All This Talk Of A Double-Dip Recession Is Almost Certainly Nonsense

The Business Insider ^ | 6-7-2010 | Barry Ritholtz, The Big Picture

[blam]

All This Talk Of A Double-Dip Recession Is Almost Certainly Nonsense

Barry Ritholtz, The Big Picture
Jun. 7, 2010, 9:30 PM

I see... whatever I have recently seen.

Our story so far: Economists as a group, completely missed the oncoming credit crisis, recession, and market collapse. In the beginning of 2009, they did not discern the economic revival. They sure as hell missed the March 2009 market bottom and forthcoming 78% rally.

Now, with Q2 of 2010 coming to a close, many have begun chattering about a double dip recession. A Google search for double dip recession generates 3,470 recent news items.

While I suggest you ignore those forecasters who — repeatedly — got it wrong, let’s at least look at the data to see what has the dismal crowd all hot and bothered.

Over the past year, a combination of pent up demand and Federal largesse created an initial spike in various sectors: Retail sales, housing activity, autos, and of course technology. However, the initial pop is now fading.

As the data confirms, there can be no doubt we have entered a soft patch. Indeed, the following data points confirm a general slowing:

• Jobs: Private sector hiring cooled off last month, with just 41,000 hires;

• GDP grew at a 3% in Q1 2010, down from 5.6% Q4 2009.

• Europe: The problems in Greek Spain and Hungary are likely to lead to significant austerity measures in Europe. Expect the Continent to see anemic growth at about 1% GDP, and that can shave 0.5% off of US GDP.

• Retailers showed a disappointing May, making no gains (outside of Autos).

• Homebuilders sentiment and mortgage apps have plunged, following the expiration of the home buyer tax credit.

[snip]

[The Magical Mischief Tour]

Ooooooh, look!

A Unicorn...

[Dionysius]

I don’t know. Seems like crap to me.

[perfect_rovian_storm]

What a bunch of shallow, butt covering, nonsense this article is. Sheesh! ;p

[LibLieSlayer]

Q4@5.6% has been readjusted to show .5% growth. The slurping sound is this author’s joy over his new presidential knee pads.

LLS

[mamelukesabre]

Seems to me our deficit spending is doing less and less stimulating the more times that old trick is used. Pretty soon we will be at a point where our deficit spending does do anything to spur the economy. Then how will we pay back all that accumulated deficits?

[shempy]

They apparently have failed to learn the lessons of 1929-33 and 1937-38. The time for balanced budgets and fiscal prudence is during the expansion phases of the economy — and not the post recession period where after an initial spurt, growth is beginning to slow.

Another deluded fool thinking we need to spend our way out of this mess.

[frogjerk]

The comments at the link are great. I don’t think I read one that believes this idiot.

[Parley Baer]

Money talks and I know a lot of people have moved to the sidelines with a cash position. I would say confidence is pretty low.

[arrogantsob]

Housing values show no evidence of recovery even with more guberment money and historically low interest rates. Wonder why. The values seemed to have declined more than is typical for most recessions. Can’t see how the recent meltdown of the stock market will help the “recovery” either.

One thing does seem clear though and that is that any recovery is not coming fast enough or hard enough to help Urkle’s party in the fall. Course we are speaking of the American idiot voter there.

[eggman]

The time for balanced budgets and fiscal prudence is during the expansion phases of the economy — and not the post recession period where after an initial spurt, growth is beginning to slow.

The hissing sound you hear is the hole in the economy that all the hot air the government pumped in the past year is escaping out of. The author is a true believer that the government simply needs to throw more money at the problem with no specific long-term plan.

You're absolutely right that government spending alone can't save the economy. The proper environment for growth must exist and Obama has done nothing to help that happen. Everything that has been done has lots of strings attached to weigh down the producers. Everyone is looking for the next quick fix but, like the gulf oil disaster, they don't know how to plug the damn hole. Where is Obama's relief well for the taxpayer money he's spewing out?

[Secret Agent Man]

I think it’s pretty nonsensical too. You have to actually have a real rise in the economy (not artificial temporary government census hires, not cash for clunkers and other government stimulus freebies where spending tanks when they’re gone) in order to dip back down again and have a double-dip recession. There has been no real rise to dip down again, from.

[taxtruth]

The only constant rally I see is G O L D!

[Oceander]

Nonsense on stilts.

[ding_dong_daddy_from_dumas]

They apparently have failed to learn the lessons of 1929-33 and 1937-38. The time for balanced budgets and fiscal prudence is during the expansion phases of the economy — and not the post recession period where after an initial spurt, growth is beginning to slow.

The author's cure for too much spending: more spending. Yeah, some characters would benefit, but not us.

[NTHockey]

The reality of the non-existant housing market is this:
1. It is of ZERO benefit to the banks to lend money for mortgages with interest rates this low.
2. Until companies hire real people for real jobs, there is ZERO demand for mortgages.
3. Banks want housing prices to drop - more mortgages for the same money and less exposure/loan.
4. Government manipulation, through tax credits, is a short term “kick the can down the road” approach.
5. Banks are making their money these days by lending money to the federal government, WITH MONEY OUT OF OUR POCKETS, at higher interest rates.

[stephenjohnbanker]

Is Barry Ritholtz concious??

[commish]

Tell the truth, this guys name is actually Steppin Fetchit isn’t it.

[arrogantsob]

I don’t believe that 1,3, or 5 is true.

Loans are still profitable to the banks.

Banks have no interest in seeing housing prices collapse further. They may have already dropped further than after 1929 as it is.

Government interest rates are barely higher than mortgages if that.

There is no question that housing prices are linked closely to job creation and employment.

Tax credits are likely to draw in people who can barely afford the purchase which is the root of the collapse to begin with.