Do you remember the economy?

Yes, the economy.  For whatever it's worth, I've compiled some recent data that point to the U.S. economy either being in, or entering a recession.

IMHO, this recession - our beloved leader's parting gift to us - will be long, hard and deep.

Strap yourselves in.  Keep your arms and legs inside the vehicle at all times.

Do you think Senator Obama or Senator Clinton will politically benefit more from this economic news?  I'm curious to hear your thoughts.

HOUSING:

New Homes:

D.R. Horton announced that their cancellation rate is running at 44%, and average home prices have declined 17%.

Horton is the largest homebuilder in America!

Existing Homes:

NAR (National Association of Realtors) released their new and disproved estimates and projections for 2008.  They claim:

Existing-home sales are projected at an annual pace of around 4.9 million in the first half of this year, rising notably to 5.8 million in the second half, and totaling 5.60 million for all of 2009.  The aggregate existing-home price should decline 1.2 percent in 2008 to a median of $216,300, and then rise 3.2 percent to $223,200 in 2009.

Keep in mind that in 2007, they revised their estimates down every single time.  I find it interesting that the pace of home sales from the first half to second half of the year increases by 18.3%.  I'd love to see what they're smoking.

Housing has not bottomed, and will not do so this year.  Professor Shiller (who has been right about this market all along) now compares the real estate downturn to the Great Depression, with prices going down 30%.  That's over 6 Trillion Dollars of wealth disappearing.

Here's the video:
Shiller Video

RETAIL:

Retailers had a bad holiday season, and it seems that it is being followed by a bad January.  Here's a tidbit:

On the retail front, a spate of reports from key chain stores like Wal-Mart Stores Inc and Target Corp showed consumers have pulled back on spending. Sales in January were below expectations and were down at some key retailers.

Wal-Mart, the world's largest retailer, reported a 0.5 percent rise in January same-store sales, short of the 2 percent rise analysts expected. Target, the No. 2 U.S. retailer, posted a 1.1 percent drop in same-store sales.

Many of the temporary and part time jobs in our economy are retail based.  If consumers aren't buying, retailers won't hire.  That'll spell more bad news.

Job Market:

Employment is a lagging indicator of economic performance.  It is usually the last indicator to improve coming out of a recession, and the last one weakening going into a recession.  That being said, employment is showing systemic signs of weakening. The economy lost 170,000 jobs in January.  The first such loss in over four years.

New applications for unemployment benefits fell by 22,000 last week to 356,000, partially reversing a big spike the week before, but economists said the level, which was higher than expected, still suggested the labor market was weakening.

"We are having a lot of trouble in the labor market," said Lindsey Piegza, market analyst for FTN Financial in New York. "Generally, a 350,000-to-375,000 range is a recession warning zone."

My Two Cents:

This recession will be a hard one.  This country hasn't experience a real recession since the early 1990's and that wasn't a protracted or deep one either.

The factors such as high energy costs, increasing food prices, the housing bust, the credit crunch, when combined with the economic toll of our government's foolish fiscal policy will be disastrous.

I know that both Senators Obama and Clinton have put forth various economic stimulus plans.  But no short term solution will save us from a downturn.  The American economy is over $13 Trillion.  The stimulus is $150 Billion.  That's 1%; which, oddly enough, is the exact number Goldman Sachs has predicted as the reduction of our GDP in the next quarter!

I hope this diary has been informative.