Uh-Oh: Economists Say Recovery, Market Gains Solid
No worries!
The same people who missed the worst oncoming recession in 80 years, the credit collapse (worst in US), and the market crash are now telling you the recovery is for real.
Gee, why does this — Economists expect recovery to stick, see slow, steady GDP rise — not make me more comfortable?
“Nearly four of five economists surveyed by USA TODAY say the stock market rally since March is heralding a sustainable recovery.
If they’re right, the nation won’t slip back into recession nor will the Dow Jones industrial average plunge anywhere near its March low of 6547.05. The Dow sank nearly 3% Friday to close at 9713 after the government reported consumer spending fell 0.5% in September.”
I had to file this under categories “Contrary Indicators” and “Really, really bad calls.”
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Source:
Economists expect recovery to stick, see slow, steady GDP rise
Paul Davidson and Barbara Hansen,
USA TODAY November 2, 2009
http://www.usatoday.com/money/economy/2009-11-01-survey-recovery-economy_N.htm
Tracking the pulse of the economy
http://www.usatoday.com/money/economy/economic-outlook.htm/
November 2nd, 2009 at 10:39 am
Best line from the story: “”The first thing to recognize is the March low was a wild overreaction,” says Joel Naroff of Naroff Economic Advisors.
Still, he looks for the market to rise or fall 10% in the months ahead because of uncertainty about the recovery’s strength.”
-So Mr. Naroff expects the market to “rise or fall 10%” in the months ahead. Now that’s what a call solid prognostication.
November 2nd, 2009 at 10:46 am
> So Mr. Naroff expects the market to “rise or fall 10%” in the months ahead. Now that’s what a call solid prognostication.
Way to not be on the fence, Joel!
Seriously, the most disturbing line in the article is the first one: “Nearly four of five economists surveyed by USA TODAY say the STOCK MARKET RALLY SINCE MARCH IS HERALDING A SUSTAINABLE RECOVERY.” WTF? If economists rely on watching the stock market for some underlying ECONOMIC strength, then we are all in big trouble…
HCF
November 2nd, 2009 at 10:51 am
HCF: Like they say, two professions where you can be consistently wrong and still get paid, meteorologist and economist.
As Barry mentioned, why would anyone ever listen to predictions from people who never saw it coming in the first place? Beyond ridiculous.
November 2nd, 2009 at 10:59 am
@Harry:
At least TV weather people are usually very attractive… Economists have no such excuse!
HCF
November 2nd, 2009 at 11:12 am
HCF: Clearly you haven’t seen the weather personalities here in the Birmingham, AL area. A bunch of dudes is all we have to look at around here. I’ve travelled to a lot of cities all across the US, and we just don’t have much down here in terms of eye candy on the TV local news.
And the economists aren’t much better
. Now, the trust bankers in the area are another story ;D.
November 2nd, 2009 at 11:13 am
Does anyone know a billionaire economist?
If economists were so smart, they would be some of the richest people in the world.
November 2nd, 2009 at 11:15 am
[...] Posted by Chill on 02 Nov 2009 at 11:15 am | I think a continued economic recovery is unlikely, too. The same people who missed the worst oncoming recession in 80 years, the credit collapse (worst in [...]
November 2nd, 2009 at 11:34 am
USA Today did a good job with the charts. Building Permits (25% of prior levels) and auto sales (down 6 million), along with hours worked are the most concerning indicators since they reflect real economic activity. Eventually people will replace their cars and a more reasonable level of sales will be reached. With permits however, we have nearly every house, mall, office bldg., and for that matter power plant that we are going to need for some time.
November 2nd, 2009 at 11:46 am
Pending Home Sales Dissected:
The industry loves to report a “soft” statistic like “pending” sales, but how about the percent of contracts that fall through because the financing failed. Based on the latest numbers reported by new homebuilders, cancellation rates are still running in the 20% range.
http://truthingold.blogspot.com/2009/11/pending-home-sales-dissected.html
November 2nd, 2009 at 11:57 am
Apparently there is great value in owning real estate close by the place from whence all economic decisions emanate:
Nov. 2 (Bloomberg) — Demand for new homes is growing faster in the Washington area than in any other major U.S. city as existing inventory shrinks and a record $3.52 trillion federal budget fuels the local economy.
Builders took out construction permits on 4,442 single- family homes in the Washington metropolitan area in the third quarter, up 11 percent from a year earlier, according to the Census Bureau. Nationwide, permits fell 17 percent.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aQelOG6kQtj8&pos=6
~indeed, it’s good to be the king or one of his courtiers. Being a serf, not so much.
November 2nd, 2009 at 12:08 pm
“I’m thinking of leaving my husband,” complained the economist’s wife.
