The Recession Doldrums

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The Wall Street Journal asks a question today:

Can Rally Run Without Revenue?
Investors Wonder Whether Profits Based on Cost Cutting Can Long Endure

No, they can’t.  Beyond the very shortest of short terms, you need rising revenue to generate rising earnings, and for that you need higher consumer spending.

But there’s no sign of that.  This isn’t an ordinary inventory cycle recession, which goes away when inventories tighten back up, or a Fed-induced inflation-fighting recession, which goes away when the Fed eases up on interest rates.  It’s a massive deleveraging recession, and it won’t go away until consumers and businesses pay down their crushing debt loads and start spending money again.

But how?  There are only a few ways for consumers to spend more money, and none of them are anywhere on the horizon.  Wages aren’t going up, employment isn’t going up, the glory days of credit card debt and home equity loans are over, and no one is drawing down their savings to buy bedroom sets these days.  Just the opposite, in fact.

So with consumers actively reducing their consumption in order to pay off debt, what’s going to keep this recovery going?  A few hundred billion dollars in stimulus money?  Not likely.  Unfortunately, with no second stimulus likely to get serious consideration, we’re stuck in the doldrums until deleveraging has run its course.  That’s probably going to take another couple of years.

SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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