The first batch of recessionary data has been released. The housing bust was converted into a recession sometime in the 31 days of August that divide July and September.
A change of -4,000 jobs was reported for August, the first time since August 2003. That was severely worse than expected. The lowest forecast was a gain of 35,000. July was revised downward from 92,000 to just 68,000.
To be perfectly frank, this is getting more and more frightening, and few things can boast their ability to frighten me. As human beings usually work out their psychology, they don't know what they fear and they don't expect the worse to happen until it is finally rendered in their mind, and they suddenly become a witness to it. No, a recession isn't the end of life as we know it, but this is pretty surprising and in a very bad way. And a bad recession can turn into a depression, which is obviously a far bigger deal, but I presume this case will not happen.
As I was reading about a meeting at Jackson Hole, which included Fed Chief Ben Bernanke and a host of economists, yes, that one human emotion (fear) just jetted up my spine and literally jarred my head forward. What surprised me the most about this article was... the pessimism. I won't feign my own feelings of pessimism (I hate using that word) on this matter, but I have generally made the attempt to relax it some, simply bringing forth the data and other developments, sorting it all out before making a conclusion. As it turns out, it is not possible to prove a negative, such as "nobody was optimistic." Let me be clear in saying that I have been very critical of overoptimism (what I think of as naive complacency), though the reason I am mentioning this is because, quite simply, I am just surprised. But I'll assume the perceptions of those who attended that meeting this past weekend were accurate. This particular quote ambushed my senses:
"There are no optimists in the crowd here," said Ethan Harris, chief U.S. economist at Lehman Brothers Holdings Inc. in New York and a former head of domestic research at the New York Fed. "There's a pretty strong consensus that this has gotten a lot more serious."
A pretty strong, did I just hear this, consensus? As it is clear to the reader, there are quotes after quotes of concern. Economist Martin Feldstein of Harvard University seemed borderline frantic with his remark of a "very serious downturn." I can't help but to think that simply assigning the mindset of all those people as "sensational" or "alarmist" does not suffice, especially given the resilience that economists have to negativity. So, as I am venturing this article, it becomes clear that there is yet another leg to go.
Says Bernanke:
global financial losses have far exceeded even the most pessimistic projections of credit losses on those loans
I think he's right. It's time to get on the ball, because a recession is here.
UPDATE: 10 a.m.
Anatomy of the 2007 Recession (August) -- How some of the major sectors faired......
Manufacturing: -46,000
Government: -28,000'
Construction: -22,000
Information Technology: -7,000
Financials: 0
Professional: +6,000
Retail: +12,500
UPDATE: 10:30 a.m.
OK, I looked through the BLS data some more, and it turns now the downward revisions in job growth were worse than originally announced.
June's numbers were revised down from +126,000 to +69,000
July, from +92,000 to +68,000
And of course August's numbers said -4,000.
The sharp deceleration in job growth is quite telling. This is a very clear trend, but I wouldn't doubt that the bulls on CNBC will brush this off as an anomaly.