Full Version: Recession Ahead?

From: Harvey only (HARVEY-ONLY) [#1]
 11 Aug 2005
To: ALL

Observing the economy lately gives this indication.

First retail sales include the sales of gasoline, home heating oil, and electricity.

With oil hitting an all time high of over $60/barrel today, and a few barometers down a bit, the retail sales index still rose less than expected.

Money spent on oil products is diverted from other products. Clothing sales have been going up, also a bad indicator. (Clothing becomes a good gift when money is tight.)

Anything that depends at all by oil is on the rise, understandably. Think about shipping costs as a minor indication of that.

So it seems that prices will go up, and money will be diverted to survival products, clothing, food, fuel & electricity. A really bad combination.

I hope that some people here can counter this argument with good facts and thinking, because I sorely hope to be wrong.


From: Engravin' Dave (DATAKES) [#2]
 11 Aug 2005
To: Harvey only (HARVEY-ONLY) [#1] 12 Aug 2005

Harvey,

Market your products and services to oil companies, who seem to be doing quite well these days, reporting record profits these days.


From: Mark [#3]
 11 Aug 2005
To: Engravin' Dave (DATAKES) [#2] 12 Aug 2005

Can we all say, "Thank you George Dubya"

From: Dee (DEENA-ONLY) [#4]
 11 Aug 2005
To: Mark [#3] 11 Aug 2005

Ah, a man who thinks as I do.

Dee


From: UncleSteve [#5]
 11 Aug 2005
To: Dee (DEENA-ONLY) [#4] 12 Aug 2005

"When you go to San Francisco, be sure to wear a flower in your hair"......

From: RALLYGUY (RALLYGUY1) [#6]
 12 Aug 2005
To: Harvey only (HARVEY-ONLY) [#1] 12 Aug 2005

Hi Harvey,

Let me see if I can help.....


Housing has continued to boom even though many have been worried about the bubble bursting...it hasn't. Sales are rising to 8.05 million. Retail sales growth is expected to rise to 5.5%. Inflation is dropping....According to Washington Kiplinger "July job numbers are stonger than expected. Jobs are up and continuing to rise due to employers economic optimism." They expect 2005 to be the biggest job gain year since 1999. An estimated gain of 2.3 million jobs. In My opinion, more jobs means more expendable income for both individuals and companies. Interest rates are going up meaning that the economy is doing well and they have to reel it in to keep inflation from becoming a problem.

I feel like the economy is holding it's own in spite of the high fuel prices which I honestly didn't expect when I realized we were in for high prices for the long haul....

Our business is based on sales to automotive hobbists. You would think that the fuel costs would stop them from their activities. Although our sales are off a bit, it's not off as bad as I would have expected, and our profits have actually improved.


Invest in refineries ;) 

Feeling any better?

EDITED: 12 Aug 2005 by RALLYGUY1


From: trophyman (MIKEBERGER) [#7]
 12 Aug 2005
To: Harvey only (HARVEY-ONLY) [#1] 12 Aug 2005

Harvey,

Unfortunately, I feel that you are RIGHT on TARGET. Our sales here have gone into the toilet. We are racing the deposits to the bank in order to cover the stock orders. The customers that we are getting can't or won't recognize that our cost are rising as are their living cost. We are currently at about 30% of what we grossed in 2003. In an effort to survive, I have let the stock on hand drop to an extremely low level and now just about any order we get needs to be ordered in. Yesterday, I spent more on gas than we took in. The FREE Delivery will most likely become a thing of the past, the same as the local pizza parlors have been forced to do.
The fact that I am looking at leaving my job in the education field at the end of the year also is beginning to scare me, this year I have been putting too much into trying to keep the 40 year old business going, thinking that I will finally be able to devote my full time to it.
We are seeing more and more of our customers taking 90 days and longer to pay for their purchases and complaining about the 2% finance charges, yet they have no problems paying 35% per month to the CASH STORES and TITLE LOAN companies. I have friends in the carnival industry and they are reporting that they are dying. Our rental equipment (cotton candy, snowkone, balloons, games, etc.) has only recieved 1 booking this season. Amost all of the factories have eliminated the employee picnics that we used do during the summer. Even the charity car show from last year did not see a repeat this summer, as they could not get the sponsors.

Mike

EDITED: 12 Aug 2005 by MIKEBERGER


From: UCONN Dave & Lynn too (DANDL48) [#8]
 12 Aug 2005
To: Dee (DEENA-ONLY) [#4] 12 Aug 2005

Dee,

Here too.

Dave


From: basehorawards [#9]
 12 Aug 2005
To: Mark [#3] 12 Aug 2005

You bet. If he had not given all of our customers a tax cut last year we would have lost even more sales and had even less money to spend ourselves. We could be in far worse shape than we are.
I do not know about the rest of you but I do not qualify as rich by very many standards but I got a tax cut and that money was a part of what I used to start this business.


