News

The Recession Will End… No Time Soon

Says who: Paul Ashworth, a senior economist at Capital Economics

“A few months ago, the U.S. was in the throes of the most severe recession since the 1930s,” said Paul Ashworth, a senior economist at Capital Economics. “We’ve had some improvement, but . . . we’re still nowhere near a meaningful recovery or even a slight recovery.” (Washington Post)

Why it might be false: The evidence that the economy is improving can be convincing: a manufacturing report Monday beat expectations and indicated some growth; pending home sales rose 6.7 percent in April; and the stock market hit its highest point Monday for all of 2009. And it doesn’t hurt that the good weather seems to bring with it all kinds of hope and promise.

Why it could be true: Consumer spending is not moving; it was down .1 percent in April. More job cuts are still on the way, including 25,000 from General Motors as part of its bankruptcy restructuring. And banks are still carrying bad debt that they’ll have to work out.

Our call: Glimmers and “green shoots” do not ensure a recovery anytime soon. We think that unfortunately, we’re in for a slog, unless there’s enough of a consumer confidence turnaround sooner. In the meantime, we’re going to go out and enjoy the sun.

Tags: economy, employers, layoffs, real estate, spending, The Recession Will End...