

Economic Recovery - Slight, but significant - Logic-Shop
http://money.cnn.com/2009/03/02/news/economy/personal_spending_income/?postversion=2009030211

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izyboyd
Related article:

"In the meanwhile the adjustment of US consumption and savings is continuing.
The January personal spending numbers were up for one month (a temporary fluke
driven by transient factors) and personal savings were up to 5%. But that
increase in savings is only illusory. There is a difference between the
national income account (NIA) definition of household savings (disposable
income minus consumption spending) and the economic definitions of savings as
the change in wealth/net worth: savings as the change in wealth is equal to
the NIA definition of savings plus capital gains/losses on the value of
existing wealth (financial assets and real assets such as housing wealth). In
the years when stock markets and home values were going up the apologists for
the sharp rise in consumption and measured fall in savings were arguing that
the measured savings were distorted downward by failing to account for the
change in net worth due to the rise in home prices and the stock markets.

But now with stock prices down over 50% from peak and home prices down 25%
from peak (and still to fall another 20%) the destruction of household net
worth has become dramatic. Thus, correcting for the fall in net worth personal
savings are not 5% - as the official NIA definition suggests – but rather
sharply negative. In other terms given the massive destruction of household
wealth/net worth since 2006-2007 the NIA measure of savings will have to
increase much more sharply than has currently occurred to restore the severely
damaged balance sheet of the households. Thus, the contraction of real
consumption will have to continue for years to come before the adjustment is
completed."

Nouriel Roubini, Professor of economics at the New York University Stern
School of Business, "The Rising Risks of a Global L-Shaped Near Depression and
Stag-Deflation", Mar 2, 2009, [http://www.rgemonitor.com/roubini-
monitor/255816/the_rising_...](http://www.rgemonitor.com/roubini-
monitor/255816/the_rising_risks_of_a_global_l-shaped_near_depression_and_stag-
deflation)

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m0nty
Slightly increased spending does not equal an economic recovery: "economists
expect consumer spending to remain weak in the months ahead as the economy
continues to deteriorate."

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gasull
_CPI-adjusted_ Dow Jones Industrial Average predictions:

<http://itulip.com/forums/showthread.php?p=80503#post80503>

iTulip has been very successful in its forecasts so far:

<http://www.itulip.com/forums/showthread.php?p=39099#poststop>

