It's a bad day for Janesville
I saw on CNN that GM plant in Janesville is closing. The company is closing four factories in North America that make SUV's and trucks. The one in Janesville produces Tahoes, Surburbans, and Yukons. It'll have a large local impact in a city of 60,000 when 2,390 jobs at the factory will be lost. The articles say that GM isn't expecting the demand of those large vehicles to revive.
According to the business cycle, during boom times, demand rises so producers produce more. Over time, demand becomes satisfied and unsold products start to build up in stores and warehouses, causing the producers to decrease production. Once the excess production has been consumed then production picks up and it's back to a boom cycle.
It doesn't seem like we've hit the inflection point of the current downturn yet. With cars and houses, prices are still decreasing, indicating there's excess supply, not to mention all the supply that has yet to go on the market--people are trying to get rid of their big cars and there are still many houses that will be foreclosed on. On this chart of mortgage schedules, we're only at month 18.
Things started to look slightly less gloomy recently when the news reported that the economy grew by less than 1% the last two quarters, avoiding the unpleasantness of a real recession literally by the skin of the economy's teeth. However, if true inflation were taken into account, which is nearly three times (fourth graph here) as much as the government reports, the economy has actually not grown positively.
According to the business cycle, during boom times, demand rises so producers produce more. Over time, demand becomes satisfied and unsold products start to build up in stores and warehouses, causing the producers to decrease production. Once the excess production has been consumed then production picks up and it's back to a boom cycle.
It doesn't seem like we've hit the inflection point of the current downturn yet. With cars and houses, prices are still decreasing, indicating there's excess supply, not to mention all the supply that has yet to go on the market--people are trying to get rid of their big cars and there are still many houses that will be foreclosed on. On this chart of mortgage schedules, we're only at month 18.
Things started to look slightly less gloomy recently when the news reported that the economy grew by less than 1% the last two quarters, avoiding the unpleasantness of a real recession literally by the skin of the economy's teeth. However, if true inflation were taken into account, which is nearly three times (fourth graph here) as much as the government reports, the economy has actually not grown positively.
Labels: business, cars, economics, Wisconsin
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posted by Mike F at 5:36 PM
