March 2001: 95% of Forecasters Predicted No Recession....Too Bad the Recession Had Already Started Then... Nouriel Roubini | Sep 08, 2006 These days I get asked daily in interviews and talks: "How do you explain that the market consensus is still so far from your recession call for 2007? Why does almost everyone on Wall Street believe that there will be no recession? What do you know that they do not?" Actually I do not know anything that they do not; we use the same public information and, of course, I have no inside information. My explanation of the consensus view about a "soft landing" is that there is a massive and systematic bias in forecasting recessions. Take the following telling example: in March 2001 in a survey 95% of US economic forecasters predicted that there would not be a recession in 2001; 95% of them! Too bad that the recession had already started exactly in March of that year!. So, even as late as March of 2001 when it was totally obvious that the economy was spinning into a recession 96% of all forecasters were still living in the delusional dream that the US would avoid a recession. This even after the tech and investment bubble had totally busted in 2000; even after the 2000 Chrismas sales were a disaster and growth was already crawling down to zero by the end of 2000; this even after the Fed went into a panic mode on January 2nd 2001 and cut the Fed Funds rate in between FOMC meetings because of the collapse of Chrismas sales and the collapse of the NASDAQ that day was clearly signaling a coming recession. There was systematic delusional bullish bias among forecasters, among investors and in the Fed.
It's stuff like this that places Roubini's cred at risk. Roubini writes, "in March 2001 in a survey 95% of US economic forecasters predicted that there would not be a recession in 2001". Huh? Who are these phantom "95%"? Without footnotes or a specific survey NAMING some economists who were on the record, how do we KNOW if Roubini's assertion is legit. Certainly the Fed was concerned about a slowdown. They began cutting rates in January (I'm sure many remember the mid session out of the blue surprise on January 2nd, 2001. NQ rallied 500 points in minutes!!!) So I for one doubt Roubini's claims of 95%.
If we are in a recession with 4.6% unemployment rate (and that is not counting the hundreds of thousands if not millions of emigres paid in cash that go uncounted as employed), then we need a new definition of recession. If anything, this is an (core) inflationary environment, in which case it would be called stagflation. I honestly don't see signs of a business recession yet, although by gawd the consumer is slowing down hard in not buying big ticket items like a house, car, vacations, etc. They are still going into debt buying "crap" (small ticket items like computer, crocs, cell phone, clothes, etc) though... nitro
The real unemployment is much higher. The unemployment rate calculation is so flawed and biased that I am amazed that institutions still look at it. If you are unemployed for more than 6 months, you are no longer part of the labor pool. With this methodoligy, even during the Great Depression you would have low unemployment. There are constant layoff articles and news about BIG corporates closing down offices, production facilities or undergoing cost cutting. The truth is that real employment has been on a steady decrease since 2000. BUT, thanks to the ever ongoing wonders of our financial system, the Real Estate bubble has created a lot of self-employment sales & speculator jobs, which always create a few support function jobs. This is on top of the Working From Home scams. The employment picture is this country is entering what I personally believe is the last stage before a total financial, moral & civil collapse. Real production, manufacturing, and a lot of the tech work is being outsourced (along with the actual assets) while the notion of trading, flipping, commission sales, speculating is what is going to replace it. To quote Frank Sobotka from "The Wire" for the second time. "We used to make sh*t in this country, build sh*t. Now we just reach into the next man's pocket". The idea of going out there for a hard days work and then being able to show a REAL PHYSICAL product that has intrinsic value is just not there anymore. It's all about grabbing a few dollars from someone else. Sh*t, the startups nowdays don't even bother doing any real work on their products, they spend their time raising money and shuffling it around. Actually doing something productive? Yeah right, that's not the American way. Recession? Not a blatant one and certainly not in the official statements & statistics. While meaningful jobs are scarce, there is an overabundance of trading, sales, RE positions that are commission based. You know, "Service based economy".
dude while u were talking 2 guys whipped up a new internet service and sold it for $1.6bio to google... just like that... sounds pretty productive to me!
Dude, you are a perfect example of the sycophant mentality that this country has glorified. Getting paid at the expense of shareholder dilution and calling it productive. The next step question is which pocket to reach into now.
Google paid for Youtube with google stock, they paid 1.65 Billion. Google stock jumped from around 397 to 432++++ a $9 Billion +++ dollar increase in market CAP.