Bottom-Bouncing Economy

Economy Recovering or a Bottom-Bouncing EconomyBy Greg Hunter’s USAWatchdog.com 

“Bottom-bouncing” is the term John Williams of Shadowstats.com uses consistently to describe the true state of the economy.  The mainstream media would like you to believe that with every slight uptick in the economy, we have hit bottom and are in a so-called “recovery.”  The upticks are reported with wild enthusiasm, while the downticks are brushed over.  The latest bad news for the economy came from the housing sector.  CNBC reported Monday, “In a stark reversal during the heart of the spring housing market, confidence among the nation’s homebuilders dropped in April to levels not seen since January.  An association index measuring sentiment fell three points, changing course after seven straight months of gains. It now stands at twenty-five; fifty is the line between positive and negative sentiment.   ‘What we’re seeing is essentially a pause in what had been a fairly rapid build-up in builder confidence that started last September,’ said National Association of Home Builders Chief Economist David Crowe in a release.”  (Click here for the complete CNBC story.) 

Maybe sentiment is down because actual housing starts are also down nearly 6% in March.  But that’s not really the point to focus on according to Shadowstats.com—it is the overall trend.  In his latest report, Williams said, “March 2012 housing starts fell by a statistically-insignificant 5.8%, versus February 2012, but that was no more than the 40th-straight month of stagnant business activity.  This period of stagnation, or bottom-bouncing at historically-low levels, followed an unprecedented 75% plunge in housing activity from 2006 through the end of 2008.”  (Click here to go to the Shadowstats.com home page.) 

Williams says a real turnaround in the economy is unlikely without real income growth.  In fact, not only is there no growth in consumer income, but it has contracted since the 2008 financial crisis as shown in this chart:  

Sinking real estate prices have also stopped consumers from using their homes as an ATM which is another roadblock for a true recovery.  Williams said on Monday’s report, “Temporary consumption gains could be fueled by debt expansion, but that option also is not available to most consumers.  With limited prospects for income growth and debt expansion in the near future, broad economic activity remains likely to bottom-bounce for the foreseeable future, while healthy, sustainable gains in real retail sales remain improbable.”

Charles Biderman, CEO of Wall Street research firm Trim Tabs, says the recovery story is being constantly kept alive because of poor government data.  Biderman laughingly calls government statistics a “bad joke” that unquestionably gets repeated in the mainstream media (MSM).  In Biderman’s “Daily Edge” commentary on Monday, he said, “The government reports garbage, and the morons report that garbage as hard facts.”  Biderman pointed out that car sales were down 6% in March, when the government reported a little more than a 1% increase in the same month.  Biderman goes on to say the government’s data is based on “surveys and guesses.”  (Click here for the complete comments from Charles Biderman.)

Charles Biderman, like John Williams, tries to offer his clients a picture of what is really going on in the economy, not a desired expectation.  What these guys see is not a so-called recovery, but bottom-bouncing at best.  In an election year, QE 3 (a third round of money printing) is a lock before November.   

Comments
  1. Hoppe

    What should be happening here, for a real recovery, is deflation. Painful yes, but the long term effects ( benefits) a far better than the alternative- inflation. Williams notes that Sinking real estate prices have also stopped consumers from using their homes as an ATM which is another roadblock for a true recovery. That points out the cheap borrowing drug habit our economy has not yet kicked.

    Because of Fed Action, basic commodity, food and energy prices will continue to take a larger part of everyones paycheck, leaving less for the kind of spending the economy has been dependent on. Yet, prices on those other things don’t seem to be dropping. My wife and I won’t take the cruise this summer, since college and housing costs for our son keep going up. It’s all out of whack!

  2. Art Barnes

    Out here on the Western Front gas prices have hurt many people who are working at low paying jobs, if working at all. Craigslist is full of people trying to trade or get out of their poor gas mileage vehicles in order to buy a hamburger instead of lunch out of a brown bag. Here in the West, with its empty strip malls, closed gas stations, empty foreclosed homes, etc. the so-called recovery looks more like a third world economy of Latin America. With flower and food vendors on 4 way stops, homeless with “need help” signs at almost every on-ramp things just don’t seem that rosy in real time. They can say what they want about the recovery but I wonder when was the last time they walked around here and took a survey, probably too busy rounding up prostitutes for the secret service to protect (notice I did not capitalize secret service).

    • Greg

      Art,
      Thank you for some real reporting from the West Coast.
      Greg

  3. M SMITH

    Greg, not only is this Nation’s Constitution under attack,Senator Barber Boxer D., has pushed a bill call MAP ‘Moving Ahead for Progress in the 21 st century. People should be well alarmed at what this bill does if passed. There comes a time to say no to these progressives & to relieved them from the job they hold & all the power with it. You can find more on it at http://www.armstrongeconomics.com/writings. This the 1 st time I have even heard of this bill, I wounder why? All the back room deals & lack of openess in DC has become SOP.
    Sorry for being off subject. I think this is just a piece of what we may see in the future as gov becomes more disperate to keep control.
    Thanks again.

    • Greg

      M. Smith,
      Thank you for the comment. Could you please post the exact link?
      Greg

  4. George Too

    Greg,
    I watched the link [Biderman] and another from 4/12 on Macroecomomics. Your previous story about what the media chose to report was less telling than what they ignored. This is another example of the MSM pushing Obama’s [they pushed Bush’s, too] propaganda. Dr. Paul Joseph Goebbels would be proud.
    Thanks for reporting import news and the thoughtful debate on some issues that are not in view of the public due to the lack of reporting in the MSM. I do not always agree but your stories are all eye opening.

    • Greg

      Thank you George Too.
      Greg

  5. Mitch Bupp

    Fake money; fake profits; and fake numbers is the only reason why the MSM exists … Corporate MSM only exists to manipulate; propagandize and blind thier status quo!

    • Greg

      Mitch Bupp,
      Amen to that brother.
      Greg

  6. ONTIME

    The desperation of this fraud administration would be laughable if it were not such a serious admission of failure and a testament to why the use of communism in any form will evoke failure, it has no history of success, no expectations of making mankind better and likes to exploit class warfare in order to make chaos advantageous to the elite.
    It is truly unfortunate, that we as Americans have let down our guard, now we have to use our knowledge of this Constitution to put this nation’s ship of state back in sailing order, we are required by our founders to maintain and repair by the tools we have this nations way of life as a Constitutional Republic. Elitism has poisoned the well and incumbency needs to be termed, it has stolen our representation, progressivism is a anchor that drags bottom and strains our sails efforts to move us into better waters. Time to Re-Pare this government and look to the future…

  7. Herman Gerbils

    All hail the dead cat bounce! CNBC, MSNBC, the Fox Channel Saturday business shows, all jokes…..no, worse than jokes. Liars, shills and propagandists for people who do not have our best interests at heart.

  8. Vess

    I don’t think that there will be QE3. It’s politically problematic. Most likely, Helicopter Ben will find some other, sneakier way to pour fake money into the economy.

    • Greg

      Vess,
      Lots of other experts say QE3 is a lock but who knows you may be correct. Thank you for weighing in my friend!
      Greg

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