You wanna know what is going on? David Rosenberg explains…

“US consumers are cutting back, and where they are not cutting back, they are scaling down. This new cycle is all about ‘getting small’ and it is deflationary. For yet another in the litany of signs pointing in the direction of social change towards thrift, have a look at what is transpiring at the upper echelons of the income strata – Now Even Millionaires See the Benefits of Budgeting on page B5 of the Saturday NYT is a must read.

“Not only are the rich trading down, but the article quotes a high net worth financial advisor who said ‘many of our clients are very happy to be sitting on bond portfolios and cash reserves.’ And see the article on page 2 of the Sunday NYT – Beauty Products Lose Some Appeal During Recession. According to the NPD Research Group, total sales

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The U.S. unemployment rate slipped to 9.4% in July from 9.5% in June, the most encouraging sign yet that the U.S. recession is easing.

But the news – released in a government report Friday – isn’t all good: Unemployment is likely to remain high in the months to come as some of these encouraging indicators of new economic growth evolve into a painful jobless recovery.

Friday’s jobs report and other recent data “reinforce our view that the U.S. recession ended in June, and we have raised our third-quarter 2009 growth forecast to 3.5%,” Christian Broda, a Barclays Capital (NYSE ADR: BCS) economist in New York, wrote in a research report yesterday.

Alan Krueger, the U.S. Treasury Department’s top economist, said he thought forecasts that growth would resume this year were “plausible” but expressed concern about long-term unemployment, which remains as a nagging problem.

“The administration is constantly looking

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The U.S. unemployment rate slipped to 9.4% in July from 9.5% in June, the most encouraging sign yet that the U.S. recession is easing.

But the news – released in a government report Friday – isn’t all good: Unemployment is likely to remain high in the months to come as some of these encouraging indicators of new economic growth evolve into a painful jobless recovery.

Friday’s jobs report and other recent data “reinforce our view that the U.S. recession ended in June, and we have raised our third-quarter 2009 growth forecast to 3.5%,” Christian Broda, a Barclays Capital (NYSE ADR: BCS) economist in New York, wrote in a research report yesterday.

Alan Krueger, the U.S. Treasury Department’s top economist, said he thought forecasts that growth would resume this year were “plausible” but expressed concern about long-term unemployment, which remains as a nagging problem.

“The administration is constantly looking

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“In a fundamental shift, consumers are saving rather than spending,” notes the Los Angeles Times. This is the shift we’ve been talking about for months. The great credit expansion of 1945-2007 is over. Now cometh the great credit contraction.

During the bubble years, more and more credit produced less and less real prosperity. It was as if you were borrowing more and more, to invest in your business or merely to increase your standard of living, but your income didn’t rise fast enough to keep up with the interest payments.

In 2005, Americans saved nothing. Not even aluminum foil or string. Now, the savings rate is approaching 5% of disposable income - a big turnaround.

We know from logic and experience that saving money - not spending it - is the key to getting wealthier. Saving money gives you capital. And it’s capital accumulation - in the form of factories, roads, ships, buildings,

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Bankruptcies, Depressions and Mark Stanford with his Argentine beauty.

Everything is working out just like we thought it would. The stock market is performing as expected. The economy is on track. Even the politicians are doing what they thought they would.

Let’s begin with the stimulus/bailout/boondoggle/BS plan. As anticipated, it has failed. That is, the economy is getting worse, not better. It has failed the test set for it by its own creators. Back when the Obama Team was arguing for a big bailout bill, it warned that without a bailout unemployment would rise above 8% in 2009. ‘Pass this bill today,’ said Ben Bernanke, or words to that effect, ‘or there may not be a tomorrow for the US economy.’

Congress dutifully bent its back to the task of adding boondoggles to the bill and then okayed the measure. And here we are in the middle of 2009 and the unemployment rate

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Bank of America Corp. (BAC) and Citigroup Inc. (C) were told by federal regulators to raise more capital after government “stress tests” revealed that the banks were not adequately protected against additional deterioration in the economy, published reports said yesterday.

Officials insist that neither Bank of America nor Citigroup should be viewed as insolvent, but people familiar with the situation told The Wall Street Journal that the capital shortfall amounts to billions of dollars at BofA. It is not clear how much of a shortfall Citigroup faces.

Analysts anticipate that some regional banks also will be required to raise more capital.

Banks that need more capital will have six months to accumulate the additional infusions by selling assets, selling more shares, or converting preferred government shares into common stock. If they are unable to build their capital through public and private sectors, the banks may again dip into taxpayer-funded government coffers.

Bank of America

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Publishing Industry in Crisis - Business Model Lags Changing Times

The sinking economy is forcing many publishing houses to the life-support of bankruptcy after a long illness. The eight-year deceleration in print advertising, fueled by a secular migration of readers to the Internet, has gone into free fall.

Newspapers have fared far worse than magazines, as web-based news options have proliferated in recent years. Circulation of newspapers fell 2-3% on average each year from 2005 through 2007, and that has accelerated to the mid-single digits in recent months as the economy cratered. Ad revenue is falling between 15-20% or more at many publications. A portion of classified has moved to wider-spread, more targeted, lower-priced or free options, such as ebay or Craigslist, and will not likely return.

In an effort to offset declining print revenue and market share, publishers are scrambling to leverage their brands and build complimentary web-based publications. But the deepening

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The dismal U.S. unemployment numbers have gotten more airtime recently than Jerry Springer.

And why not?

The numbers are mind-numbing.

A total of 2.6 million jobs lost in 2008 – the most since World War II.
A jobless rate that’s at 7.2% – and climbing.
About 11 million people out of work.

As usual, however, the “official” numbers don’t tell the entire story.

“People say that they know how bad the economy is. But they don’t know how it feels to have the reality hit home,” said Stu Schweitzer, global markets strategist at J.P. Morgan Chase & Co.’s Private Bank (JPM). “It’s not the facts — it’s how the facts feel. And it feels terrible to have so many Americans losing jobs, and so many more likely to follow in the coming months.”

As it did last week with the government’s inflation statistics, Money Morning will …

I’m writing this from a hotel room in Santa Monica in California. I’m on holiday here with my lovely wife Lynn and our two equally gorgeous daughters, Eilish and Maddie, and am about to embark on an RV trip across America to Orlando in Florida.

Lynn will attend a conference on digital scrapbooking at Disneyland in Orlando in a fortnight if we make it. I’ll tell her story about how she came to be a digital design exporter (earning a lot more than me…) in this blog at a later date.  Suffice to say, this trip will more than pay for itself in US dollar earnings.

I’ll try to blog about the trip and what I learn from an economic and business point of view as often as I can. It should turn out a lot easier to do than in New Zealand. Free cable broadband or WiFi access

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Congressional negotiators late yesterday (Thursday) reached a tentative agreement on a credit-crisis compromise that gives the Bush administration about a third of the $700 billion it has requested up front, but made sure half that outlay was subject to a congressional veto, published reports state.