In the heat of healthcare reform and the mobilization of radical shock troops, the economy has drifted with little public discussion. When it comes up, it is frequently within the context that "the worst is behind us;" "we're leveling off;" or "recovery is just around the corner." While I wish all of this was true, I am concerned that it is not. While I wish that the Obama administration were being more honest, I believe they are engaging in the same type of spin we became accustomed to under the Bush administration.
The signs seem to indicate that the current economic downturn will continue, and perhaps even intensify over the next couple of years. Part of this has to do with more real estate issues, part with continued job losses, and part with the global economic scenario. For real people, things do not look all that good.
The real estate debacle is not behind us. The chart below from
Credit Suisse shows mortgage reset activity remaining high through
2011. Elizabeth Warren, appearing 
on the August 12, 2009 MSNBC "Morning Joe," warned that another shoe
would be dropping as commercial real estate entered a reset period that
runs through 2012.
The chart below is an edited version found in an article by Doug Hornig , which is originally from page 47 of the Credit Suisse 2007 report Mortgage Liquidity du Jour: Underestimated No More
The U.S. (and other nations) continue to experience rising
unemployment. The upbeat report by the Obama administration stating
that the unemployment rate had dropped while the number of new claims increased was based largely on dropping 637,000 people from the labour count .
In other words, a statistical change occurred in the number of people
actively looking for work. It does not mean they became employed.
All those job losses translated into a 34 % increase in consumer bankruptcies - in July alone. Unemployment (and under-employment) is also fueling ongoing foreclosures . Foreclosures and tight credit drives down housing (and real estate values) putting more people (and businesses) upside down on their loans.
Not surprisingly, the global nature of the economic collapse is reflected in a major hit on global trade. It is down 36% from its peak in July 2008 or about $1.5 trillion.
And so we cycle around and around, sinking a bit lower on each spin. All of the indicators I see do not signal a recovery. However, there are other indicators which could be interpreted with a new meaning: that "recovery" may not mean the same thing any more. If "recovery" means returning to where we were before the current crisis, then the odds seem slim indeed. If "recovery" means returning to the growth path we were on, then the odds seem long beyond calculation. The reasons for this have to do with the physical constraints of the planet. Simply, there would appear to be a limit on the resources and capacity of the planet for continued development, growth, and exploitation.
Below are a series of graphs. The first one is a sample of an exponential growth curve. These curves are characterised by their "J" type formation. The sharpness of the "J" depends upon the rate of growth that the curve is measuring.
Sample of an Exponential Growth Curve
(From: Regents Prep Algebra Lesson
Here is the fossil fuels curve. This represents the dominant form of energy use around the world (and particularly in "developed" nations) at this point in time. Since it is frequently argued that the other human growth curves (population, development, per capita income, etc) are linked to energy availability, then the energy curve is distinctly important in any recovery.
(From: Geothermal Education Office slide 117)
However, fossil fuels are not the only resources that we use. This graph from The New Scientist 
is instructive (link gives scalable image of graph below).
Of interest is that if global consumption continues at the current rate, the materials indicated have a life expectancy of 58 years (on average). However, if the global rate increase to half of the U.S. current consumption, the expectancy drops to 20 years. Currently the uranium supply is expected to last another 30-40 years, but every nation that has the capability (including the U.S.) wants to dramatically increase the number of nuclear power plants to make up for the loss of fossil fuels (and decrease CO2 emissions). Such an increase would likely halve that 30-40 year estimate.
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