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U.S. Economy: Service Industries Unexpectedly Shrank in January

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posted on Feb, 5 2008 @ 10:03 AM
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U.S. Economy: Service Industries Unexpectedly Shrank in January


www.bloomberg.com

Feb. 5 (Bloomberg) -- U.S. service industries unexpectedly contracted in January at the fastest pace since the 2001 recession as the housing slump deepened and consumer spending cooled.

``This is a stunning fall,'' said Michael Moran, chief economist at Daiwa Securities America Inc. in New York. ``If accurate, it's dire news on the economy.''

(visit the link for the full news article)




posted on Feb, 5 2008 @ 10:03 AM
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I think this is the first time we've had such a fall since 2003. People need to seriously look at the impending financial crisis and take the necessary precautions to protect their investments, their homes and their retirement accounts.

I'm not a doom and gloomer but I do think financial collapse has been a long time in the making and the manipulated media doesn't really want the general public to be aware of our failing economy.

Just more food for thought.

www.bloomberg.com
(visit the link for the full news article)



posted on Feb, 5 2008 @ 10:05 AM
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It looks like us washing each others clothes as the basis for an economy might not work after all. Too bad we ripped out most of our manufacturing facilities and sent them to China and Mexico huh?



posted on Feb, 5 2008 @ 11:00 AM
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First to slump in an impending recession is durable goods manufacturing, then comes the service sector.



For all of last year, total orders -- durable and nondurable goods -- placed with U.S. factories went up by just 1.4 percent. It was the worst performance since 2002, when the economy was struggling to recover from the 2001 recession. In 2006, factory orders rose by 5.1 percent.

Manufacturers have been hard hit by the housing bust and a struggling automotive sector. They also continue to cope with fierce competition from overseas producers.

Against that backdrop, factories eliminated 28,000 jobs in January and have cut 269,000 jobs over the past 12 months, the government reported last week.

source


I guess people have maxed out their credit and can no longer afford to go out and take advantage of all the pleasures of a service economy. Since we have, as the previous poster pointed out, sent many of our manufacturing sector jobs overseas or south of what we like to call "the border", this indicator of economic contraction is less noticeable, and the steep decline in the service sector is the new primary indice of the dire straits we find ourselves in economically.

I saw an article last week saying banks have frozen equity lines of credit as home values have plummeted to avoid borrowers owing more on their house than it is worth when they get foreclosed. Scary. Let me see if I can dig that one up.....

Ah, here it is.



Home equity lines of credit are loans that use a home as collateral and allow the borrower to withdraw money up to a maximum limit.

Those lines are drying up as Countrywide Financial announced Thursday that it has cut off 122,000 borrowers from pulling any more equity out of their homes. Wells Fargo, Washington Mutual and JPMorgan Chase released statements Friday that they have also started halting equity lines because of tumbling home values, but declined to provide any numbers.

source


We need a President and federal government that will pull its head out of the sand, realize we are sinking fast, and do something substantive about it now! No more rose garden tinted glasses and economic band-aids. The economy has ruptured an artery and needs life support and emergency surgery.



posted on Feb, 5 2008 @ 11:10 AM
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I have a consultancy practice in the service sector. I'm here to tell you it's worse than I've ever seen it. I've been telling my clients since late 2005 that they should be following basic business survival plans. Those that ignored that warning and have gone about business-expansion planning have suffered mightily. I've been doing this kind of work since the 80's. Things are bad and there's an ominous feel to it as well.



posted on Feb, 5 2008 @ 11:27 AM
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Why do I doubt that this is really a "surprise"? I am having a hard time believing that we are being treated with the respect and honesty that this situation deserves. They will just continue to lie to us and act surprised as the house of cards continues to crumble.



posted on Feb, 5 2008 @ 11:27 AM
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During one or our recessions - 1970's or early 80's - Southern Pacific Railroad parked a lot of box cars along California Route 126 between Piru and most of the way to I-5 near Magic Mountain.

Not only SP RR boxcars, but from railroads across the nation.

As the recession deepened more boxcars were parked.

I heard that there were other unused trackage areas that also had parked boxcars.

When the recession started lifting the boxcars were moved out a few at a time until they were all gone - back in service I hope.


Somewhat the same seems to be happening in the N/W Arizona area where I live.
It's a major two main tracks Railroad thoroughfare.
Usually enough trains come through each day that the average is about one per every 18-20 minutes.

I usually run errands during the weekdays - I'm retired - and once a week I hit the In & Out Burgers place for a burger & fries.
Yeah, I know, not good for me, but last cholestrol count was 210 which ain't too bad.
Moderation in all things is the hot ticket.

Anyway, I like to grab a burger and make a 4-5 minute drive to a good overlook up a scenic canyon, watch for trains and eat lunch.
Most times I stay about a half hour.
Almost always I see two trains.

About the last 4-6 weeks there have been times of one train or no trains at all.
This takes place anywhere between 1100-1400 on weekdays.

I can hear railroad traffic from my house at night and it seems train traffic is running at a normal pace during the hours of darkness.
And the trains I see at those times are the usual container trains.

Mostly container trains come through our area, but every now and then you get an interesting mix of boxcars, gondolas and loaded or empty flatcars with a few tank cars in the mix.
Very occasionally a train of all tank cars.

So far all the trains seen have been the extremely long ones they always run out here.
Usually with 4-5 locos and sometimes long enough so they pick up three more helper locos for the long uphill grade going north.
After the helper locos have helped the train up the grade, they drop off and when there's an opening the go back to their staging area.
If you've traveled the desert, more than likely you've seen these long trains that exceed one mile in length.


Weekends, except for night train traffic, it seems not many trains are running at all.
Last year they ran about the same amount of trains on the weekend that they did on weekdays.


All of which is to say, with the slowdown in rail traffic, it's simply more evidence that the economy is slowing down.

A doomsayer I'm not, but I do find it interesting....

[edit on 5-2-2008 by Desert Dawg]


jhh

posted on Feb, 5 2008 @ 11:40 AM
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If this doesn't force the commodity bubble to burst, nothing will. I have been working up in the northern plains doing electrical work on power plants and oil wells. Last week was the first time in three years that I have been laid off for more than 3 weeks. The company I was working for claimed they were going to put calls in at the end of the month for a plant shut down, but either they have been transferring electricians from other plants in the area, or the work was never released by the plants. Luckily I am at the top of the out of work list at my local union hall, but still it looks like a rough year or two is heading our way.



posted on Feb, 5 2008 @ 11:45 AM
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reply to post by Icarus Rising
 


You know, while our government keeps painting a picture of economic grow it never touch the big issue eating our economy away.

The dying manufacturing base.

Now it can not be ignore anymore, our economy is in crisis and without a strong manufacturing base we are falling deeper and deeper in trouble.

Subprime loss: $70bn and counting....

www.business-standard.com...




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