In the above chart the day-by-day courses of the 2008 and 2010 contractions in our Daily Growth Index are plotted in a superimposed manner with the plots aligned on the left margin at the first day during each event that our Daily Growth Index went negative. The plots then progress day-by-day to the right, tracing out the changes in the daily rate of contraction in consumer demand for the two events. The 2010 contraction event is now more than a year old, dating back to January 15, 2010. Although the chart clearly bottomed at about 9 months into the contraction (at roughly 270 days), the rise since that bottom has been neither steady nor substantial. In fact, there is no way to forecast when the indicated contraction of on-line consumer demand for discretionary durable goods will end based solely on the recent course of the blue line.
The above chart speaks to more than the continued possibility of a (now generally dismissed) "double-dip" recession. It indicates that discretionary spending habits have changed (and remain changed) for the demographics that we track. The lingering contraction and near lateral movement of the blue line indicates that modest prolonged year-over-year contraction may be a new "normal" for the economy. If so, this is not something that the vast majority of Americans have ever experienced. Only our grandparents (or our peers in Japan) have seen anything of this sort. Let's hope that the BEA is correct. I'd rather have our data be wrong than to miss an entire decade of growth.
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