What is the state of the economy? It seems each day brings us a new
set of "signs", and a new set of prognosticators telling us how close,
far, or indeterminate our situation is from recovery.
Take for example two reports, one from the Wall Street Journal and one
from CapLease, both published only days apart in July.
1. CapLease cites employment data and states: "After 18 months of
economic decline, we are seeing signs that the deepest recession in a
century may be close to hitting bottom and the economy gradually
recovering. The Labor Department reported that 345, 000 jobs were lost
in May – well below the 650,000 average monthly job loss in the first
quarter and the 504,000 loss in April."
2. Now compare this to the Wall Street Journal story, subtlety
titled "The Economy is Even Worse than You Think"
"The Bureau of Labor Statistics preliminary estimate for job
losses for June is 467,000, which means 7.2 million people have lost
their jobs since the start of the recession. The cumulative job losses
over the last six months have been greater than for any other half
year period since World War II, including the military demobilization
after the war. The job losses are also now equal to the net job gains
over the previous nine years, making this the only recession since the
Great Depression to wipe out all job growth from the previous
Here we have two reports using relatively the same numbers, with both
coming to wildly different outlooks of both the present and future.
This is not to fault the process it just demonstrates how differently
the filtering mechanisms of disparate brains can sort things out.
· Home prices dropped 7% in the first quarter of 2009, while
home sales saw an increase in March and April - 45% of home sales this
year were distressed properties sold in foreclosure auctions.
· Since their peak in 2006, home prices have fallen 32% and
now match their 2002 levels.
· It is estimated that housing is 18-20% below fair value at
today's prices; three years ago it was estimated to be overvalued by
· 5.4 million out of 45 million homes in the U.S. (12%) are
either delinquent or in foreclosure, with the number continuing to
· By February 2009 the number of prime mortgages delinquent
for at least 90 days, in foreclosure, or turned over to a lender was
at 1.5 million, totaling over $224 billion in loans.
· The Consumer Confidence Index hit 54 in May, it's highest
point since last September and up from 40.9 in April. This constituted
the greatest gain since April 2003. A Reading of 90 is considered
· Between March and April, personal after tax income rose by
$131.5 billion (1.1%). $121.8 billion of the increase resulted from
reduced taxes and increased unemployment benefits. $44 billion could
be traced back to stimulus programs.
· Consumer spending declined 0.01% in April, as consumers
saved 5.7% of their after tax income.. In March they saved 4.5% and
one year ago they saved 0%. Consumer Spending is estimated to make
up nearly 70% of GDP..
· Mortgage debt now accounts for 70% of GDP, in the 1990's it
averaged about 46%. Household debt is at 96% of GDP, it was less than
50% in the 1980's.
· Total industrial production saw an annualized decrease of
20% in the first quarter of 2009. This continues a trend of four
periods of harsh declines.
· Commercial paper volume is at $1.5 trillion. Companies sold
$55 billion of stock between January and May, making that the busiest
period since 2000.
· It is estimated that 60% of CMBS loans made between 2005 and
2007 will not qualify for refinancing at maturity.
· Unemployment is at 9.4%.
Linda Shea/ Managing Partner
"We Bring Experience to the Meeting"
CFO Capital Partners
Main Office: 437 FoxTract Rd., 1st Floor, Bridgeport, NY 13030
Direct Line: 315.307.8594 * Office: 315.633.9653 * Efax: 775.248.6603
Linda@CFOCapitalPartners.com * www.CFOCapitalPartners..com
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