Today, the Commerce Department released updated January manufacturing and trade inventories and sales data: down 14% year on year. This is pretty much the economy: one trillion dollars in business for January. It would appear that in situ construction value is excluded, though building materials are included.
The numbers are a bit below December 2008 numbers. In turn, December 2008 numbers were 12% below those of December 2007, so the January comparisons show year-on-year deterioration.
(For stock investors, acceleration to the downside in sales and earnings comparisons for a company is a SELL sign. (It is only not a sell sign if there is a special factor, such as having so much cash in the bank, or other good assets, that the whole company is fundamentally seriously undervalued in the market's valuation.))
These data do not include inflation or deflation. Considering that except for housing, there was some net inflation between Jan. 2008 and Jan. 2009, and given the Depression housing is suffering, one has to assume that the economy contracted more than 15% year on year.
Given that there was no plague on the land or literal bombs falling to prevent business from being done, economic activity has plunged. Dr. Strauss-Kahn of the IMF regretted his use of the "D" word. Yet business depressions were what "recessions" used to be called; after the "Great" depression of the early 1930s, that term was mothballed in what has been till now a successful public relations effort.
In the Gerald Ford administration, the chairman of the Council of Economic Advisers, Herb Stein, was admonished that the boss did not like him to talk about a recession. So Dr. Stein suggested that he would henceforth use the term "banana" to mean recession.
We can forget about the bazooka that Hank Paulson boasted was in his pocket.
What we're going through is one big banana.
Although Mae West would not be impressed.
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