Posted on 10/17/2011 3:45:38 AM PDT by blam
HUSSMAN: The Recession Is Still Coming, And The Europe Mess Has Barely Gotten Started
Joe Weisenthal
Oct. 17, 2011, 6:16 AM
So you think last week's rally and firmer than expected data means we're out of the woods? Ha!
In his latest note, John Hussman spills some cold water.
From my perspective, Wall Street's "relief" about the economy, and its willingness to set aside recession concerns, is a mistake born of confusion between leading indicators and lagging ones. Leading evidence is not only clear, but on a statistical basis is essentially certain that the U.S. economy, and indeed, the global economy, faces an oncoming recession. As Lakshman Achuthan notes on the basis of ECRI's own (and historically reliable) set of indicators, "We've entered a vicious cycle, and it's too late: a recession can't be averted." Likewise, lagging evidence is largely clear that the economy was not yet in a recession as of, say, August or September. The error that investors are inviting here is to treat lagging indicators as if they are leading ones.
The simple fact is that the measures that we use to identify recession risk tend to operate with a lead of a few months. Those few months are often critical, in the sense that the markets can often suffer deep and abrupt losses before coincident and lagging evidence demonstrates actual economic weakness. As a result, there is sometimes a "denial" phase between the point where the leading evidence locks onto a recession track, and the point where the coincident evidence confirms it. We saw exactly that sort of pattern prior to the last recession. While the recession evidence was in by November 2007 (see Expecting A Recession ), the economy enjoyed two additional months of payroll job growth
(snip)
(Excerpt) Read more at businessinsider.com ...
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Good analysis. Hussman sometimes misses mini-rallies but usually avoids the major pitfalls.
“The Recession Is Still Coming”
Is this article 3 years old? Why do they keep talking about “recession coming” and “double-dip” when we’ve never gotten out of the low point?
I know they use figures to explain their terminology, but anyone who doesn’t believe we are already in a depression is in denial. The high unemployment, the number of “for sale” signs, and a brand-new mall here in northern NJ that has NEVER OPENED, tells us what apparently the talking heads don’t know: the recession/depression has been here for some time.
Ignoring it doesn’t make it go away, nor does it make it invisible to us little people.
(Some people are genetically incapable of learning.)
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