Wednesday, October 1, 2008
In this report I review the recent data to conclude that a recession is here right now. Don’t wait to hear this fact much later on the news…it’s time to start spending and behaving like we are at the beginning of a pretty serious economic decline.
The prior economic reading of 3.3% GDP growth (recently revised down to 2.9% growth) will certainly go down in the history books as one of the more grossly errant economic statistics of the decade. Where that statistic claimed the economy was still expanding, in actuality the economy was almost certainly contracting.
If we want to know where all this is heading so that we can stay ahead of the game, it’s more important that we keep a close eye on the real economic data than on shoddy economic statistics or even Congress’ struggle to salvage the credit markets with gargantuan new borrowing programs.
After all, repairing the ability of banks to lend money will prove fruitless if it turns out that nobody wants to borrow any because they are too busy fighting a recession. Repairing the credit facilities at the outset of a recession would be like building an Ark at the beginning of a long drought.