by Ms. Meacham: Money Maven
Member since:
December 14, 2005

The Bottom Line EXTRA: Economist says we're not at the bottom, yet...

December 19, 2008 05:30 PM UTC (Updated: February 27, 2009 04:22 PM UTC)
views: 0 | comments: 25

Kirby Daley, senior strategist at Newedge Group does not believe the U.S. markets have clocked in at the bottom. Here he tells CNBC how to identify the bottom in the equity markets and the economy.

Daley's bottom line: Recovery hinges on consumer spending. Look for the bottom of the economy to come six months after an uptick in consumer spending.

Note that Daley says to check the federal flow of funds report for an "uptick in the annual rate of change of the aggregate net worth of the consumer." You'll find the raw, annual numbers on the Federal Reserve's B.100 Balance Sheet of Households and Nonprofit Organizations, page 102, line 42. The net worth category hasn't been this low since 2003.

Meanwhile, the U.S. Department of Commerce's Bureau of Economic Analysis tabulates consumer spending's ups and downs. (Here's its report for October: http://www.bea.gov/newsreleases/national/pi/pinewsrelease.htm.) If you're following Daley's input, then it looks like the economy should rebound after six months of positive numbers in the "Personal consumption expenditures" category. Note that that category hasn't been in the positive since June.

Just f.y.i....

Comments: 25

Chris Wiegard Dec 19, 2008, 5:55pm UTC
Merry Christmas to you too, money maven. Things are tough and not yet ready to get better, agreed.
Christine Zibas Dec 19, 2008, 5:59pm UTC
I feel like we are in a downward spiral right now, until something causes the brakes to be put on the economy. As long as people are losing jobs, losing confidence in the markets and financial institutions, and afraid to make long-term commitments (like buying a house or new car), the downward trend will continue.

I think it's going to take the Obama Administration's infusion of cash into the infrastructure of this country to put a halt to this trend. Just my two cents.
Ms. Meacham: Money Maven Dec 19, 2008, 6:10pm UTC
I know that my spending is down the Christmas Chris. So although I'm contributing to the general decline in consumer spending, I'm feeling great about capitalizing on sales and getting the shopping done with minimal impact on my bottom line. That considered, it will indeed be a merry Christmas for me. ; )
Ms. Meacham: Money Maven Dec 19, 2008, 6:12pm UTC
Christine, surprisingly there was an uptick in car loans this past month. I haven't looked into the numbers, which could be caused by a) car refinancing (a good thing to secure when interest rates are down, which they are, but a bad thing if it's being done to merely cover short-term expenses) or, as the news reports imply, b) new car purchases (there are indeed some deals out there, including free lifetime dealer maintenance).
Dorothy H. Dec 19, 2008, 6:42pm UTC
Lifetime dealer maintainence sounds good, only if the dealer is still around a year fromnow.
Connie C. Dec 19, 2008, 6:50pm UTC
I am really concerned about the economy and all thoes who are already affected by it. I know it will get worse but taht too scares me to death. I have had many friends already loose their jobs. I just hope we can hold onto our home. We stil owe a lot on it. If it were paid for I woud not worry.

I just read your comment and I know there has been a lot of car sales in our area because of all the great deals out now.
Connie C. Dec 19, 2008, 6:51pm UTC
Dorothy,
My husband and I was just chatting about that very thing the other day. It does seem very risky at this point
Connie C. Dec 19, 2008, 6:52pm UTC
Ms. Meacham,
I do not know how I have been missing your posts lately. I will have to catch up on this later tonight.
Dan V. Dec 19, 2008, 6:53pm UTC
Now that's scary knowing it hasn't hit bottom yet..I've been lucky in my occupation, but know many are hurting out there
Roy ☯ Hilbinger Dec 19, 2008, 7:00pm UTC
Jennifer, that jibes with what the economists here in RI are saying about the local economy. Our unemployment rate is at 9.3%, and they expect it to go over 10% before the economy starts to recover, which they say won't happen until 2011. I know I've been unemployed since January (thank Charles unemployment benefits keep getting extended every time the rate goes up again!), and looking for a job here is an exercise in futility - the job listings, even on Craig's List, are virtually empty.
Carrieanne L. Dec 19, 2008, 7:37pm UTC
Thanks for posting this! It is scarry to know that we have not hit the bottom yet.
Nancy 67 Dec 19, 2008, 8:00pm UTC
Scary stuff, this!!! Be Afraid Smiley
Busy Buzzy Bee 'Gather Proud Mamarazzi' Dec 19, 2008, 8:02pm UTC
really!
Debra H. Dec 20, 2008, 3:51am UTC
Keep the faith and keep looking up, we aren't ready to bottom out yet!
☃ Shannon K. Wendt Dec 20, 2008, 8:46am UTC
Ali Velshi (I believe), one of CNN's analysts, was discussing ways to help GM "recover" after they get their loan: people need to buy cars!

Well, that's nice. And how, pray tell, are we to pay for them? If people had money to be buying cars, wouldn't they have been doing it all along? And GM supposedly wouldn't be in this mess?
You're right Ms. Meacham, it is going to get worse. So many people are already affected, and there will be more. Actually, I think 'everyone' will be affected, just to different degrees. My heart breaks for those already put into a bad situation through no fault of their own. Knowing it's going to get worse breaks my heart and depresses me. I know my family and I are going to see hard times, but I think we are in a unique position, that we won't hurt as much as many others, and for this I'm very grateful and thankful.
But honestly? I don't see this getting better till maybe, 2010, and then it will be a slow process. It may not be a years lasting depression like the Great one, but it will be very hard.
Heather M. Dec 20, 2008, 5:55pm UTC
Yes, things still have a ways to go in this downward spiral. By the time we hit the true bottom, there will be very few people who have gone unscathed.
donna h. Dec 23, 2008, 10:34pm UTC
I just bought a Ford..we tried to help the economy!
Jane C. Dec 24, 2008, 11:58pm UTC
wow
David C. Dec 27, 2008, 6:52am UTC
Yes, this is similar to what I've been hearing. Our planning at my organization has been looking at this lasting potentially 2 years or so.
Janell R. Dec 28, 2008, 2:45am UTC
I think we have a ways to go.
Selene N. Jan 18, 2009, 5:16am UTC
Oh yeah.
Beth J. Feb 23, 2009, 10:53pm UTC
Thanks for sharing
Lou Anne L. Feb 23, 2009, 11:09pm UTC
Yeah, I dropped a rock down the old economy well and it still hasnt hit bottom!
Ms. Meacham: Money Maven Feb 24, 2009, 3:28pm UTC
lol Lou Anne. Thank you everyone for keeping the conversation going!

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