From: UCONN Dave & Lynn too (DANDL48) [#10]
 12 Aug 2005
To: basehorawards [#9] 12 Aug 2005

James,

Rich is a relative term. On another forum I got into an argument with someone who made $400+K a year who claimed that his income didn't qualify him to be called rich. Poor guy couldn't make ends meet. I feel his pain!!


From: basehorawards [#11]
 12 Aug 2005
To: UCONN Dave & Lynn too (DANDL48) [#10] 12 Aug 2005

Dave,

In the last presidential election we were told that we were rich if as a family of 4 our income exeeded $60,000. I intrepret that from the retoric about the "tax cut for the rich" of which I got a fairly good sized piece. In fact if you look at the numbers, almost everyone - at least those who pay taxes - got a tax cut so we are all rich!

Now where did I park my Jag?


From: Harvey only (HARVEY-ONLY) [#12]
 12 Aug 2005
To: RALLYGUY (RALLYGUY1) [#6] 12 Aug 2005

I really appreciate your thoughtful reply, but will pick it apart, a little bit. This of course is from my perspective.

quote:
Housing has continued to boom even though many have been worried about the bubble bursting...it hasn't. Sales are rising to 8.05 million. Retail sales growth is expected to rise to 5.5%. Inflation is dropping....According to Washington Kiplinger "July job numbers are stonger than expected. Jobs are up and continuing to rise due to employers economic optimism." They expect 2005 to be the biggest job gain year since 1999. An estimated gain of 2.3 million jobs. In My opinion, more jobs means more expendable income for both individuals and companies. Interest rates are going up meaning that the economy is doing well and they have to reel it in to keep inflation from becoming a problem.


Housing sales=no viable counter argument.

Inflation is dropping=No one has the money to spend so prices have to be low. The middleman suffers the most.

Jobs are up=More people are looking for part time supplemental jobs at lower hourly wages.

Interest rates are going up=Thank the Federal Reserve Discount Rate, not growth. This bubble should burst soon.

General to the paragraph. Either someone trying to make people spend money to keep it going a bit longer, or someone who cannot see the forest for the trees.

quote:
Invest in refineries


If you have any money, excellent advice.

From: Cindy (CINDYM) [#13]
 12 Aug 2005
To: Harvey only (HARVEY-ONLY) [#1] 12 Aug 2005

Harvey - I don't think I can counter your argument.

Prices for goods are increasing at a faster pace than wages. Our insurance premiums for everything from business insurance, auto, home and health insurance has gone out of site. I am cancelling my health insurance ($350 a month on my husband's policy through his work) and changing to a Health Savings Plan with a high deductible in order to be able to continue some kind of coverage.

Yesterday, I paid $37.50 for a 1/4 tank of gas. Last year, in checking my record book, I paid $12.20 for the same amount. Our gas here in OR is amoung the highest in the nation, except for CA I believe. We're at $2.59 a gallon (today - tomorrow it will go up)in my area, $2.76 in the southern part of the state and $2.40 in the Portland area. Ouch.

I literally can't afford to buy a piece of property in my town to build a building - prices are through the roof and if you aren't a developer, you can't even find a piece of property to buy. Our town has the lowest rate of properties for sale and the prices are astounding. Completely out of reach for the average business owner. I've found government grants and loan programs slanted towards favoring the non-profit organizations, and was even told by a city rep that I would be at the bottom of a long list because I was a privately owned business and non-profits would get a $250,000.00 grant before I would. This I just could not understand, as don't I bring tax dollars to the table???

And although we are busy here at work, I am not hiring to replace a worker who is leaving. Like you, I expect the economy to tank here in the next year or so.

With all the brilliant people in our country, why can we not get back on track and get some of these problems figured out? Beyond the fact that a few are getting very rich off the backs of many, surely we can turn this around. Insurance reform needs to be at the top of the list, with alternative fuel sources for our cars a high second. Although many would like us to all ride bikes everywhere (highly promoted in my area), that's not going to happen 100%. People like the freedom of having their own car. And transporting large goods on a bike just doesn't work:) I'm not sure how I would transport a load of 8' wood fence posts on my bike and then ride 20 miles home from the farm store. And what about when winter comes - am I suppose to ride my bike in the slashing rain and wind too?

I wish I could figure out a way to do without all that is going skyhigh - insurance, drugs, gas - opt out of the whole situation. But that isn't realistic, so what alternatives are there out there?

Cindy M


From: RALLYGUY (RALLYGUY1) [#14]
 12 Aug 2005
To: Harvey only (HARVEY-ONLY) [#12] 12 Aug 2005

Harvey,

I think everyone has their own personal perspectives based on their own experiences. I think it's easy to get down on stuff, but I try to keep everything on an even keel.

