A Little Bedtime Reading

…for those who like nightmares:

"America Is No Longer a Land of Opportunity" (Joseph Stiglitz, Financial Times op-ed)

US inequality is at its highest point for nearly a century. Those at the top – no matter how you slice it – are enjoying a larger share of the national pie; the number below the poverty level is growing. The gap between those with the median income and those at the top is growing, too. The US used to think of itself as a middle-class country – but this is no longer true.

"We Are Living in a ‘Modern-Day Depression’: David Rosenberg" (Yahoo! Finance)

While some, notably the cycle watchers at ECRI, believe the U.S. economy is definitely heading for another recession (or already there), Gluskin Sheff's chief economist and strategist David Rosenberg goes a big step further.

"We are living in a modern-day depression," he declares.

This dramatic statement is based on several factors, including the record number of Americans living on Food Stamps — 46 million or 1-in-7 in 2011. Because these benefits are now given in the form of electronic debit cards, we don't have bread lines like in the 1930s, but they are there in virtual form. And that's just the most obvious form of government support for its struggling citizenry.

"Government transfers to the personal sector now makes up nearly one-fifth of total household income," Rosenberg writes. "Even Lyndon Johnson, architect of the 'Great Society', would blush at that."

"SURVEY: The World's Top Executives Are Losing Faith In The Economy" (Business Insider)

McKinsey has just published the finding of its global survey of executives, and it shows a startling downturn in sentiment about the direction of the economy.

Back in March, 45 percent of respondents expected the economy to improve moderately over 6 months. Now, that number is down to 19 percent.  The number that expect it to do moderately worse is up to 42 percent.

"Enter, the Blindside Recession" (Hussman Funds Weekly Market Comment)

In recent months, our measures of leading economic pressures have indicated the likelihood of an oncoming U.S. recession. Our view is based on the analysis of leading/coincident/lagging indicators (see Leading Indicators and the Risk of a Blindside Recession) as well as more statistical signal processing methods that extract "unobserved components" from noisy data (see the note on extracting economic signals in Do I Feel Lucky?). As Lakshman Achuthan at the ECRI has noted on the basis of different but related evidence, the verdict has been in for a while. The interim has been little more than waiting for the coincident data to catch up to the leading evidence that is already in place.

This wait is by no means over. As Achuthan has observed, economic data such as GDP and employment data are heavily revised over time. Very often, the first real-time negative GDP print occurs about two quarters after the recession actually begins. It is only later that the data are revised to show an earlier downturn. For that reason, it's important to pay attention to the joint action of numerous economic data points, rather than selecting any specific indicator as an "acid test." The joint evidence suggests that the U.S. economy has entered a recession that will later be marked as having started here and now.

"A Nation Too Scared to Quit" (New York Post)

More than 1 million fewer Americans a month are quitting their jobs than before the recession.

Quits aren’t supposed to be falling during a recovery. During a recession, sure: With poor prospects of landing a good new job quickly, people hesitate to voluntarily leave.

But the opposite is supposed to happen in a recovery: People sense opportunity, and they chase it. (The rebound is especially strong after longer recessions, as people who’ve been putting off quitting finally decide it’s safe to bite the bullet.)

Yet now we have a “recovery” where Americans have grown even more fearful about quitting their jobs.

Nighty night…

(Image: source)