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Friday, October 31, 2008


anecdotal evidence

via clusterstock:

Time Inc CEO Moore at the ABC Circulation conference yesterday morning (from Folio):

“By this October it was looking like 1931,” she said. “[Time Inc.] has never had so many advertising clients in trouble at the same time. The declines are stunning.”

Moore added that she didn’t care if it technically isn’t a recession. “It is one for us.”

commerical real estate has turned a dark corner in recent months as well.

“With all of the anxiety and uncertainty in the credit market, the conditions are likely to get worse before they get better,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “Many architects are reporting that clients are delaying or canceling projects as a result of problems with project financing.”

and to that you can add the comments of san fancisco fed president janet yellen via calculated risk:

... [R]ecent data on the economy have been deeply worrisome. Data released this morning reveal that the economy contracted slightly in the third quarter. For the fourth quarter, it appears likely that the economy is contracting significantly.

For consumers, the credit crunch is one of several negative factors accounting for the decline in spending in recent months. Consumer credit is costlier and harder to get: loan rates are up, loan terms are tougher, and increasing numbers of borrowers are being turned away entirely. This explains, in part, the exceptional weakness we have seen in auto sales. In addition, of course, employment has now declined for nine months in a row, and personal income, in inflation-adjusted terms, is virtually unchanged since April. Furthermore, household wealth is substantially lower as house prices have continued to fall and the stock market has declined sharply.

Business spending, too, is feeling the crunch in the form of a higher cost of capital and restricted access to credit. ... Some of our business contacts report that bank lines of credit are more difficult to negotiate, and many indicate that they have become cautious in managing liquidity, in committing to capital spending projects that can be deferred, and even in extending credit to customers and other counterparties. Nonresidential construction also is headed lower largely because of the financial crisis; the market for commercial mortgage-backed securities, a mainstay for financing large projects, has all but dried up.

for all the political showboating about banks using capital injections to lend, they won't and indeed can't if they want to survive. i don't see the need to pay out bonuses, but neither do i expect any bank to do anything but hunker down. business conditions are collapsing as beleaguered consumers retreat.

evidence is little more than anecdotal at this point. but the economy looks to have hit a wall in september and october, and what will follow in months to come may be brutal.

UPDATE: append the chicago PMI for october -- this is a nightmare report and beyond the worst case scenario. i hesitate in fact to consider the figures entirely valid, given the psychology at the time of its taking.

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btw, your current posts continue to be arguably my most eager reading pursuits, and great writes, too.

and, gm, i've also begun reading your 11/04 archives. your 2004 election posts are eery. God help us if it's "deja vu all over again" and the mccain/failin ticket wins - "against all odds".

because i'm with you - the neocons need a major correction and attitude adjustment via timeout.

not that the dems are angels. i just think after years of "checks", we now need years of "balances". in a 2 party system, it's our only hope.

you know, i've always jested "the only thing worse than a politician is a child molester". it remains to be seen if i shall "reverse" the thinking in that quote.

thanks, always. but mostly for all the reading you have given me between now and the election. it will be like being kept up at night for a good book.

less sleep, holy krap.

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my pleasure, dc -- thanks.

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