I wonder when the last time you felt the economy was good was? The tech bubble was a real bubble that did burst. It wasn't sustainable. Was there ever a time that you really felt things were good, or is it that you are a glass half empty person when it comes to this type of topic?

The Fed's rate increases are a response to inflation dangers. If the economy is gaining too fast they bump the rate to cool it off. Your statement regarding what you think low Inflation does may be true, but the decisions by the Fed are based on the rate of economic growth, which means that people are spending money.

I don't know how you can specify where jobs are being lost or gained....Its funny how the people that say that the only jobs being gained are low tech jobs are the same people telling us that the high tech jobs are always the ones being lost when the reports are showing job losses. Everyone always tends to pad their own perspective I guess. Have you tried to hire lately? Hourly pay hasn't dropped around here at all.

I think your statement may be based on a negative viewpoint, instead of hard numbers. Most of the economic indicators over the last few months have been positive even with the high fuel costs. I consider that pretty awesome. Imagine if the fuel costs would be where they were in the past....the economy would be doing that much better. Don't blame forign oil for the problems. It's the refineries that are the bottleneck. There is far more than enough oil in the world, just not enough refineries.

The other side of that coin is that if someone is in a very profitable business, that money trickles down....meaning that if the refineries are having great times....that money gets taxed and spent just like you or I would if we were doing well. It means more jobs and flowing cash.



Brian G.

EDITED: 12 Aug 2005 by RALLYGUY1


From: Dee (DEENA-ONLY) [#15]
 12 Aug 2005
To: RALLYGUY (RALLYGUY1) [#14] 12 Aug 2005

Brian,
Have you noticed how many large corporations are laying off large numbers of well paid highly skilled workers? Where will these people find jobs? Large corporations may be posting profits but they are doing it with much less staff. There was an article in our local paper saying that donations to charities from corporations and people making over 100,000.00 are down 40% this year.

While I won't go into the political issues surrounding Iraq I do know that we can't afford to layout that kind of money for years to come and not see a ripple effect across the board.

Dee


From: Harvey only (HARVEY-ONLY) [#16]
 12 Aug 2005
To: RALLYGUY (RALLYGUY1) [#14] 12 Aug 2005

Good economic times, the 60's & 70's. A one worker family could afford a small house and still have some money left. You could actually have a savings account that grew. Taxes were far lower, Social Security taxes were far less than they are now. It was not used to balance the budget or pay for Medicaid.

I started engraving 20 years ago, Christmas sales have dropped dollar-wise about 10% a year, even with a much larger selection of products. I am talking about gross sales, not net. Rents have gone up greatly, in addition to all other costs.

As far as half full/empty. I get excited when sales go up 10% in a month over last year. Even though last year was stinko. But in the overall, I am a realist. I try to see what is really happening, rather than what I would like to be happening.

Refineries being the bottleneck is bogus when oil is $66 a barrel compared to what it used to be.

Trickle down theory is the dumbest theory that has been perpetrated on the public that I have ever heard. If there is more profit, it is skimmed by attempting to pay the least required to still produce. A little trickles down, the rest goes upward. Start it at the bottom and it is proved to trickle up.

EDITED: 12 Aug 2005 by HARVEY-ONLY


From: GBengraver [#17]
 12 Aug 2005
To: RALLYGUY (RALLYGUY1) [#14] 12 Aug 2005

The other side of that coin is that if someone is in a very profitable business, that money trickles down....meaning that if the refineries are having great times....that money gets taxed and spent just like you or I would if we were doing well. It means more jobs and flowing cash

Trickle down??????????
The rich and the oil companies do NOT pay what you and I pay in taxes (as a percentage of income).

The newly passed energy bill:
The bill provides $14.5 billion in tax breaks and potentially billions more in loan guarantees and other subsidies to big oil to encourage oil and gas drilling, improve natural gas and electric transmission lines, build new nuclear power reactors and expand renewable energy sources, especially construction of wind turbines.
Yet fuel costs continue to rise unchecked. Why do they need tax breaks?

These tax breaks are going the the oil companies that are recording record profits quarter after quarter.

Our deficits are at record levels (but our children and grand children will pay for them), I guess that doesn't count. And these deficits don't even include the cost of this crazy war we are in (a cost of roughly 9 billion a month) and thousands of lives with no end in sight.

We at the bottom of the trickle down group continue to bear the brunt of our country's leader making it sound like it is so great to allow the rich to pay little or no taxes.

Trickle down, what a joke.

From: Stunt Engraver (DGL) [#18]
 12 Aug 2005
To: RALLYGUY (RALLYGUY1) [#14] 12 Aug 2005

Brian,

Remembering The Best of Times, I was employed as an engraver, making $4.50 per hour. circa 1974.

Furnished Apartment - $125 Mo.

