Tulsa World: All economic signs point to recession

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All economic signs point to recession

By R. HINRY MIGLIORE Business Viewpoint
Published: 7/10/2008 2:08 AM
Last Modified: 7/10/2008 4:19 AM

Business journalist Daniel Gross has stated this year, "A recession is defined as a widespread contraction in economic activity lasting more than a few months, and because of the lag in financial data, recessions typically aren't officially declared until long after they start. In short, the United States could already be in one."

The late Russian economist Nikolai Kondratieff figured this out in the 1930s. He was banished to prison in the 1920s for making the argument that there are predictable economic cycles (See graphic).

My interpretation of the Kondratieff wave and other analyses of economic cycles as far back as 1985 indicated a downturn circa 2000. Here we are in 2008, and for sure, we are in a position for an economic adjustment.

At the root of Kondratieff's theory is the rise and fall of commodity prices.

In January 2006, Peter McKay of The Wall Street Journal reported, "The Dow Jones-AIG Index of 20 commodities ended at 171.15, up 17.5 percent, or 25.54 points. Another broad-based measure, the Reuters/Jefferies CRB Index, rose 16.9 percent, or 47.93 points, to finish at 331.83, close to a record."

The trend continues today. This spring found all commodity prices at record highs: aluminum up 27.1 percent, copper up 25.1 percent, corn up 29.5 percent, unleaded gasoline up 33.5 percent, gold up 10.1 percent, lumber up 4.5 percent, natural gas up 51.9 percent, heating oil up 42.8 percent, crude oil up 34.5 percent, platinum up 40.5 percent, silver up 19.4 percent and soybeans up 11.1 percent.

My research indicates that economic cycles can be traced as far back as the late 1200s in Great Britain. Since 1800, the United States has had four definite cycles. All the signals indicate our economy is ready for a correction. We are in the fourth quadrant of Kondratieff's curve.

So far this summer, the stock market is trading in the mid-11,000 range, the price of oil is close to $140 a barrel (compared with April 2007, when it was $62.26) and annual Chinese economic growth over the last decade is in the 15 percent range. The U.S. jobless rate recently climbed the most in 22 years to reach 5.5 percent, and the dollar is down significantly against most other world currencies.

In a CNBC interview June 26, legendary investor Warren Buffett said he sees a worsening economy.

A junior high school civics class could figure out the current solution. A government policy that makes the United States energy self-sufficient solves the long-term problem. We don't need Saudi, Kuwaiti, Russian or Iraqi oil.

R. Henry Migliore is president of Managing for Success, an international consulting company. He was professor of strategic planning and management at Northeastern State University/Oklahoma State University-Tulsa from 1987 to 2002. He served as a professor of management at the Oral Roberts University School of Business from 1975 until 1987, and was founding dean of the school.

The views expressed here are those of the author and not the Tulsa World. To inquire about writing a Business Viewpoint column, e-mail a short outline of the article to Business Editor John Stancavage at john.stancavage@tulsaworld.com. The column should focus on a business trend; outlook for the city, state or industry; or discuss a topic of interest in a particular area of expertise. Articles should not promote the writer’s business or be overly political in nature.

By R. HINRY MIGLIORE Business Viewpoint

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	Report Comment Javine Hill, (7/10/2008 5:07:28 AM) Wouldn't it be an idea to have public conversation with the author, Bruce Langhus who spoke yesterday at the Central library's brown bag series, and others who might imagine a future that reflects our demographic, economic, and resource realities?
	Report Comment coconut, Sand Springs (7/10/2008 10:00:10 AM) I say we are in recession too....but the government say NO.... go figure... I think we need a new definition.
	Report Comment Daven, Tulsa (7/10/2008 12:11:11 PM) Well Duuuuuh! Your tax dollars at work. lol!
	Report Comment oldrustytulsa, (7/13/2008 4:32:06 PM) Now this dont take a Rocket scientist,, Just go to the grocery store, or by a gas pump.,Recession hell-fire, we are about in a depression,And the Democratic congress is the people to blame for the economic mess we are in.,So come November, Do not vote for any more Democrats.

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