Bad Moon Rising

I see the bad moon a-rising.
I see trouble on the way.
I see earthquakes and lightnin'.
I see bad times today.
— From "Bad Moon Rising,"
by John Fogerty, Creedence Clearwater Revival

Maybe I'm showing my age (and revealing, perhaps, that my brain has a rather odd configuration of neural pathways), but when I read the article that follows in the Baltimore Business Journal, "CEOs Predict Hard Times Ahead," I was reminded of the 1969 hit single by CCR. Although it's clear that the song has nothing whatsoever to do with economic or financial concerns, it nonetheless conjures up a mood of foreboding that seems appropriate to the topic at hand.

Nearly half of the chief executive officers across the U.S. expect their sales to decline over the next six months, according to a fourth-quarter survey conducted last month by the Business Roundtable.

The Washington, D.C.-based company’s economic outlook index — which measures expected sales, capital expenditures and employment figures for the next six months — shrunk to 16.5 this quarter. In the third quarter it was 78.8, and the fourth quarter of last year, it was 79.5. The index is centered on 50, and results can range from negative 50 to positive 150.

An index of 50 or lower points to an overall economic contraction.

For the next six months, 52 percent expect U.S. capital spending at their companies to decrease and 60 percent predict their U.S. staffing levels will contract during that time.

Business Roundtable has been surveying its membership -- CEOs of about 160 of top U.S. companies -- on a quarterly basis since 2002.

“As economic conditions continue to soften, so have our member CEOs’ near-term expectations for sales, capital spending and employment,” said Harold McGraw III, chairman of Business Roundtable and chairman, president and chief executive of The McGraw-Hill Cos. “We are committed to working with the new administration and Congress to restore economic growth through bipartisan solutions to the complex challenges facing our workers and businesses.”

In terms of the overall U.S. economy, member CEOs estimate gross domestic product growth for 2009 to be flat.

In regards to cost pressures, CEOs say material costs have the greatest impact over an array of pressures, like labor costs, health care expenditures, energy costs and litigation costs.

For the first time, CEOs listed pension costs as a major concern.

The Business Roundtable’s member CEOs head top corporations that represent a combined workforce of nearly 10 million employees and $5 trillion in annual revenues.

Comments

[anon]

no commentary? only an ominous song and editorial as your chosen harbinger of doom? :[

[Omitted Kingdom]

I can see the idiocy in America, but what I don't understand is the complicity of the Chinese. I will skip the part about George W Bush and Elaine Chao and their monthly jobs creation target. We have IRS records computerized with three different flavors of spreadsheets, so we know the real unemployment rate: when YOUR payroll withholding drops to zero and barely budges. We know the tech companies who have campuses in India: Microsoft, IBM, Google, Intel; their CEOs know as well.

In the US, 100K-130K new jobs have to be created per month just to absorb new graduates into the workforce. Granted, most Americans are completely dumb and oblivious to that number (or maybe they are waking up now to realize it). But the Chinese have enough smarts to know the 100K-130K requirement.

What I don't understand is that TARP money going to bail out the Chinese: if the Chinese know they are getting US jobs, that people in the US cannot make re-set monthly mortgage payments, why were the Chinese purportedly threatening Hank Paulson into giving them TARP money? "bail out foreign investors" How can the Chinese receive all the American manufacturing jobs but be so dumb they think Americans can pay mortgage rates that reset to a higher monthly payment?

[roger]

in the western world there is very near unanimity on the theory
of modern finance with as you can see catastrophic results.
It is as if people sitting around a rich table see only the pleasure
of good food and are never aware of their arteries retaining the
fatty droplets leading to death.Making/ piling up money feels good,
anybody who can do that must be smart.after all Financial times
the Economist /Barons etc...all concur we must resume GROWTH.ITS NICE TO DIE RICH!!

[mountaineer]

Okay....now this song will be reverberating around my brain all day! :) Here's another version:

http://calculatedrisk.blogspot.com/

This past week, Doris Dungey, noted blogger from Calculated Risk passed away and was mourned and remembered by many in the journalism and economics field.

[I]n a post in August 2007, Tanta presented this gem from our very own central_scrutinizer: "Dead Cat On The Rise": (CR note: good call by central_scrutinizer!)

I see a dead cat a risin'
I see trouble on the way
I see copper thieves obligin'
I see more flat screens on Ebay

Don't go long tonight
Cause you'll grab a fallin' knife
there's a dead cat on the rise

I hear pension funds implodin'
I know the end is coming soon
I'll see my short funds overflowin'
Bloomberg proclaiming rage & ruin

Don't go long tonight
Cause you'll grab a fallin' knife
there's a dead cat on the rise ... oh yeah

Hope you got your cash together
Hope you are quite prepared to die
Kudlow will soon be tarred and feathered
One eye is taken for an eye

Don't go long tonight
Cause you'll grab a fallin' knife
There's a dead cat on the rise

[Joe M.]

Speaking of the IRS/unemployment situation, other government agencies that are responsible for support programs like welfare and food stamps also know how bad the employment situation.

The other intangible is the huge black market job sector. This is in most part services and is now imploding.

In it's most simple form, this is a currency crisis and always happens at the end of a fiat-ponzi-scheme. It cannot be resolved before the whole thing goes down. Gold offers some protection but stored food for up to 2 years is even better.

[Omitted Kingdom]

You have to find gallows humor where you can. I read Investors Business Daily just for the right wing humor. Elaine Chao's name never appears on the front page with the monthly jobs report. It's just the "Labor Department." The woman enjoys a media blackout. However, the IBD editorial page has barked about Michelle Obama's graduate thesis. Who cares? Anyone who's attended graduate school knows it's a benign dictatorship. You have to please your thesis professor b/c everyone has good grades, GRE scores, good work ethic. The intangibles become important.

The joke is that IBD has not published its Stocks Week in Review for several weeks. Only yesterday did they re-publish it, and with only 10 stocks listed! You have to laugh.

What if everyone banded together, bought Sam's Club, Walmart, CostCo, stored what they needed, then just stopped showing up at work. Thomas Jefferson's vision for America was that everyone (except him, of course, he was a plantation owner) should be farmers and help each other out. We may return to that early idea.