8 Bags of Groceries, (filled to the brim) = $40.

Gasoline = .38 per gallon.

A lot of buying power with none of the responsibilities of running a business. It was great!

I'm not a pessimist - I'm an eternal optimist - The glass isn't half-full, it's overflowing!

Even with that optimism on my side, I feel that something's going to give before long.

Of course, for those prepared, the best opportunities present themselves when there's blood in the streets.

Not many people I know are prepared.

From: basehorawards [#19]
 12 Aug 2005
To: GBengraver [#17] 12 Aug 2005

"The bill provides $14.5 billion in tax breaks and potentially billions more in loan guarantees and other subsidies to big oil to encourage oil and gas drilling, improve natural gas and electric transmission lines, build new nuclear power reactors and expand renewable energy sources, especially construction of wind turbines."

Who (what people) is going to do the drilling, improve the transmission lines and build the new reactors and other new sources? Last I checked with my friends in the construction industry the only time anyone in a suit shows up on a construction site they are there to look around not to work. Those construction guys going to work and getting paid and then paying taxes and buying stuff (food, cars, houses etc.) mean the businesses that sell those things will be busier and will need more help and will hire more people - after using all their currently available capacity. Those people will pay taxes and on and on.

Yes there is a need for changes in the insurance industry but an undeniable part of the problem is the fact that I can go to the doctor and he can run all sorts of tests and do all kinds of examinations even if they are not needed just to cover his .... with his malpractice insurer and I will pay $25 plus my deductible. My insurance company pays the rest. Is the solution to this socialized medicine (shudddder) or more out of pocket expenses for routine medical care combined with catastrophic coverage? I don’t know - I’m just an rookie engraver.

Trickle down does work. It worked when President Kennedy cut taxes in the sixties. It worked when President Reagan cut taxes in the eighties and it is working now with President Bush’s tax cuts today. I go back to what I said earlier about those tax cuts gave me the money to go into this business last year. How much worse off would we be with even higher taxes than we already have? If you want the price of oil to go back down stop the speculators from running up the price.

“The rich and the oil companies do NOT pay what you and I pay in taxes (as a percentage of income).”

You are absolutely right. Eighty percent of the taxes paid to the federal government are paid by the top twenty percent of all taxpayers. The top fifty percent of all taxpayers pay 96.03% of the income taxes. Source: The IRS. Get rid of the high tax rates and the rich invest more into capital investments and people get jobs. Raise taxes and they hide the money in tax shelters and loopholes.

How about a flat tax with no deductions? Say 17% of all income with no deductions - across the board starting at an income level of say $20,000?

Whow it sure is high up here on my soapbox.


From: Cindy (CINDYM) [#20]
 12 Aug 2005
To: Stunt Engraver (DGL) [#18] 12 Aug 2005

It's funny that this conversation showed up here because we've been having the same conversation at our house and trying to prepare the best we can for what is to come. It is not a matter of "the roof is falling" type of panic, but more a thoughtful look at what is going on in our country and planning for when the bubble bursts. Things simply can't continue along in the manner it has.

Some practical things we are doing at our house:
converting to solar power and solar hot water at our house.
Growing our own food as much as possible and preserving what we can.
Using human power instead of gas powered tools when possible, driving much less, planning our errands, car pooling when possible, streamlining all purchases (in the past I might go to three or different stores to pick up items where I liked one brand over another - now I find a brand that will work at the one store I'm shopping at), buying nothing extra, taking care to stay as healthy as possible, buying no junk food, cancelling subscriptions to the paper and unnecessary magazines and little changes like getting updated insurance quotes and changing to a Health Savings account instead of reg. insurance.

At work I'm:
running audits on phone services, long distance and cell phones to make sure I'm getting the best value. Buying bulk print cartridges to save money, not replacing aging equipment yet - making do with what I've already got and maintaining it, disposing of excess inventory, making sure my clients know what services we offer and encouraging them to add to what they usually order from us, increasing our community visibility by attending networking opportunities, packing my lunch, saving junk fax paper and printing my orders on the back of these pages, using fans instead of turning on the a/c, ship through USPS for non-urgent packages, and just being conscience of little things I, as one person, can do to save money.

Here in OR, minimum wage is $7.25 per hour. I always thought min. wage was suppose to be a training wage - what happened to that thought? Now people seem to think they should be able to live and live well on min. wage.
My first "real" job at 15 - $1.00 hr. at a hamburger stand. I didn't expect to buy a house on that money or even rent an apartment and pay real bills. I did pay for college and clothes on it though.

I'd like to change the world, and I support change, but until those in charge turn things around I feel I can only change my immediate surroundings. To not acknowledge that Big Oil rules this country would be to fool yourself. Until that changes, we can either get involved in the political arena and try to change it that way, or do the best we can on our own.
Cindy M


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