“All he ever does is stand at the end of the bed and tell me how good things are going to be.”
November 2nd, 2009 at 12:20 pm
http://www.businessinsider.com/latest-bank-failures-were-casualties-of-the-commercial-real-estate-collapse-2009-11
Latest Bank Failures Were Casualties Of The Commercial Real Estate Collapse
“The FDIC seized a staggering nine banks on Friday. At least three of them, all in California, were victims of the CRE collapse……”
November 2nd, 2009 at 12:21 pm
If you agree with the vast majority and are wrong, you have an excuse and will keep your job. If you disagree and are wrong, watch out.
November 2nd, 2009 at 12:51 pm
Bruce, what inning is it for commercial RE?
I think FDIC wants to keep the foreclosures in single digits as long as possible and will start spreading the announcemnts over several days
November 2nd, 2009 at 1:26 pm
Good question, jc. I noticed that two of the world’s billionaires were both quoted over the weekend as the coming CRE collapse with be “frightening”…I think is the way Wilbur Ross mentioned it.
‘course I am just trying to dog paddle here amonst the sharks….
November 2nd, 2009 at 1:27 pm
This one turned on a dime today:
GS Nov 2009 140.0000 put (GSWH.X)
Wonder why…
November 2nd, 2009 at 1:28 pm
By the way, the only way I passed high school typinng was because the teacher admired my steady and didn’t want to fail me because of her….so if you see “amonst” you must translate that to “amongst”….
November 2nd, 2009 at 1:37 pm
“Does anyone know a billionaire economist?
If economists were so smart, they would be some of the richest people in the world.”
This is about as dumb as to say, “if physicists were so smart, they would be able to fly”. Are the richest people in the world also the smartest people in the world? I very much doubt that. And there isn’t any necessary relationship between studying and understanding well how the economy works as a whole and success with founding and managing a business or with investing. These are very different things that require different skill sets, in addition to that factors like luck and opportunity also play a big role for latter one and that there is a limited time budget. How could any economist who seriously works in his profession and uses his intelligence and spends his time for his studies become one of the richest people in the world?
rc
November 2nd, 2009 at 1:38 pm
I did a quick check of the 9 banks, there was one A+(WTF?) and one C, the rest were Fs
As of last Q about 1900 of the 6000 small enough to fails were rated F. If “they” are right about the commercial tsunami for these banks there won’t be enough days in the week to spread the failures to keep the number below alarming.
These 6000 banks need to merge into just a couple banks to become TBTF survivors. How about Bank AtoM of America and NtoZ National Bank?
CITI is graded F and BAC and WFC are both Bs. CITI is going to cost the US a lot of money with those 300B of guarantees
November 2nd, 2009 at 1:38 pm
[...] now saying that the recession is over and happy times are here again…….Lots of links, HERE Meanwhile the number of failing banks soar to all time highs with no end in sight. [...]
November 2nd, 2009 at 1:40 pm
@rc: You saved me the time and energy of basically saying the same thing. I was going to reply earlier but can’t muster too much energy to do so (or post much of anything) this morning.
November 2nd, 2009 at 1:40 pm
The sad thing is even this crazy optimistic projection isn’t as rosy as the one the Administration is using for its budget projections.
November 2nd, 2009 at 2:04 pm
Mannwich,
I didn’t even mention that one also would have to assume that understanding well how the economy works can be translated into predictions with respect to specific investments, at least. What if the system isn’t really predictable by its structure due to its inert non-linearities (deterministic chaos etc.), so that any specific investment is a gamble by its nature? Even the smartest economist couldn’t do anything about this, except gambling, maybe supported by probabilities derived from the past, and hoping it works out well.
rc
November 2nd, 2009 at 2:19 pm
There really is a big game of high stakes gambling going on right now in investment normalities. What we’ve become used to seeing is the market correct in october, as history has shown. Didn’t happen. Not to the extent we expected anyways.
I finally stumbled upon the secret to life yesterday evening, whilst watching the local news folks talking about our college football teams: the market is not for the Boise State’s and TCU’s of the world. Rather, it’s for the Texas, Florida, and Alabama’s of the world. All the rest of us might have a fine year every now and then, but we won’t touch those big dogs. Too big of a lead. IT STILL TAKES MONEY TO MAKE MONEY.
November 2nd, 2009 at 2:22 pm
@rc: Equating one’s smarts to how much money they’ve made is part of the reason we’re in the mess we’re in. It’s cultural rot. Priorities all out of whack.
November 2nd, 2009 at 8:45 pm
A combination of a survey of economists AND USA Today (aka nobody ever lost money by underestimating the intlligence of the vaerage American). Run for the hills.