The scales continue to tip in favor of our Recession call (Yo! Jimmy P!). Three recent comments suggest as much:
1) Macroeconomic Advisers have been reluctant to make the recession call. They now estimate that economic output declined at a 0.5% annual rate in April (gross domestic product). The April decline followed an annualized gain of 4.5% in March, a decline of 10.1% in February and a 7.5% gain in January.
Macroeconomic Advisers uses a model based on the BLS formula for quarterly GDP. (Source: Real Time Economics)
2) Building on the MacroEconomic Advisers monthly database is Merrill Lynch’s David Rosenberg. In note late Tuesday, David writes "The recession in GDP is here – but it’s in the monthly data, not the quarterly data. The MacroEconomic Advisers monthly database shows that real GDP dipped at a 0.5% annual rate in April and has contracted now in two of the past three months.
Note that since January, the month we had been saying for some time that represented the peak of the business cycle, real GDP has declined at a 2.2% annual rate. So, do not be fooled by that 0.9% first quarter GDP print – it is masking an erosion in activity beneath the veneer of quarterly averages. (Source: David A. Rosenberg, Merrill Lynch)
3) Martin Feldstein says the U.S. is "Slipping into recession." Normally, we do not weight any single person’s viewpoint all that heavily. But Feldstein is the chief of National Bureau of Economic Research, the group that actually dates recession in the U.S.
And, since he is retiring this year, this is as much as any NBER Chair ever tips his hand on the NBER recession call. (Source: Bloomberg)
Bouncing around trading desks is this comment on Fifth Third Bancorp (FITB): “Given its recent performance, the company has announced they are changing its name to “Three Fifths” Bank . . .” Looking at the chart below, perhaps that should even be “Two Fifths” Bancorp ! > > Thanks, Mike! ~~~
This morning, I’ll be doing the guest-hosting thing on CNBC’s Morning Call, from 11:00am til Noon. Today’s topics: Oil: After kissing $140, crude is now down to $133. Credit Crunch: Bank and Broker stocks still have work to do Fed Ex report: What does FedEx earnings have to say about a any recession ? We…Read More
Former Federal Reserve Bank of St. Louis President William Poole talks about monetary policy, the outlook for inflation and the housing market, and the Fed’s response to the turmoil in credit markets.
00:00 Fed’s stance on inflation, policy outlook
03:58 Core PCE; energy not a "temporary shock"
05:49 Inflation expectations, wage growth
07:12 State of U.S. banking system
08:32 "More pain" in housing market; energy prices
11:40 Fed’s response to credit market turmoil
14:01 Brokerage regulation; Fed’s independence
15:50 Fed "should stay clear" of dollar policy.
Poole Says Fed Has to Deter Inflation From Fueling Wages: Video
Bloomberg, June 17, 2008 09:51 EDT