A Depression is defined as a 10% decline in GDP from peak to trough.
Auto Sales are DOWN around 50%.
New Home Sales DOWN over 75%.
Hotel Revenues DOWN over 20%.
Trucking Sales DOWN over 20%....rail not far behind.
Banking in TROUBLE....Credit Card Defaults OVER 10% and CRE imploding.
Commercial Construction coming to a grinding halt at the end of this summer.
Major Law Firms cutting staff at unprecedented levels.
Architectural Billings evaporating with not much on the books after August.
Government Tax Receipts off 20, 30, 40% and MORE!
Below are just a sample of this afternoon's headlines:
Palm Q4 revenue $86.8 mln vs $296.2 mln
Accenture Q3 revenue $5.54 bln vs $6.59 bln
Micron Technology Q3 sales $1.11 bln vs $1.5 bln
It is obvious Technology and Services are feeling the slowing effect HARD!!!!!!
The two key sectors left are Health Care and Government, and both are tied at the hip and starting to feel the pain. Based on California's predicament, major cutbacks in spending will be necessary....and soon. The cutbacks will be material and not limited to just California. Major cutbacks will occur nationwide as most State and Local governments have seen tax revenues evaporate. As the large cutbacks kick in over the next few weeks, our economy will slow materially.
Based on the typical lag of government statistics, there is little doubt that we will look back sometime in the Fall and determine the Depression started sometime around the end of the 2nd Quarter.
As far as unemployment being reported under 10%.....U6 is now over 16% and many are not being counted as unemployed due to benefits expiring. Further, making an apples to apples comparison to The Great Depression, welfare NEVER existed in the thirties......so if you added in welfare recipients to the unemployment numbers, we are likely well OVER a 25% unemployment rate.
Here is an example from the WSJ of citizens going from being counted as "unemployed" to becoming "welfare" recipients:
Michigan's generous jobless benefits and strict eligibility rules have kept the welfare rolls down despite the state's 14.1% unemployment rate, the highest in the country. But a surge in jobless workers reaching the time limit for unemployment benefits in coming months could change that.
A major test for the state's welfare system could come by January, when nearly one in seven unemployed workers will have exhausted their jobless benefits, unless the laws change, said Norm Isotalo, a spokesman for Michigan's unemployment-insurance agency. Many of the more than 680,000 unemployed workers in the state are collecting jobless benefits, which last for as long as 79 weeks.
Other states with high unemployment, such as Florida and Oregon, have already seen significant increases in welfare caseloads.
"We're expecting a huge influx of applications in the next few months," said Barbara Anders, the director of adult and family services at the Michigan Department of Human Services. About 100,000 people's jobless benefits will expire by January. Officials hope for funding to add staff to handle the influx, and the state Senate appropriations committee has approved hiring 200 more staffers.
Just extrapolating from the above, it is easy to see that millions of Americans are likely to transfer from being counted as "unemployed" to "welfare" recipients. From a practical perspective, they are still unemployed.
Then if you factor in the number of spouses and elderly who will be forced to return to the workforce but unable to find a job....we should exceed 30-35% unemployment by the end of the year.
30% unemployment and a 20% contraction in GDP...........how fast do you think Benny B can print? Will it be an INFLATIONARY DEPRESSION?