This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

3 Signs We're Heading for a Recession

By David Meier, DailyFinance


By DailyFinance ( DailyFinance) -- Zero. Zilch. Nada. That's the number of jobs created in August 2011.

By itself, it's just a single data point. And while the U.S.'s gloomy employment situation is distressing, that figure alone is no reason to hit the panic button.

Does that mean our economy is on the mend -- or at least that we've hit the bottom and there's nowhere to go but up? Hardly.

In fact, we've got a four-alarm economic fire burning: Take the employment situation, add the state of consumer confidence, and top it off with Wall Street skittishness, and all signs point to trouble ahead.

Who Says We're Heading into Recession, Act II?
Not Ben Bernanke. In his Jackson Hole speech, he said, "I expect the economy to continue to expand in the second half of this year, albeit at a relatively modest pace." That's a whole lot of nothing, but what else is our Federal Reserve chairman going to say? He can't say we're heading for a recession. We have to look at the data and make up our own minds.

So we turn to the professionals that dissect the economy's every twitch and flutter. Of course, these are the same economists who believed economic growth would pick up during the second half of 2010. Yet growth slowed down.

More from DailyFinance
How Our Economy Has Changed Since 9/11
10 IPOs You Can Buy at VIP Prices
Google and Zagat Review Their Own Deal

Then they tweaked the timeline and announced that the first half of 2011 was when things would really start rocking again. Really? The government recently revised its first- and second-quarter annualized growth to 0.4% and 1%, respectively. Those aren't exactly on up-tempo beats.

Now we're told that economic growth will strengthen as we head into 2012. I'm beginning to wonder if economists are looking at the same stats I'm seeing.

The Writing's on the Wall
Despite being one of the best systems in the world, the U.S. economy is not poised for rapid growth anytime soon. In fact, the signs are stronger than ever that we're heading into Recession, Act II. Here are three reasons why.

  • 1. It's the jobs, stupid.
  • Let's start with the stunningly awful jobs report in August.

    Persistent, high unemployment is a big problem. Lakshman Achuthan, managing director of the Economic Cycle Research Institute, summed the situation up perfectly for CNN Money by saying, "When employment drops, incomes fall. When income falls, sales fall. When sales fall, production falls. When production falls, employment falls."

    1 of 2

    Select the service that is right for you!

    COMPARE ALL SERVICES
    Action Alerts PLUS
    Try it NOW

    Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

    Product Features:
    • $2.5+ million portfolio
    • Large-cap and dividend focus
    • Intraday trade alerts from Cramer
    • Weekly roundups
    TheStreet Quant Ratings
    Try it NOW
    Only $49.95/yr

    Access the tool that DOMINATES the Russell 2000 and the S&P 500.

    Product Features:
    • Buy, hold, or sell recommendations for over 4,300 stocks
    • Unlimited research reports on your favorite stocks
    • A custom stock screener
    • Upgrade/downgrade alerts
    Stocks Under $10
    Try it NOW

    David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

    Product Features:
    • Model portfolio
    • Stocks trading below $10
    • Intraday trade alerts
    • Weekly roundups
    Dividend Stock Advisor
    Try it NOW

    Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

    Product Features:
    • Diversified model portfolio of dividend stocks
    • Alerts when market news affect the portfolio
    • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
    Real Money Pro
    Try it NOW

    All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

    Product Features:
    • Real Money + Doug Kass Plus 15 more Wall Street Pros
    • Intraday commentary & news
    • Ultra-actionable trading ideas
    Options Profits
    Try it NOW

    Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

    Product Features:
    • 100+ monthly options trading ideas
    • Actionable options commentary & news
    • Real-time trading community
    • Options TV
    To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
    Submit an article to us!

    Markets

    DOW 17,653.33 +296.46 1.71%
    S&P 500 2,044.29 +31.40 1.56%
    NASDAQ 4,716.9810 +72.6690 1.56%

    Brokerage Partners

    Rates from Bankrate.com

    • Mortgage
    • Credit Cards
    • Auto

    Free Newsletters from TheStreet

    My Subscriptions:

    After the Bell

    Before the Bell

    Booyah! Newsletter

    Midday Bell

    TheStreet Top 10 Stories

    Winners & Losers

    Register for Newsletters
    Top Rated Stocks Top Rated Funds Top Rated ETFs