Looking around at shops I've had for a while had the idea that we are heading into an economic slowdown as shops have been stocking very 'samey' and unadventurous products which is usually a good sign that they are getting jittery. However I was reading in the paper yesterday that ptoprty reposessions and household debt are both sharply up and retail sales well down. Although mid growth cycle falterings are usual this does seem to be more marked than the usual stumble so are we just in a dip all be it more marked than usual or have we tripped and entered an early depression?

Personally I think we are heading into a recession.

Two Christmases ago, our business took a phenomenal amount in credit card receipts (over cheque and cash payments). Whilst being aware that it was Christmas and our busiest period, I had an uneasy feeling about the sheer number of people paying for goods on the never-never.

The following year, we had (I think) 5 consecutive increments in the interest rate. In January of 2004, I had my house valued which I bought in 2002. It was worth over double what I'd paid for it. I felt incredibly lucky, but wondered how people who had borrowed staggering amounts were coping with these rises in the interest rate. It seems that many aren't coping at all.

House reposessions are back, the property market is flat and we in the plumbing and heating trade have definitely felt the knock-on effect. The 0.25% cut in interest rates has made no difference. Frankly, I feel we need another three, if not four, cuts in the rate if only to bring confidence back.

Big retailers like B & Q and Boots have been shedding jobs whilst the cost of living continues to rise at way above the rate of inflation. The pound in your pocket is a lot lighter than it was only three years ago.

We're taxed to the eye-balls and yet people cannot be fed up enough as they passed at the chance to rid the country of this tax and spend government (but I digress).

The fact is, what is happening and very probably about to happen - a recession - I saw coming well over two years ago. That is, people are borrowing more than they're earning.

It's time to get real (myself included).

I think it'll be a slowdown. There is hardly anytrhing ever adventorous in Sheffield shops anyway!!.

I think the ridiculous credit culture has slowed down so less money around.

Originally posted by evildrneil
Looking around at shops I've had for a while had the idea that we are heading into an economic slowdown as shops have been stocking very 'samey' and unadventurous products which is usually a good sign that they are getting jittery. However I was reading in the paper yesterday that ptoprty reposessions and household debt are both sharply up and retail sales well down. Although mid growth cycle falterings are usual this does seem to be more marked than the usual stumble so are we just in a dip all be it more marked than usual or have we tripped and entered an early depression?

Nosedive economy according to some of the people I know who puport to understand it.

An over-valued dollar too, I'm told, could be a problem.

Originally posted by Phanerothyme
Nosedive economy according to some of the people I know who puport to understand it.

An over-valued dollar too, I'm told, could be a problem.

Told by whom? The dollar has indeed been appreciating against the euro and the yen, but this reflects weaknesses in these two currencies as much if not more than the intrinsic strength of the dollar. You should remember that the dollar has been declining against these two currencies for a substantial period, so it was virtually inevitable that relative values would swing the other way at some point. You should also remember that the dollar was very strong against the european currencies and (from January 1999) against the euro n particular in the late 1990s and very early 2000s when the US economy was enjoying something of a boom period. Moreover, since many countries hold substantia portions of their national reserves in dollars, an 'over-valued' dollar can be something of a good thing for them (although as is always the case in Economics, there is a downside too).

When banks and oil companies are announcing record profits one after the other, you know the economy is about to take a turn for the worse...

Expect a new, improved Foreign Policy by certain governments, in order to keep domestic news off the front pages... ;)

Mind you, if you are frugal like me (some may unfairly call me tight) you can pick up a bargain if you know where to look :)

http://www.dixons.co.uk/product.php?sku=692188

I think this country is at a tipping point.

Manufacturing never really made it out of recession.
Retail is going into recession fast.

People make much of the increase in inflation (up a quater point or similar), yet the 25, 30% houseprice inflation that we saw in '03, '04 never seemed to be a cause of concern.

Nowadays first time buyers have to committ a huge percentage of their future earnings to buying a property. Think of it: this is a massive redistribution of wealth, towards the already wealthy.

Unless houseprices correct themselves (which looks unlikely as they are about to be added to many private pension portfolios), we are going to enter a new era in Britain where an underclass of lower to middle earners will never be able to afford their own property.

What this means for our economy is yet to be realised as we have not been in this position since way before the industrial revolution where many people paid rent to large landowners.

Because of our addiction to credit (or tomorrow's money today), insurance companies are coming up with policies that will settle your outstanding debts on the occassion of your death. People are talking now about the prospect of leaving your debts to your children rather than the tradition of leaving a nest egg.

Apart from property owners, the other main group of people who benefit from our credit slavery are of course those who own the money (the banks). They are the ultimate winners from our current predicament.

Originally posted by Deavon
I think this country is at a tipping point.

Manufacturing never really made it out of recession.
Retail is going into recession fast.

People make much of the increase in inflation (up a quater point or similar), yet the 25, 30% houseprice inflation that we saw in '03, '04 never seemed to be a cause of concern.

Nowadays first time buyers have to committ a huge percentage of their future earnings to buying a property. Think of it: this is a massive redistribution of wealth, towards the already wealthy.

Unless houseprices correct themselves (which looks unlikely as they are about to be added to many private pension portfolios), we are going to enter a new era in Britain where an underclass of lower to middle earners will never be able to afford their own property.

What this means for our economy is yet to be realised as we have not been in this position since way before the industrial revolution where many people paid rent to large landowners.

Because of our addiction to credit (or tomorrow's money today), insurance companies are coming up with policies that will settle your outstanding debts on the occassion of your death. People are talking now about the prospect of leaving your debts to your children rather than the tradition of leaving a nest egg.

Apart from property owners, the other main group of people who benefit from our credit slavery are of course those who own the money (the banks). They are the ultimate winners from our current predicament.

Deavon,

Your prognosis is in my view probably too pessimistic, not least because in focusing on the downside of the credit boom, you are ignoring its positive side - i.e. the effect it has on boosting demand for products and services. It may well cause a problematic debt burden (for certain groups) but is also an engine of growth and the creator of jobs through the multiplier effect. Despite all of the horror stories about mounting debt and repossessions etc, I don't think the problem is a serious for most people as your post would suggest. The size of a debt only becomes an issue when people lose the ability to pay it back. So far, and generally speaking, I do not think we are in this position, or are likely to be in it for the forseeable future.

Note my use of the word 'probably' though. I think anyone making predictions these days about the prospects for the domestic or the global economy needs to hedge their statements with all sorts of qualifications. In my opinion, there are so many uncertainties, and so many variables, affecting the global economy (and therefore the domestic economy) that it is virtually impossible to predict with any great degree of accuracy how things are likely to pan out.

I will, however, make two predictions: firstly, the general trend in the British economy will continue to be strongly affected by the performance of the US economy; and secondly, the British economy will continue to perform better than those of the eurozone economies (with perhaps a couple of exceptions). The former factor we can do little about in the short to medium terms; the latter factor depends on a policy decision - i.e. to continue to stay out of the eurozone (i.e. not to adopt the euro as our currency, which would be as disastrous for us as it is proving to be for Germany and Italy at the moment).