Evidence of a Double Dip RecessionJune 2010
Daryl MontgomeryJune 24, 2010
Copyright 2010, All Rights Reserved
The contents of this presentation are not intended as a recommendation to buy or sell any security.
Fiscal State of U.S.
• National Debt: $13.10 trillionUnfunded liabilities $109 trillionState and Local Debt $3.05 trillion.
• 2010 Budget Deficit $1.6 trillion. The U.S. GDP will NOT increase by this amount in 2010.
• GDP is 14.4 trillion (very overstated)• GDP grew 5.6% (2/3rd less inventory loss) • GDP grew 3.0% in Q1 (1/2 inventory gain)• The FDIC has taken over 83 banks in 2010.
There are 702 troubled banks.
Federal Deficit
Total Federal Outlays: 1900-2010
Bank Failures Last 3 Years
Employment Picture
• Unemployment rate for May was 9.7%
• Alternative figure is 16.6%
• Up to 1.2 million Census workers will disappear mostly in July and August.
• Reports of Census workers being hired and fired multiple times.
• Workers ‘leaving’ work force has kept rate down.
• Birth/death model and seasonal adjustments.
Weekly Census Employment
Employment Before and After Recessions
Long-Term Unemployment 1965-2010
Weekly Claims
Housing Market Not Recovering
• May New Home Sales dropped 33% to record low 300,000
• May Existing Home Sales dropped 2.2% to 5.66 million annual rate. Inventory on market almost 4 million.
• Housing Starts down 10% in May.
• Permits down 5.9% in May after 10% drop in April.
• Fed tax credit was holding market up.
New Home Sales
Existing Home Sales
Leading Indicators Signal Recession
• ECRI weekly leading indicators peaked in November 2009 and have been heading down since then.
• Have fallen below zero. Were -5.7% last week.
• Copper, the most economically sensitive indicator is on a sell signal.
• EU cutting spending and raising taxes. Will be a drag on world economy.
ECRI Weekly Indicators
ECRI Weekly Indicators
ECRI Weekly Indicators
Government Financed Demand 1930s vs 2000s
Commercial Bank Loans: 1974-2010 % Change From Previous Year
Copper ETF JJC Six-Months Daily