over mere harping. Summers, Paulson, Geithner, Bernanke, and Greenspan all have very different views of what has been going on, but none believe the Fed is anything more than a kind of traffic light on a chaotic street. What they do share is a feeling that they can do something and that as such they have an obligation to do something.
    Would the situation really be that much better if some really big banks were allowed to go under and credit markets were allowed to completely bottom out? History suggests such a sharp correction would come with extreme social costs. Guns and butter economics have caused our cities to explode in violence before.
    If well meaning civil servants get this level of hateful criticism for doing what they can, then what fools will actually dare to apply for the job the next time around? Often the best way to demonstrate command of capital is to treat human capital with respect by differentiating between people and their inevitably imperfect ideas and decisions.

  8. Posted by tipster

    OK Rillion, you win. That’s bad.

  9. Posted by Trip

    Second Debtpocalypse’s point. My anecdote — it is a bloodbath in the world of big law firm layoffs. All those masses of lawyers needed for the big mergers and financing deals in past years simply have nothing to do now as their are no such deals. This is hitting NY the worst by far, but nowhere is immune. Fortunately, we were never a big player in that space (although we pulled our hair out over that fact in 2006-07). But lots and lots of $160k – $300k associates and $100k staff members are losing their jobs.
    This recession/depression is hitting the high end nearly as hard as the low end (the latter always gets slammed in a downturn; the former not so much).

  10. Posted by dch

    The SF legal market is deader than NY, in my experience. A good friend is moving there from here because that’s where he got a job. With 190 latham lawyers hitting the streets today (biggest layoff in large law firm history, i think), it’s only getting worse…

  11. Posted by ex SF-er

    If well meaning civil servants get this level of hateful criticism for doing what they can, then what fools will actually dare to apply for the job the next time around?
    Mole Man. This is a good point. however, I and others seriously question whether or not these people are well meaning civil servants, or if they are instead shills for the Banking Sector.
    They continually REFUSE to acknowledge the severe problems in the banking sector, and the path that likely must be taken.
    The most likely reason for this is that they are blinded by their idealism. however, many of us are also concerned about CONFLICTS OF INTEREST. (Paulson as ex Goldman guy, Rubin as Citi boardmember etc).
    I find it disturbing that they have consistently
    -underappreciated the problem
    -lied about the problem (telling us the banks are ‘well capitalized’. are you kidding me?)
    -obfuscated the problem (no transparency for what they’re doing with this bailout money)
    -failed to take appropriate action.
    even now, YEARS into this we still have yet to do a stress test? WTF?
    it is possible that they are simply afraid because there are no good options (this is true). it is also possible that they have been “captured” by the banking system and thus are shoveling taxpayer money to their friends and connected fellows.
    I used to give them the benefit of the doubt. But as actions progress I find it harder and harder.
    I am VERY versed in financial markets. And even I have a hard time understanding what they are doing with all the “programs” and “swaps” and “guarantees” and “agreements”, most under the cover of secrecy.
    all the while most of the execs continue to make BIG bonuses. nay, may I say RECORD bonuses.

  12. Posted by LMRiM

    Good to see you back, ex SF-er. With my recent aversion to the long end of the Treasury curve, and your increasing questioning of the “good will” of these yahoos, it seems like our views have converged more than I bet either of us would have thought possible.
    Well put about “it is possible that they are simply afraid because there are no good options (this is true)”.
    These guys have driven the car off the cliff. It’s done – two decades of acceleration towards the canyon, and nothing could have stopped it by the early 2000s (at least nothing politically plausible).
    But they can’t let go of their ways behaviorally, and remember, none of these guys is a dictator. For every good thing they try, the banksters demand tribute. All these show trials about Merrill Lynch bonuses and private jets are just pablum for public consumption. The real theft is being hidden in plain sight.
    Obama in his heart knows (or is being told) that at any given moment, the Fed can simply torpedo his predicency. Every administration knows this. And so the “logrolling” and tribute paying continue.

  13. Posted by sfrob

    Obama in his heart knows… the Fed can simply torpedo his presidency.
    It seems Obama’s popularity at this point could torpedo anything he wanted with a good speech to rally the people to his side.

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