evidence of a double dip recession june 2010 daryl montgomery june 24, 2010 copyright 2010, all...

Evidence of a Double Dip RecessionJune 2010

Daryl MontgomeryJune 24, 2010

Copyright 2010, All Rights Reserved

The contents of this presentation are not intended as a recommendation to buy or sell any security.

Fiscal State of U.S.

• National Debt: $13.10 trillionUnfunded liabilities $109 trillionState and Local Debt $3.05 trillion.

• 2010 Budget Deficit $1.6 trillion. The U.S. GDP will NOT increase by this amount in 2010.

• GDP is 14.4 trillion (very overstated)• GDP grew 5.6% (2/3rd less inventory loss) • GDP grew 3.0% in Q1 (1/2 inventory gain)• The FDIC has taken over 83 banks in 2010.

There are 702 troubled banks.

Federal Deficit

Total Federal Outlays: 1900-2010

Bank Failures Last 3 Years

Employment Picture

• Unemployment rate for May was 9.7%

• Alternative figure is 16.6%

• Up to 1.2 million Census workers will disappear mostly in July and August.

• Reports of Census workers being hired and fired multiple times.

• Workers ‘leaving’ work force has kept rate down.

• Birth/death model and seasonal adjustments.

Weekly Census Employment

Employment Before and After Recessions

Long-Term Unemployment 1965-2010

Weekly Claims

Housing Market Not Recovering

• May New Home Sales dropped 33% to record low 300,000

• May Existing Home Sales dropped 2.2% to 5.66 million annual rate. Inventory on market almost 4 million.

• Housing Starts down 10% in May.

• Permits down 5.9% in May after 10% drop in April.

• Fed tax credit was holding market up.

New Home Sales

Existing Home Sales

Leading Indicators Signal Recession

• ECRI weekly leading indicators peaked in November 2009 and have been heading down since then.

• Have fallen below zero. Were -5.7% last week.

• Copper, the most economically sensitive indicator is on a sell signal.

• EU cutting spending and raising taxes. Will be a drag on world economy.

ECRI Weekly Indicators

ECRI Weekly Indicators

ECRI Weekly Indicators

Government Financed Demand 1930s vs 2000s

Commercial Bank Loans: 1974-2010 % Change From Previous Year

Copper ETF JJC Six-Months Daily