Will The Stimulated Economy Be As “Sticky” As Real Estate?

if everything continues to be on sale, yes. otherwise no.
Agreed with Joesph. Perception vs reality.

I don’t know. We’ll see what the government does and whether jobs come back during the time that housing remains buoyed. But if Socketsite is any sort of a barometer the gloomsday crowd of last year has gone silent and missing over the past few months. Months that have corresponded with housing improvement.

Some of the businesses I run are usually ahead of the economy. They turn down first and turn back up first. One of those businesses has turned slightly up, but is nowhere near normal- it went from about 30% of normal to 35% of normal. The others are still way down.
One of the problems is that the companies still selling in volumes are doing so at much lower price points. I walked through a grocery store the other day and the prices shocked me: they are way down, probably at or near the sellers’ costs including distribution. Bread that had been selling for $4.69 per loaf can be had for $1.99 per loaf. What this means is that the company selling it either goes out of business, or they squeeze their own suppliers dry.
If you have the power to squeeze your suppliers, you are still making money, though less of it than before. If you don’t, you are probably losing money to compete. We’ve resisted the squeeze by the people to whom we supply, but that means much less volume, and that means less of a chance to spread out our fixed costs, so our costs are effectively going up.
Se we’re squeezing our own suppliers to try to make it up. We already cut our salaries, and raises this year are out of the question. We’re debt free and so we can outlast this, but we’d be in a world of hurt if we were not. Instead, my take home is about half of what it was last year.
If that’s an encouraging sign, take it. Business isn’t zero, but our customers are still closing up shop almost daily, and it’s usually because their own customers are doing the same. The economy may be expanding, but we’re not seeing it very broadly based. At least not in Silicon Vally, where most of our customers are located.
The only good thing about being a business owner right now is that the businesses that usually lead the economy turned way down in September of 2007, and so that was why I was able to bail out of the market entirely by the end of 2007. I didn’t lose anything in the market, but my annual income is down so far that I’m still taking quite a hit. The headline firms may have stopped collapsing, but the small companies I work with are still failing.

This is open to annon or anyone else, besides gold and oil (and north slope Bernal listings), name one item selling for more this year than last.

EBGuy, Goldman Sachs’ stock.

EBGuy:
The S&P 500 Index.
Closed today at 1066.
Closed 10/29/08 at 930.

Good news that at least some of the Fed purchases used to prop housing prices up has stopped, although they’re still plenty of propping up of housing prices going on through other programs:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aogAIdJC8sRc

One stimulus program ends, another begins. I believe they can drag this out for many years, no problem.
I’m waiting for the 2010 small-business bailout with next year’s ~10% GDP deficit. I can’t wait to see what they have planned!
Midterm elections next year should make the handouts particularly awesome.

Alot of people are just not getting the fact that housing will continue to be propped up until it stabilizes and starts moving up, however long that will take, and no matter what the cost.
Unemployment will start decreasing within the next six months, maybe less. The worldwide economy is expanding, trade is increasing…

Anon,
How’s that theory working out for people who bought in Florida, Nevada Arizona, Stockton, Inland Empire, Detroit, etc…

>name one item selling for more this year than last.
College education and health care are both up substantially. The present value of future state and federal pensions, which you are paying for via your taxes, is also up. Those taxes may be deferred for the moment, but unless you are planning to die soon, then by accrual accounting theory you should make a debit now. Military spending, which you are also paying for, is up. Again, your taxes may be down for the moment, but eventually the bill will come due, and with interest, so you should account for that today. If you are one of those wretches you has credit card debt, then your interest rate is likely up. Cost of traveling to Europe is up again, (exclusive of oil prices raising airfares) due to the decline of the dollar, as are many imports from Europe.
In short, goods and services exposed to competitive pressures are getting cheaper while services which involve government interference in the market (education, healthcare, government itself) are getting more expensive and this trend is not likely to change anytime soon. The decline of the dollar versus the euro, on the other hand, is probably reached its limit.

Careful. U.N. $80 oil can be the result of the government pumping money into investment banks, who see no good prospects to lend it, and instead send it to people who speculate with it in the stock and commodities markets.

Yes, good thoughts fred. I see that CIT is about to file bankruptcy. More credit tightening from that. And the stock run-up looks to have ended imho (for the record, I pulled out about 80% of my equities a little over a month ago — a few weeks too early). We still have a lot of headache to nurse before our very bad hangover is over. To paraphrase Churchill, we may be at the end of the beginning (which is great), but we’re not yet at the end, or even the beginning of the end. My two cents is that the gubmint will keep the spigot open but it’s going to be more directed toward job creation and less at the housing market.

UPDATE: “Americans cut spending for the first time in five months and a gauge of confidence weakened, signaling consumers will make a limited contribution to the recovery without government incentives.”