U.S. recession may have already started
Leonard Zehr, November 12, 2007 at 1:32 PM EST
The analytic crowd likes to give odds on the U.S. economy falling into recession, but Merrill Lynch figures the consumer knows something Wall Street isn’t admitting: that a recession has already arrived.
Citing results from the latest University of Michigan survey of consumer sentiment, economist David Rosenberg points out that the year-over-year trend in buying intentions for large household goods is closing in on the pace that was evident just ahead of the last two economic downturns in 1990 and 2001.
And in the 30-year history of the data, there have been only two other times, not including Hurricane Katrina, “when consumer confidence has fallen so far so fast at this critical shopping period for retailers, and they were October, 2001, and October, 1990 - both times the economy was officially in recession,” he contends.
Mr. Rosenberg suggests a host of reasons why a recession “may have already started ... and ... we just don’t know it yet.”
Among other things, real average weekly earnings peaked in January, motor vehicle sales peaked in January, U of M consumer expectations peaked in January, truck tonnage peaked in March, the Conference Board’s “jobs are plentiful” index peaked in March, total construction spending peaked in May, and bond yields peaked in June.
And in the second half this year, he notes that manufacturing orders peaked in July, LME copper inventories bottomed in July and railway car loadings peaked in September.
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