NBR: Green Shoots Give Hope But…
Here is last night’s PBS appearance:
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Green Shoots Give Hope But…
Thursday, June 18, 2009
http://www.pbs.org/nbr/site/onair/transcripts/recession_shows_recovery_signs_090618/
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click for video (second story at the 5 minute mark)
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SUSIE GHARIB: The economy sprouted more of those so-called green shoots today, a smaller than expected rise in weekly jobless benefit claims and a solid rise in May leading economic indicators. But despite the positive economic data, the U.S. remains mired in a recession which began in December of 2007. When will the downturn be over? Suzanne Pratt got some answers to that all-important question.
SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: Just as all bull markets eventually come to an end, so too do all recessions. The current downturn, arguably the worst since the great depression, is likely to be no different. Exactly when the recession will end is a bit of a debate on Wall Street. There is however far more agreement as to what the recovery will look like whenever it ultimately arrives. First the issue of timing. In the mainstream camp, many experts predict the economy will soon start expanding again.
MICHAEL MORAN, CHIEF ECONOMIST, DAIWA SECURITIES: When they get around to dating the end of the recession, I think it will probably be sometime in the late summer, early fall. If I had to pick one single month I would probably say September. But, I would stay open minded on that.
SAM STOVALL, CHIEF INVEST. STRATEGIST, STANDARD & POOR’S: Our view is the equity markets are foreshadowing an end to the recession by the September period and S&P economics is foreshadowing the same.
PRATT: And then there are the outliers. People like Barry Ritholtz, author of “Bailout Nation,” the popular blog “The Big Picture” and head of research at Fusion Analytics. He says it will be next year before we say, bye-bye recession.
BARRY RITHOLTZ, EQUITY RESEARCH DIR., FUSION ANALYTICS: My best guess is somewhere in the first half of 2010 and if we’re lucky the first quarter of 2010. But, it’s now the end of June. Are you telling me in July we’re going to be out of recession because that’s Q3 and I’m sorry, I don’t really see that.
PRATT: Second, the issue of the recovery itself. Ritholtz sees an extended stretch of transition with GDP hovering in the meek range of only 1 to 2 percent.
RITHOLTZ: You’re not going to come from this really horrific period to one day, the switch goes on and everybody says OK, “oly oly oxen free, everybody back in the pool.” That’s not going to happen.
PRATT: Many other experts agree saying it could be several months after the end of the recession before we see vigorous economic expansion. Citigroup economist Robert Diclemente calls it the foothills of recovery.
ROBERT DICLEMENTE, CHIEF US ECONOMIST, CITIGROUP: I don’t think that what we’ve got in store at the end of this year is more than just a bridging produced by fiscal stimulus and the end of this inventory correction as businesses have tried to realign production with lower levels of demand.
PRATT: Whenever the recovery begins, this year or next, experts say most Americans are likely to remain disillusioned. That’s because it still won’t feel like we’re out of recession until many months after it officially ends. Suzanne Pratt, NIGHTLY BUSINESS REPORT, New York.
June 19th, 2009 at 3:44 pm
not sure there is really any agreement on what recovery looks like. will it be back to where we were ? not a chance.
i suspect the GR has had as much impact on consumers that they aren’t going to come back to spending like they were for at least another 50 or so years.
and i base that on what happened right before the GD. consumers were spending a lot then too. but after, not so much. and they didn’t trust banks or wall street. had very low tolerance for either of these.
June 19th, 2009 at 4:15 pm
willid-
the way I see it- maybe this is it- as good as it gets- we are at the pinnacle of recovery- and we can only look at a slow economic decline – maybe in the future- we will look at the this exact moment with nostalgia- and say- “man- those were the good times”-
because outside of one inflated bubble after another- I don’t see what will carry this country forward into future prosperity- we will become but a shabby less well off version of our former selves- no longer able to afford or finance our hedonistic ways- as addressed by Paul McCulley of PIMPCO when in 2001 he endorsed the creation of a housing bubble so Americans could carry on with what we do best- borrow, spend and consume-
the music has to stop sometime
June 19th, 2009 at 4:46 pm
ahab, i think you might be right. i just suspect that the consumer will lead us down as they keep loosing their incomes, with no let up. oddly enough though, we will probably take every one else down with us. so the race to teh bottom is on! any guesses where bottom will be? and who gets their first? or last?
June 19th, 2009 at 4:51 pm
Good for Barry. NBR is not famous for presenting non-bullish views. In fact, many of their interviews (even with those who have been lukewarm in their judgment) end with phrases like, “We only have a few seconds left, but won’t you give us the stocks you are recommending?”
June 19th, 2009 at 4:55 pm
Equities appear overpriced and everyone’s projections are based on overly optimistic assumptions. New cool trend: automobile registrations nationwide. Guess what? They’re down. Gas prices become a leading economic indicator. Here’s the worst part: any gain in economic activity gets siphoned off and sent to foreign lands in the form of higher prices. WTF.
