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The Masked Tulip

Uk Allegedly Booming, Us Economy Contracting

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Wasnt the US about a year ahead of us back in the late 2000s?

US housing peaked 2005/6 instead of 2006/7, pound peaked at 2.2 dollars prior to its quick slump, reflecting people's belief sub-prime issues were US only...

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Wasnt the US about a year ahead of us back in the late 2000s?

US housing peaked 2005/6 instead of 2006/7, pound peaked at 2.2 dollars prior to its quick slump, reflecting people's belief sub-prime issues were US only...

It's less than that. They are maybe 6 months ahead in the economic cycle if I remember the 2007-2009 period correctly. They peaked mid-late 2007, we peaked very early-early 2008.

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It's less than that. They are maybe 6 months ahead in the economic cycle if I remember the 2007-2009 period correctly. They peaked mid-late 2007, we peaked very early-early 2008.

It's possible the US economy has begun its latest cyclical downturn. The US has grown fitfully since 2009. Given the inherent post-bubble condition of the economy 1.5%/yr for 4-5 yrs may be the new normal. US tax collections (witholding taxes) have been in decline for the past 6-7 weeks consistent with a broad step down in economic activity. If that trend continues there's going to be a problem. US stock markets look considerably over-extended, if the Fed continues to taper there's going to be a problem. Finally, Mario Draghi has to come up with something spectacular next week (negative rates?) to match what the other three big central banks are doing (Fed, BoJ and PBoC are all printing furiously; the BoE's too small to count but Osborne's spending like a maniac anyway, of course) and to keep market expectations satisfied. If he doesn't there's going to be a problem.

I'm expecting UK H2 2014 GDP print to be markedly weaker than H1. As you say, we're typically 6/9 months behind the US.

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I was talking with a UK IT recruiter this week who told me his firm has just opened an office in LA of all places - due to the demand for skilled IT workers in California. Seems the Yanks are sucking more Brits over there.

However, I suspect that IT is currently the exception to the rule when it comes to the US economy generally.

Negative IRs from the ECB? I assume that has people putting more money into stocks and commodities?

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^^ this. Those idiot yanks are obsessed with investing in tech. As a result it is one of the many places that decent developers from the UK end up. The ones left in the UK are left being talked down to by Estate agents and wondering where it all went wrong.

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The FT is headlining this morning about the EU about to lower interest rates this week... and perhaps print... whilst, at the same time, talking about the US Fed trying to work out how to raise interest rates... and a bit about BOE rates being 3% in a few years.

But if the US economy is indeed contracting already that surely rate rises will soon be off the table, if they were ever one, and it will be back to more talk about more QE printing?

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The FT is headlining this morning about the EU about to lower interest rates this week... and perhaps print... whilst, at the same time, talking about the US Fed trying to work out how to raise interest rates... and a bit about BOE rates being 3% in a few years.

But if the US economy is indeed contracting already that surely rate rises will soon be off the table, if they were ever one, and it will be back to more talk about more QE printing?

Draghi has to do something spectacular - QE or NIRP next week - stock markets will sell off hard if he doesn't come up with the goods. UK base rates aren't going back to 3%. They're probably not even going back to 1%.

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Uk booming.

It's the usual made up stuff.

It amounts to manipulated GDP stats, hyped up sentiment stats and every VI and media outlet rounded up to talk positive and so on. The LibLabCon took such a pounding with the eu and local elections they have to try to raise their spirits somehow as the Uk general election will be on top of them before they know it.

On the same beat the phony drum theme today the Express had their usual front page headline of "House Prices To Soar by.." this time by 12%. They just chop and change the numbers to suit themselves. A couple of weeks ago it was "Battle to Halt House Boom". They must must have lost that battle already - so soon.

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US is going to grow c. 3% this year.

Hope that helps.

ALL printed...except of course, the last results were downgraded, unexpectedly of course.

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ALL printed...except of course, the last results were downgraded, unexpectedly of course.

