The Recession Will End… When Small Businesses Can Afford Health Care

Says who: 27 million small business owners

“It’s gotten to the point where it’s such a huge expense that I don’t know if we can continue doing 60 percent,” said Dan Verbeten, owner of Gardan Inc., a contract manufacturing company in Hortonville. “It’s the fourth-largest expense item.” (via BizJournals.com)

Why it might be false: Providing health benefits has been a growing expense, even before the recession took hold. According to a study by PricewaterhouseCoopers, health care costs for employers rose 10 percent in 2008 alone. Such costs are behind a disheartening trend: Just 59 percent of small business employers provided health benefits in 2007, down from 68 percent in 2000. But whatever health care’s crimes, it’s on its own track, separate from the forces that brought down the economy…

The Recession Will End… When Staycations Are a Thing of the Past

Says who: Staycationers – those who have had to cut back on their normal vacation plans to far-flung destinations and chosen instead to spend their time off in their own backyards.

Why it might be false: Just because staycations are said to be the summer’s hot thing doesn’t mean that everyone’s doing them. In fact, cruises, campgrounds and destination spas are experiencing surges in traffic. Priceline.com’s recent 35% second-quarter profit increase contradicts the idea that staycations are dominating “time off time” and underlines that there are some great deals on the market. Even if staycationers aren’t spending a lot of dough on transportation or accommodations, they are still spending money and bolstering the local economies. In short, they aren’t as damaging to the economy as other spending cutbacks might be (like, say, on buying homes)…

The Recession Will End… When I Get My Damn Job Back!

Says who: 14.7 million unemployed Americans, some of who spend their days sending resumes, setting up networking meetings, scrutinizing expenses. Others have given up.

Why it might be false: There have been A LOT of predictions about a gradual and jobless recovery, ranging from Federal Reserve chairman Ben Bernanke to economist Nouriel Roubini. Housing indicators are rebounding well, with starts and sales climbing, and we’re seeing more consistent growth than in the past year. There’s a general consensus that the start of economic growth is projected to start in early 2010, lowly workers be damned.

Why it could be true: As recent as this Sunday, U.S. Treasury Secretary Tim Geithner noted that unemployment may peak in the second half of 2010 on ABC’s “This Week” program, and Larry Summers, director of the White House National Economic Council, also admitted that the jobless landscape will be in critical condition for a while…

The Recession Will End… in 2010

Says who: Ben Bernanke

“FOMC participants generally expect that, after declining in the first half of this year, output will increase slightly over the remainder of 2009. The recovery is expected to be gradual in 2010, with some acceleration in activity in 2011.” (via Federal Reserve testimony)

Why it might be false: Even if output, the total value of all goods and services the country produces, does increase before the end of this year, it won’t really matter unless someone actually buys all that stuff…

The Recession Will End… by 2010

Says who: None other than “Dr. Doom,” Nouriel Roubini, professor of economics at the Stern School of Business, New York University and chairman of RGE Monitor, an economic consulting firm.

“I have said on numerous occasions that the recession would last roughly 24 months. Therefore, we are 19 months into that recession. If, as I predicted, the recession is over by the end of the year, it will have lasted 24 months with a recovery only beginning in 2010. Simply put I am not forecasting economic growth before year’s end.” (via RGE)

Why it might be false: Not too long ago (a mere four months), Roubini was predicting an end not until December 2010 or so. And with his new call, he adds so many caveats that you almost think he’s hedging himself against getting it wrong. In line with his Dr. Doom image, he’s described the recovery as “very ugly” and “subpar,” and highlighted that, “It’s going to feel like a recession even when it ends.” While it’s a somewhat nice change to see him cautiously optimistic, he makes it hard to believe him…

The Recession Will End… Second Half of 2009*

Says who: A bunch of economists surveyed by Bloomberg

The U.S. economy will expand faster than previously forecast in the second half of this year and in 2010 as a revival in consumer spending signals an end to the recession. (via Bloomberg)

