Greiner says recession will be long and deep
Bill Greiner, chief investment officer for UMB Bank, says that the U.S. economy will be in recession for most of the next year and that unemployment will exceed 8 percent before it’s over.
His downbeat assessment of the economy came during a breakfast presentation to UMB customers at the Frontenac Hilton. He says the recession probably began this summer and will last until at least the third quarter of next year. The cause is an overdose of debt, he said:
The reason we’re in this recession has nothing to do with the housing market or the price of oil. It has to do with the financial structure of the United States. The entire economy is too highly levered. The housing problem was a result of this issue.
Total debt in the U.S., as a percentage of gross domestic product, rose from 157 percent in 1982 to 357 percent now. It doesn’t have to return to the lower level, he said, but
Consumers have to start getting their balance sheets in order. In a volatile environment, people save more and spend less. Our view is that over the next year or so, the savings rate is probably going to go back to between 7 and 10 percent of personal income.
That would compare with a savings rate that’s been at 1 to 2 percent recently, and has sometimes been negative. The next decade, Greiner says, will look more like the 1950s or ’60s — with a growing government sector, and relatively frequent recessions — than the consumer-led 1980s and ’90s.
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David Nicklaus has covered St. Louis business for more than 25 years. His column appears three days a week on the Post-Dispatch business page. 
Financial crisis in the United States of America is now in full swing. America’s economic troubles weren’t started by payday loans, to be sure. The official start time of the current recession was December 2007, according to the NBER. The NBER, or the National Bureau of Economic Research, has identified December 2007 as the peak time from where the US has declined ever since. The NBER defines recession as a period of time featuring “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators.” The NBER is considered one of the best authorities on economic research, trusted by the government, the private sector, and academia, so this is about as official as you get. The biggest criteria are employment, income, industrial output, and sales figures. The peak time for income and employment were in December of 2007, industrial output peaked in January 2008, and then sales peaked in June. Congress, especially Democrats, weren’t exactly surprised, and called for a stimulus package. Senate Majority Leader Harry Reid (D-Nevada) said that “The announcement simply makes official what we have long known: with rising costs, rising unemployment, record foreclosures and depleted savings, we must do more to help families make ends meet.” Not rolling over and granting the banks’ wish to ban payday loans would be a good idea, too. Bear in mind that economies work in cycles, booms and busts. The expansion that just ended lasted from November 2001 to December 2007, for 73 months. The record is 120 months, but most expansions last an average of 57 months since the end of World War II. For more info on Payday Loans, click the link.