House prices crashing. Gas prices exploding. Now interest rates surging:

30-year fixed mortgage average at 11-week high

I don't think US consumers can handle anymore economic fixes from Ben "Special Needs" Bernanke.

Does anyone think that the rise in 10 year treasuries is due to the fact that THE FED uses them to swap mortgage backed securities thus making them more risky?

Could be part that and rising inflation fears.

But it also looks to me like every time the yen sells of the 10 year rate jumps.

So maybe the bond market is pricing in renewed bubble fears.

Entirely appropriate IMO.

The bubbles must end or we have no economic future.

Not good on oil/gas inventories. Big drawdown.

We're headed back to $135.

How did everyone like them GDP numbers? Weren't expecting that were you? Suck it echo chamber!

You can basically calculate the revisions ahead of time based on revisions to economic data over the past few weeks.

The numbers came in at 0.9% as expected.

Please don't feed the troll.

Tim said: "I didn't like them GDP numbers. It shows negative real growth when factored with inflation. I expected about 0.6%. the same as before. Consensus was about 1%."

No, Tim, the numbers quoted are for real GDP, with inflation already factored-in.

So quarter-over-quarter real GDP was +.9%, with Q1 2008 up by +2.53% over Q1 2007.

Sebastia

jg said: "See, ac, just listen to Seb. All is fine, all is well, think soothing thoughts..."

I'm just the messenger, not my fault if you don't like the message.

Here's the data, check it out for yourself.

http://bea.gov/national/xls/gdplev.xls

Sebastia

Do not want to hijack this thread with a divisive discussion. I read an article on Yahoo yesterday that tied Oklahoma's decline in unemplyment to its recently enacted and draconian immigration laws.

Overall employment and state GDP is down (fewer workers). Unemployment is also down. What is the right answer?

(OT) Robert said: "Robert writes:
Do not want to hijack this thread with a divisive discussion. I read an article on Yahoo yesterday that tied Oklahoma's decline in unemployment to its recently enacted and draconian immigration laws."

This link shows Oklahoma's employment data. Looks like the unemployment rate has been falling for a long time.

Bureau of Labor Statistics Data

Sebastia

Deflationary Jane says:

"We're ready to high tail it out of CA and Wash Univ is offering us a pretty package. We're looking at the anything withing a 5 to 10 min bike ride from the main campus. I prefer the Loop area."

Well, if you do it, good luck from UC Santa Cruz. I have never been to St. Louis, but I've heard from several that it's a pretty different cultural experience from California. Are you primed for the differences?

w writes:
Isn't Oklahoma in the middle of an oil and agriculture boom?
w | 05.29.08 - 11:36 am | #

Ag boom is sucking bodies like crazy - I was in NW MO last week & asked the person I was visiting what their county unemployment was... between 1-1.5%. Those are real numbers too - she said she has workers they draw in from a 50 plus mile radius - parts of four states (IA, KS, MO & NE).

Pay is way up too but still 'cheap' by coastal standards.

But I wouldn't read too much into this - we're still not talking a whole lotta people. Lotsa space, not lotsa bodies.

I don't suppose that anyone keeps figures on underemployment, or whatever you call it when skilled individuals fill low-level positions that don't require those skills. Under-utilization, whatever? There's a lot of that around right now.

At my university a lot of the recent hires are 'way overqualified for their (low-paying) positions, but 1) they can't find the steady work that meets those qualifications, and 2) the uni offers a benefits package that contract work doesn't.

Fortunately, being overqualified doesn't work against you at the uni. At the wages they pay, they expect high staff turnover.

It's not unreasonable to question whether 2.6% is a realistic deflator to apply to q1 gdp - you're talking about a calculation in which accelerating import inflation actually lowers the deflator.

(OT) deflationary jane said: "...The fact that I can buy a 2500 sqft 1990s house for less then a 2/1 800 sqft condo with 200 mo HOAs would cost me here sure isn't hurting. >; )"

You're welcome here in NC. Strong academic and research culture in the Triangle, McMansions available (with mature trees and close-in, not to- Hell-and-gone) for under $300k, and in great school districts.

S.

Bob & W,

I started as an AA 1 with a masters and 2 BAs. My husband started as AA 1 with MA from a top 10. You can advance but you'd be pretty smart and you won't be doing it fast or by just working 8-5 unless you know someone at the college level. There are still some AAs that have just a HS diploma but they tend to be older timers treading water until retirement. That should give you an idea of what it's like here.

UCD had a rash of REIC applicant last year. I had fun reviewing those apps that were sent to my dept. On average, the only job requirements they met were knowledge of standard office equipment and the ability to take a message.