Why it might be crap: These guys are all over the place. In its own article on the report, Bloomberg admits that the same group had wildly different predictions in earlier surveys. Just one month ago, the same panel held a more bearish outlook, expecting the economy to shrink more than its 1.8 percent in April and May. The group also held that the Fed would keep the benchmark interest rate in a near-zero holding pattern until end of next year. Suddenly, they’re all bull? They say the Fed could raise the rate to 1 percent in the fourth quarter of this year—that’s a full year’s difference. Further, even though these economists anticipate the unemployment rate will indeed climb above 10 percent, they don’t seem to give it much weight in their formulations, so it’s hard to imagine we’re getting the best, fullest and consistent eye on the economy here…

The Recession Will End… Wait, It Already Did

Says who: Christopher Rupkey, the New York-based chief financial economist at Bank of Tokyo-Mitsubishi UFJ

“Consumers and businesses have postponed purchases for six months, the population is still growing about 1.2% per year, and if the unemployment rate is close to peaking, then growth may be firmer than expected in the second half of 2009.” [Rupkey] points to a series that in the past has proven a remarkably good indicator of business cycle troughs: weekly claims for unemployment benefits, [which] … peaked in the week of March 28. (via WSJ)

Why it might be crap: Sounds a little like the aftermath of 9/11, no? “I encourage you all to go shopping more,” George W. Bush said in 2001. Looking at the indicators themselves, there’s disagreement over when Americans will return to the malls in force, or when housing starts will improve, or even whether unemployment has bottomed out — considering how much of a surprise last month’s number was, and the fact that many are predicting the rate will move comfortably into the double-digits…

The Recession Will End… in Six Months (End of 2009)

Says who: Wachovia

“In a clear sign that the economic winds have shifted, our recession model puts the latest probability of recession two quarters from now at 37 percent—down significantly from the 80 percent readings earlier this year…the results suggest economic recovery is likely in six months…our outlook is that the recovery will begin in the third quarter of this year.” Wachovia Economics Group

Why it might be false: Who are they to say? Wachovia itself won’t be around much longer as it’s absorbed bit by bit into Wells Fargo. But back to the data: The Wachovia prediction relies on an increase in consumer spending to support economic recovery…

The Recession Will End… Not Until 2011!

Says who: The World Bank

“While the global economy is likely to begin expanding again in the second half of 2009, the recovery is expected to be subdued as global demand remains depressed, unemployment remains high, and recession-like conditions continue until 2011,” said Hans Timmer, Director of the World Bank’s Development Prospects Group. (via World Bank report)

Why it might be false: Governments worldwide have announced about $2 trillion in economic stimulus programs, and China targets GDP growth of around 8% this year, keeping it in a position to suck in more raw materials and capital goods…

The Recession Will End… Later this Year

Says who: Richmond Federal Reserve President Jeffrey Lacker

“It now appears as if the pace of contraction is diminishing, and at some point later this year, activity will bottom out and begin expanding again.” (via Reuters)

Why it might be false: Well, for starters, how about those rising interest rates? Rates on 30-year fixed mortgages increased to 5.79% last Wednesday – that can’t be very good for the single family housing starts which have risen steadily since a low in January. And we think that generally, Lacker’s just a bit too U.S.-centric and myopic. Let’s not forget, the Treasury Secretary Timothy Geithner just met with his G-8 counterparts. The U.S. economy is not an island, it’s entangled in the global one – for better or for worse. Any prediction on the recession’s end can’t ignore international market indicators like a record loss of 1.22 million jobs in the 16-country euro zone in the first quarter.

Why it might be true: We’re not about to call these “green shoots,” exactly, but it seems like good omens that new jobless claims and consumer spending are no longer in freefall. Also, ten big banks are expected to start repaying the government bailout funds, a big sign considering that the financial industry played a big role in the creation of this crisis. On the global front, there are also some positive signs from China with industrial output increasing 8.9% and retail sales up 15.2%, at least according to the Chinese National Bureau of Statistics.

Our call: The end of the year is not completely unrealistic given the positive shifts in unemployment, consumer spending and banking, but it also depends both on how domestic and international factors play out. Either way, we’re going to have a little faith that the bank repayments are good signs that an industry that helped create the crisis will try to redeem itself and lead us out of it.