The first paragraph of Wachovia’s Report is a tough one, but I think a first real honest look at where we are in today’s market….
A Serious Recession Has Set In
While the NBER will not likely get around to declaring when a recession began until late January or early February, there is little doubt a serious recession has set in. Real GDP declined at a modest 0.3 percent pace in the third quarter and more recent data have been decidedly more negative. Nonfarm payrolls fell 240,000 in October, following a much larger-than-initially-reported 279,000 job loss in September. Not only has the pace of economic decline intensified but it has also broadened considerably. Both the ISM manufacturing and non-manufacturing surveys fell well-below their key break-even level of 50 in October. The pace of layoff announcements has also picked up, as has the list of firms announcing earnings disappointments. While lending among banks has improved, the credit crunch is still abundantly evident virtually everywhere else. Underwriting criteria for home mortgages and consumer loans remain exceptionally tight and terms are far less generous than they have been anytime this decade. Lending for commercial real estate has all but dried up and the list of delayed and canceled projects has skyrocketed. Even state and local governments are scaling back. We expect policymakers to continue to work to offset this weakness, with a new stimulus package; likely to be passed during the lame duck congressional session.
Not exactly peaches and cream, but at least we are acknowledging the facts. Now, let’s start charting a course for improvement.
View the entire november economic report.
As always, thanks to David Bell, VP, Wachovia Business Banking for providing us with the Wachovia Economic Report.
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