John Kenneth Galbraith once famously wrote that the purpose of economic forecasting is to make astrology look legitimate.
It's worse than ever as the range of guesses hits the headlines in the past couple of weeks from multilateral organizations to bank economists.
Crystal-ballgazing has never been more perilous because the world has so many moving parts operating at the speed of light.
For most, the only reliable barometers are what customers and employers are saying and doing. This is because customers and employers are not always right, but they are never wrong. Their opinions, spread by word and deed, become self-fulfilling to a certain extent and should be heeded.
And the consensus seems to be that the bottom has not been reached overall and that is why unemployment and bankruptcies are tracking upwards and will continue to do so for many months.
Slow to Get It
The entire world held its breath for months after the catastrophe hit in September 2008. Suppliers went unpaid by customers but did not complain. When orders dried up, they hunkered down, hoping for an uptick in a few months. They burned through their retained earnings to keep afloat, slow to lay off or otherwise downsize. Retailers were tardy in trimming inventories. Manufacturers and distributors waited until some signs of recovery before deciding what products or services to abandon or slash. Consumers canceled trips if they could and postponed trading up houses, condos, appliances or cars.
Then spring sprung and tough decisions have led to more job losses and bankruptcies than before. And this may increase for some time, six months if one is optimistic and longer if not.
Businesses holding the bag cannot do so any longer. Some cannot face the prospect of a few more years of hardship so they go under and/or push their suppliers into bankruptcy.
Government Giveth and Taketh Away
Another reason why green shoots have not led to much of a pulse in economic activity is that, despite trillions in bailouts and government initiatives, many government stimulus packages are mislabeled, have long lead times, been bogged down in red tape or their effectiveness been negated by premature tax hikes.
There is government tax-creep, and tax clouds looming, across U.S. and Canada, thus dampening some gains made by over-spending.
Florida and dozens more states have dramatically hiked taxes on cigarettes, gasoline, liquor.
More Trouble Looms
That aside, that things will worsen is probably as good a guess as any. Here are the statistics:
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