June 19th, 2009 at 5:40 pm
Everything seems to be in place for the next major downturn in our economy and in stocks: Commodities are rising, long yields are rising, insiders are selling, option ARM resets are coming, and bullish sentiment as a whole is reaching extreme levels. I personally feel the recession/depression will last into 2012-2013, but I agree with Barry that when growth does occur, it will be muted.
June 19th, 2009 at 6:10 pm
@ ahab — “the music has to stop sometime”
Perhaps, but it’s still playing. Consumers were lined up at CA Best Buys as early as Wednesday to buy the latest, must have new gadget today — the new I-Phone. There were 500K pre-sales. Until the mindset in this country changes, nothing stops. Here’s my question; if you have a cell phone and it performs the basic functions that one is supposed to well enough, why do you need a new one? I guess so that you can call up your friends and boast about your achievement. Pitiful….
June 19th, 2009 at 7:55 pm
I loved BRs “oly oly oxen free” part of his response regarding the time after the end of the recession. (And, I fondly remember the game associated with it from my New York childhood.) But, non-New Yorkers may not have played that kid’s game.
June 19th, 2009 at 8:12 pm
SAM STOVALL, CHIEF INVEST. STRATEGIST, STANDARD & POOR’S: Our view is the equity markets are foreshadowing an end to the recession…
Good grief, really? The old myth about the stock market predicting the recovery? Clearly investors guess several times during a recession/bear market and get all excited about a recovery based on the thin evidence of something positive. Most of those turn into bear market rallies and eventually the market “gets it right” and the start of a new bull market comes from that last rally.
Why is that so hard to understand amongst supposed experts like this “chief investment strategist”? I guess they have to prop up the myth of the all knowing market to help justify their existence and their pathetic forecasts.
June 20th, 2009 at 2:56 am
So these green shoots are the slower growing type and won’t ripen until H1 2010?
How can folks see that far ahead from current data and second derivatives?
My dart throwing chimpanzee here claims it’s going to be H2 2010. He seems quite insistent and confident in this. No, wait…now he says it’s going to be H1 2011. He’s jumping up and down and throwing bananas at me. I’ll take that as a firm H1 2011. No, wait….looks now it looks like H2 2009…no, wait….
June 20th, 2009 at 8:07 am
Green shoots?
Fighting two wars…check
Missle defense around Hawaii…check
http://www.foxnews.com/politics/2009/06/19/deploys-missile-defense-hawaii/
Higher unemployment (yesterday in 48/50 states)…check
http://www.bls.gov/news.release/laus.nr0.htm
Alt-A hasn’t really started yet…check
34% less national tax revenues 2009 c/w 2008…check
continuing claims decreases due to exhaustion of longest affected workers…check
Massively costly health care plan on the horizon… check
Tuition costs up…in my state an average of 8% for 2010…check
gasoline costs rising again…check
Bailout of Kalifornia due…check
state tax revenues down severely…check
GM bankruptcy…check
Zombie banks…check
Cash for clunkers for Mr. Taxpayer…check
Mortgage subsidies for Mr. Taxpayer…check
The only thing expanding this year will be the number of zeros on the checks we write to Uncle Stupid.
June 20th, 2009 at 8:18 am
we will be in and barely out of recessions for years until this cycle runs it’s course and from what the solutions proposed by the completely unproductive incompetent gov i’d say they don’t recognize the problem whatsoever. bottom line there is too much debt that must be payed bck or destroyed and funny thing is this process has not EVEN BEGUN LOL> furthermore tax revenue across stae local and fed gov is plummetting. excess capacity around the GLOBE IS COMPLETELY OBSCENE especially in china which is another bubble. there are no driver for jobs and there will be no recovery in housing until 2013-2014. good luck
June 20th, 2009 at 9:37 am
Sung to the tune of “Who’s gonna buy this diamond ring?”
Who’s gonna buy all this junky debt?
Our GDP’s in the hole, lest anyone forget
This pile of debt doesn’t buy what it did before
and securitizing debt doesn’t fly like it did before
So if your heart is set on that new car
better bust open the penny jar
June 20th, 2009 at 9:42 am
Our gullible, thumb-sucking, glass-is-half-full financial media, egged on by Wall Street pumpers and touts, yet again completely misses the story.
Massive wealth and credit destruction is well underway. It will take many years. perhaps decades, for its effects to finally wane.
June 20th, 2009 at 10:19 am
“Our gullible, thumb-sucking, glass-is-half-full financial media, egged on by Wall Street pumpers and touts, yet again completely misses the story.”
I would amend this statement to:
Our gullible, thumb-sucking, don’t-report-just-write-what-we-tell-you-to-mainstream-media….
The real reporting done is by the MOLRs (Media Of Last Resort, i.e., blogs.)
July 6th, 2009 at 7:26 am
[...] case in point is the absurdly foolish Green Shoots compost. As we have detailed since this nonsense first started spreading earlier this year, the data simply did not support the [...]