John Hussman: It's Official, The Data Says Another Recession Is Coming

The Business Insider ^ | 6-28-2010 | Joe Weisenthal

[blam]

John Hussman: It's Official, The Data Says Another Recession Is Coming

Joe Weisenthal
Jun. 28, 2010, 12:48 PM

Fund manager John Hussman (via PragCap), who's been bearish for awhile, says it's now clear that a double-dip is coming.

Based on evidence that has always and only been observed during or immediately prior to U.S. recessions, the U.S. economy appears headed into a second leg of an unusually challenging downturn.

A few weeks ago, I noted that our recession warning composite was on the brink of a signal that has always and only occurred during or immediately prior to U.S. recessions, the last signal being the warning I reported in the November 12, 2007 weekly comment Expecting A Recession. While the set of criteria I noted then would still require a decline in the ISM Purchasing Managers Index to 54 or less to complete a recession warning, what prompts my immediate concern is that the growth rate of the ECRI Weekly Leading Index has now declined to -6.9%. The WLI growth rate has historically demonstrated a strong correlation with the ISM Purchasing Managers Index, with the correlation being highest at a lead time of 13 weeks.

Image: Hussman

Taking the growth rate of the WLI as a single indicator, the only instance when a level of -6.9% was not associated with an actual recession was a single observation in 1988. But as I've long noted, recession evidence is best taken as a syndrome of multiple conditions, including the behavior of the yield curve, credit spreads, stock prices, and employment growth. Given that the WLI growth rate leads the PMI by about 13 weeks, I substituted the WLI growth rate for the PMI criterion in condition 4 of our recession warning composite.

[snip]

[blam]

Paul Krugman Throws In The Towel, Says We're Headed For Another Depression

[frogjerk]

Paul Krugman Throws In The Towel, Says We're Headed For Another Depression

KRUGMAN:"WAAAAAaaaaa!!! Keep spending money....WAAAAaaaa...That's it, if you don't keep spending money I'm going to go home and write an article that tells of the coming depression...."

[SupplySider]

Thank you for posting. I’ve been a fan of John Hussman for many years. My idea of a good time, sadly, is reading this lengthy piece. :)

[AngelesCrestHighway]

“a double-dip is coming.”....

Thanks to the Double-Dip in the White House!...

[equalitybeforethelaw]

Its clear from the chart that we need more debt, said Mr. Skittles.

[Anti-Bubba182]

Paul Krugman takes it where the sun never shines.

[norraad]

"Lordy, lordy I didn't E X P E C T that?

[blam]

Double Dip? We're Already In Recession

[Huskrrrr]

Batten down the hatches! Taxes a plenty next year.

[denydenydeny]

Bush’s fault, obviously.

[JPG]

Obama, the king of the shave-ice, double-dip. Bammi sucks the straw to get the syrup at the bottom while America financially burns. Move over, Nero.

[fatnotlazy]

Methinks we’ve been in a recession a lot longer than the White House wants to admit.

Of course, it’s all Bush’s fault.

[pallis]

A lot of unemployed people would be surprised to discover that we’ve bubbled out of the recession we are dipping back into, and soon they will have more company to share their grief.

[Red6]

Krugman is exactly where he belongs, in an ivory palace (Princeton- the elitist types care a lot about these status names), sheltered from reality and living in a theoretical bubble. He's one of those academic types that does well writing books, giving lectures and consultation........ In reality he contradicts himself...... pushes a political paradigm........ He's one of those that does well in academia. What he says can be boiled down to a few sentences and has little value to those dealing with the realities in business etc. As a former PM for Perot Systems, what value did Krugman have to me? None.

[arkady_renko]

later

[blam]

The Bearish Chart Of The Day Is The Breakout Of The 10-Year (Flight To Safety)

[SteveH]

This is unexpected...

:-(

[Lancey Howard]

"People will have to make money the old-fashioned way and earrrrrn it."

[The Comedian]

It's Official: We Never Left the First One

Frowning takes 68 muscles.
Smiling takes 6.
Pulling this trigger takes 2.
I'm lazy.