David Rosenberg Part 1: "Why The Depression Is Ongoing"You will have to click through to see the graphs. And don't miss the first comment and the link to a truly scary graph, by Mako:
There are classic signs indeed that the recession in the U.S. ended last summer — output, sales, etc. But the depression is ongoing and the reason we say that is because real personal income, excluding handouts from the government, has barely budged. In fact, real organic personal income is nearly $500 billion lower now than it was at the peak 16 months ago and this has never occurred before coming out of any technical recession. It is a depression, as the chart below attests — that is the trendline for real household incomes, until the government comes in to top them off with handouts, subsidies and extended jobless benefits. The share of U.S. personal income being derived from Uncle Sam’s generosity has risen above 18% for the first time ever.
Real consumer spending is up $200 billion over the past 16 months and everyone believes we have a sustainable recovery even though organic income is down almost $500 billion. Think about that for a second because once the stimulus wears off, and with a 10% deficit-to-GDP ratio and concerns surfacing everywhere about sovereign credit risks, there is little out there to support future growth in consumption.
Keep in mind that even with the ‘cash for appliances’ program, almost 80% of chain stores missed their sales targets last month; and the new normal in the aftermath of the ‘cash for clunkers’ program seems to be around 11 million units at an annual rate on auto sales at a time when replacement demand should be closer to 12 million. Moreover, once the foreclosure moratoria is over, and the government no longer tries to play around with market forces and allow for price discovery, home values are back on a downward track, now evident in all the data series. There is no denying, after looking at the latest Census data, that there is an excess of five million vacant housing units across the U.S. acting as a continued dead-weight drag on house prices.
You haven't seen a depression yet, the entertainment is just starting. Wake me up in 40 years and I will take a peak as to how far along all you guys are in the liquidation process.
Won't be a 18-25 year process like last time. Figure a generation or two this time.
The chart is a few years old, you are just starting the roll over portion.