Almost everywhere I look in the mainstream financial media, I see story after story celebrating the end of the worst U.S. recession since the 1930's AND start of an all-out recovery to a brighter, smarter-for-the-pain bull market. "The grimmest days are now behind us," begins a November 5 BBC report. "All that talk of a return to the thirties now seems fanciful."
Yet let's take a look at some of the actual data. At the very BASIC level, these comparisons between late 2007 and today are quite eye-opening:
2007: 2009:
Unemployment rate: 4.6% Unemployment rate: 10.2%
Fed's Lending Rate: 5.25% Fed's Lending Rate: 0%
Year-over-Year Bank Credit: + 10% Year-over-Year Bank Credit: - 6.8%
Consumer Spending: + 2% pace Consumer Spending: .5% decline in September
ISM Service Sector Index: 55.8 (Sept.) ISM Service Sector Index: 51.5 (Sept.)
U.S. retail sales report strong growth U.S. retail sales: 1.5% decline in Sept.
Year-to-date auto sales: 3% decline Auto sales: 10.4% decline in Sept.
Federal Bailout Balance: $0 Bailout Balance: $13 Trillion, and counting
(P.S. On August 31, 2007, Federal Reserve Chairman Ben Bernanke explained: "It's not the responsibility of the Federal Reserve -- nor would it be appropriate -- to protect lenders and investors from consequences of their financial decisions.")
GDP growth in third quarter: 4.9% GDP growth in third quarter: 3.2%
By many measures, the economic conditions today are either at, or well BENEATH the levels of 2007 -- not to mention the fact that industrial production is at its worst decade since 1930-9, total manufacturing employment is at a 60-year low, real overall joblessness in 2009 is 17.5% (highest on record), and the once "invincible" commercial real estate sector has hit the skids.
YET -- as the November 2009 Elliott Wave Financial Forecast reveals, the total U.S. trading volume is HIGHER today than in 2007 -- when fundamental economic conditions were actually better. Here, our analysts provide the following close-up:
In the end, there is one reality: "Finance anchors the economy now; which makes it far more susceptible to non-rational dynamics," as the November EWFF puts it.This is in no way like the boom times of the 1960's (as illustrated on the chart above) -- when industrial growth reflected social mood's solidly bullish bias.
And, as the November Elliott Wave Financial Forecast warns: "The financial system is not bound by laws of supply and demand in the same way as industrial economies. In finance, fear and confidence rule decisions." When those emotions turn, so does the entire order.