That said, if you treat those early years as an internship, you will do well but certainly not by staying at UC. If I get the position in St. Louis, I'll finally be back to making my dot.com wages. I'd probably have to put another 10 to 12 yrs to get to that point if I remain here.

People think UC = CA state worker but it's not. It's a whole other world.

Evidence that the crisis is over:

1. Bond prices are on a continued path of DOWN. Yields are UP. This makes Stocks go up.
2. Gold, precious Metal, is dropping quite significantly, signalling lower fear in market.
3. Stock market has stabilized, (i.e. stopped trending lower) looks to be on verge of rebound soon.
4. Interest Rate market is now worried about inflation and betting Fed will increase by 0.25% by EOY.
5. Inflation is feeding into the economy, now companies with pricing power are increasing their prices. (See DOW's 20% increase). This is bad for common people for sure, but this is GREAT for investors and the stock market!
6. Emerging Markets are reducing/stopping their gas subsidies, so global consumption should stabilize in the near term.
7. Like it or not the revised Q1 GDP is positive, more positive than anyone expected. Revised is more reliable than initial figures, so it looks like we will not have negative GDP in 2008 now.

This is all very very positive. I'm beginning to think Sebastian's call is correct, that we'll avoid a recession in 08. At least for the stock market's/Corp profit point of view, we're looking like we're going to avoid it and go into another boom.

Now whether 09 ends up being the crisis year instead of 08 is another topic, but for 2008, seem to me Sebastian's call is on track.

Living standard aside, corporate profits (which is what matters) appears to be on the way up.

"People think UC = CA state worker but it's not. It's a whole other world."

Tell me about it. For equivalent jobs, UCSC pays significantly less than the community college down the road.

Don't forget, Asset loss and Profits are not the same.

I can lose 50K in my bank account -- that's asset loss.

If my future earnings increase by 50K a year, that's profits gain.

Stock market only look at Profits going forward, that's why (to the stock market) things are looking rosier than what the news say.

Lets see what can affect Profits going forward:

1. Inflation will cause absolute profit to go up, whether the actual "value" of the profit decrease or not is irrelevant. This is even truer for companies with Pricing Power, like DOW Chemicals, AG & OIL sector has shown.(This means if a company makes $1 today, and $2 tomorrow, it's 100% profit growth -- regardless of whether $2 tomorrow is greater than $1 today or not)
   Verdict: Market Up.
2. Oil went up 30%+ this year! Lets assume 0% growth in oil consumption, that means consumer is forced to pay 30% more on energy out of pocket -- whether they like it or not. This takes the wind out of deflationary forces simply because they're forced to spend more. (Depression/deflation results if consumer spends less and less in absolute terms -- oil is not allowing that to happen right now)

You can argue whether they're spending more (because they're tapped out) or simply borrowing more from credit to pay for OIL; but whatever the case, it's indisputable that this is UP for the market in the short term (until ALL the borrow source really ends)

1. Treasuries Yields are going up, which means inflation expectations are going up and people are DUMPING treasuries. Where do you think all that new money is going? Yup, into Stocks... Verdict: Market Up
2. No doubt financials are in trouble, but now that bear sterns bailout is a fact. The game has changed. The Fed has shown that it is willing to go down with the boat if necessary -- so now the only way we're going to be in a depression, is if the fed itself fails (non-zero chance, but still very far away). Every other central bank so far hasn't moved against the grain, so they're helping to inflate too. The game now is hyperinflation. Verdict: Market Up.
3. Job loss has been moderate so far. People are finding replacement jobs fast enough that there hasn't been a significant increase in unemployment rate. Verdict on Market: Not clear, but not negative on it's own.
4. Times are getting tougher, everyone spends more in OIL, FOOD, necessities. More and more people end up dipping into their 401K, savings. People are working overtime, but the extra income goes just to make ends meet. Verdict: More money spent - Up!

I think what this means is that in aggregate, consumer spending is forced up. Sales to optional items and "toys" will shrink, but that doesn't affect Market as long as overall numbers is going up.

i.e.

Previously, I feel rich (cause of housing bubble), I can HELOC or cash out refinance, so I spend:
$3000 on housing
$2000 of vacations/big screen tv / gadgets
$1000 on food/oil/necessities.

Now, I feel poor, whether I borrow or dip into savings or sell my assets, I still spend:
$2000 on housing, rental now.
$1000 on vacation/toys/gadgets
$3500 on food/oil/necessities.

End result? Economy grew by $500! Not a recession!

I'm not saying this is good for the future or for 2009, but for 2008, this is baked into the cake!

Because the population increases by about 1% a year, a 0.9% yoy increase in GDP represent zero growth in GDP per capita.

dryfly- "Just remember, rednecks are people too."

Yeah, rednecks are strange. If someone is lying in the middle of an interstate highway, they're the only ones who'll stop to find out what's going on.