Indeed. And even with massive govt intervention the US economy is still subject to a business cycle. We've had a long expansionary phase since 2009 - weak by historic standards, but genuine - we now appear to be moving into a contractionary phase. If Draghi flubs it next week and stock markets sell off hard then I could see a case for the US being back in recession before the end of the year. The alarming decline in US treasury yields this year is entirely consistent with a slowdown in economic activity domestically and internationally.

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US is going to grow c. 3% this year.

Hope that helps.

Just to confirm, there will be no growth at all in the US - unless you believe the made up figures, that is.

The number that’s being reported is “nominal” GDP, meaning it includes price inflation. If you strip out the price deflator used by the Government of 1.3%, “real” GDP would be -2.3%.

Edited by Errol

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Just to confirm, there will be no growth at all in the US - unless you believe the made up figures, that is.

The number that’s being reported is “nominal” GDP, meaning it includes price inflation. If you strip out the price deflator used by the Government of 1.3%, “real” GDP would be -2.3%.

It's real GDP.

I assume you read dodgy data sources rather than make this stuff up. Please link your source to the 'number that's being reported is 'nominal' GDP.

Here's the official data release for Q1 from the BEA from Thursday:

Real gross domestic product -- the output of goods and services produced by labor and propertylocated in the United States -- decreased at an annual rate of 1.0 percent in the first quarter according tothe "second" estimate released by the Bureau of Economic Analysis.  In the fourth quarter, real GDPincreased 2.6 percent.

http://www.bea.gov/newsreleases/national/gdp/2014/gdp1q14_2nd.htm

Edited by R K

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It's real GDP.

I assume you read dodgy data sources rather than make this stuff up. Please link your source to the 'number that's being reported is 'nominal' GDP.

Here's the official data release for Q1 from the BEA from Thursday:

http://www.bea.gov/newsreleases/national/gdp/2014/gdp1q14_2nd.htm

note how a reduction on the previous quarter often translates into a better increase in the next, which is as yet uncorrected.

GDP is a stupid measure...parrently, we include drug deals and prostitutes in ours now. Got to include them as our banks are probably the biggest benificiaries in pimping and laundering.

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It's real GDP.

Who cares about real GDP? UK real GDP is 2-3 times higher than it was in the 1970s. During that time the UK has gone from being a country where one average worker could support a family in an average house to one where you need two above average wages to do the same. I'm not sure what to call what has happened over the last 40 years, but I don't think it's "economic growth".

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Who cares about real GDP? UK real GDP is 2-3 times higher than it was in the 1970s. During that time the UK has gone from being a country where one average worker could support a family in an average house to one where you need two above average wages to do the same. I'm not sure what to call what has happened over the last 40 years, but I don't think it's "economic growth".

Errol wrongly claimed, without a source, that GDP reported was nominal not real and needed to be adjusted down by the deflator.

I was simply pointing out, with source, that was nonsense.

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Errol wrongly claimed, without a source, that GDP reported was nominal not real and needed to be adjusted down by the deflator.

I was simply pointing out, with source, that was nonsense.

Don't bring facts into an Internet argument...

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note how a reduction on the previous quarter often translates into a better increase in the next, which is as yet uncorrected.

GDP is a stupid measure...parrently, we include drug deals and prostitutes in ours now. Got to include them as our banks are probably the biggest benificiaries in pimping and laundering.

Everything supposedly has economic value. If I'm sitting around, doing nothing, but happen to watch a burglary take place, report it to the police, and the perp gets caught, then my sitting around has economic/utility value...presumably we'll get to a point where govt wants to include that in GDP calcs. In my mind, its already included. I dont get paid for it, even though for that moment I am providing a surveillance service, but the homeowner being burgled gains by not having to pay me for this 'service'. It is thus already accounted for as the homeowner can spend the money saved on something else.

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Who cares about real GDP? UK real GDP is 2-3 times higher than it was in the 1970s. During that time the UK has gone from being a country where one average worker could support a family in an average house to one where you need two above average wages to do the same. I'm not sure what to call what has happened over the last 40 years, but I don't think it's "economic growth".

Sure its growth. Its financialization. Previously you'd buy a car and all your money went to the producer and retail. Now, that nice Mr Bankster takes his cut too. The growth has simply been transferred to the parasite city state of London.

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