Stalling economy?

Philly Fed points to stalling economy

Factory activity in mid-Atlantic region fell for first time in more than three years.

September 21 2006: 4:32 PM EDT

The Philadelphia Federal Reserve Bank said Thursday its business activity index tumbled to negative 0.4 this month from 18.5 in August, far beneath forecasts of about 14.8. It was the first reading below zero since April 2003, indicating a decline in regional manufacturing.

"We're seeing signs in the Philadelphia survey that the economy is cooling off," said Gary Thayer, chief economist at AG Edwards & Sons.

The entire survey was troubling, with new orders also slipping into negative territory. The six-month business outlook turned gloomy as well, showing its first negative reading since just before the last recession, which ended in 2001.

"The region's manufacturing executives were significantly less optimistic about future activity, with most indicators dipping to their lowest readings in six years," the survey said.

The survey added to evidence that the economy is entering a rough patch led by a sharp slowdown in the housing sector, which is expected to take a toll on consumer spending.

"These are very weak numbers," said Chris Low, chief economist at FTN Financial.

Many economists had been counting on business investment to pick up where consumers left off. The Philadelphia Fed data suggested, however, this handoff has so far failed to take place.

Excerpts above from money.cnn.com

I believe that the job losses and reduction in consumer spending (which results in more job losses) from the combined impending housing bust and debt bomb will add a great deal of recessionary pressure to our economy. 70% of the GDP is consumer spending, so as ARMs & HELOC's reset and people realize that their house is not an ATM - the loans actually have to be repaid - the amount of escalades and frappacino's sold will expectedly decrease.

I'm not an economist but I'm firmly in the recession camp. How many red flags do you need? Look up "Inverted yield curve" and see what that gets you.

We have a National sickness with credit (read: debt) individually and as a nation. There should be no argument about that. We lead lives of shallow consumerism because ... I guess ... image is more important than substance and maintaining a hip lifestyle is more important than financial security. I like "things" as much as the next guy, but I don't buy things I can't afford and certainly not to keep up with the Jones'.

Keeping up with the Jones': Buying stuff you don't need with money you don't have to impress people you don't know.