Click to enlarge

Source: RecessionAlert


My pal Lakshman Achuthan was just on Bloomberg TV, defending his 2013 (and 2012) recession call.

While I respectfully disagree, I understand his point: The current environment is a typical feeble post-credit crisis recover. Indeed, we are in a Fed driven economy, and but for their interventions, we in the USA would very likely already be in a recession. As I have have stated to  many times, but for the Fed, equity markets would likely be 20-30% lower (and I may be too optimistic with those numbers).

But the key takeaway, based on the chart above from Recession Alert, is that the rest of the world IS ALREADY IN a recession. Indeed, more than half of the 41 OECD member nations are in economic contractions — and have been since Q4 2012.

Here is the bizarre twist: As I will explain in this weekend’s WaPo column, this hardly matters for equities. In fact, markets correct before official recessions, primarily because contractions typically show up in earnings long before they do in the economic data . . .


Category: Data Analysis, Economy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

11 Responses to “World Is In a Recession (Go about your business as usual)”

  1. mjb1286 says:

    I understand the feds liquidity affects upon the market but my question more concerns the economy. Do you believe the Feds actions will work in regards to the economy or will the economy continue to fluctuate between drowning and swimming while we equity investors reap the gains?

  2. JoseOle says:

    It’s really only Europe that is in recession. Achuthan’s recession call, first announced in Sep 2011 btw, was for the U.S. specifically. Time to bust out the Hitler-in-the-bunker parody video again.

  3. Concerned Neighbour says:

    Meanwhile the S&P is on pace for an approximately 50% gain this year. It’s amazing how quickly gains compound when stocks are never allowed to go down.

    BTW, remember how a few weeks ago that Japanese minister said he would like to see the Nikkei at 13K? Well, it’s at 12K now (a gain of ~27 since December 1), and we’ve barely started March.

    Only the most naive among us can still believe that world equity markets are not manipulated.

  4. Jim67545 says:

    Do you remember, back in the days when the housing crisis was merely a slight fever, not a full blown ICU event? When the problem was thought to be confined to sub-prime mortgages? When it was “contained?” Now the problem in Europe is confined to 25+ unemployment in a few mediterranean countries. Thanks to Draggi it is contained. Hmmm.

  5. AHodge says:

    i will listen to laksh but he is stretchin too hard
    trying to be right after all, we are in a “growth recession” but maybe about to go little faster
    i just saw thisBloomberg and thot my frd silvia with him looked much more reasonable.

    Laks is cooking his data citations
    citing 2nd third q income declines.
    this is true, but 4q was up a thumping big amount, lot of reaons incl dividends paid or paid early
    income is a wild ride, it will now collapse in 1Q with way down dividends and higher payroll tax
    as shown by the jan 4.0% “collapse” in real DPI
    but you should basically average the 2 Qs, doesnt look like abig prob to me

    Lakshman vs the Ray dalio you cite yesterday? not even a contest

    Ray is a euroe bear but apparently thinks that US can delink

  6. AHodge says:

    Outlook?with due regard for the payroll hike and sequester
    GDP can still go faster a little from yearend

    in particular housing starts and autos can add a lot this year as they often do in recoveries
    unit auto sales could be 15 mio this year and be up well over 20%

  7. AHodge says:

    and state and local hiring will likely break from a negative to a plus this year

  8. socaljoe says:

    I suspect an accurate measure of inflation would show that we are currently, and have been for most of the last decade, in recession. In other words, I suspect the increase in the national output is less than the increase in the cost of living, which is why this feels like recession to many people, official statistics notwithstanding.

  9. Pantmaker says:

    Lakshman “being wrong” has become one of the top three reasons to get long this market…right behind “Fed put” and the “rotation out of bonds.” Other than price action, Im just not feeling the love up here. With that impressive list of countries currently in recession I am concerned we may hit a few more speed bumps.

  10. ancientone says:

    Please don’t allow AHodge to post such spelling and capitalization and punctuation garbage……it’s hard enough to figure out what is being said without all that trendy crap, or am I just getting old?

  11. Despite a new round of hysteria, be assured global is presently on a 3.2% pace and my G-20 Recessions Monitor gauges there is only one of its nation members in Recession: Italy

    G20 Recessions Monitor: