Article Image
News Link • Economy - Economics USA

America's Corporate Headquarters

• TheAutomaticEarth.blogspot.com
 
The current 2010 contraction is now over 215 days old. At the same point during the duration of the 2008 Great Recession, consumer demand was contracting at less than a 1% year-over-year rate. Additionally, during the 2008 Great Recession our Daily Growth Index had returned to net growth after 223 days. From the above chart we can see that the profile of the 2008 contraction and the 2010 contraction are substantially different. The 2008 event was a classic "V" shaped recession. So far this one is not. We have previously suggested that this contraction might be mild but prolonged. We are no longer confident about "mild". We have previously gained some notoriety for having our Daily Growth Index lead the GDP by a relatively consistent 18-20 weeks during the Great Recession. Does this mean that we expect the GDP a couple of quarters from now to be contracting at rates similar to our current -5% rate? Our methodologies capture only on-line consumer demand for discretionary durable goods, the most volatile portion of the consumer's 70% contribution to the GDP. As a consequence we are not seeing the impact of most ongoing governmental stimuli. If governmental stimulus packages can successfully offset the 2010 drop in consumer demand, the GDP might never feel the full weight of the 2010 contraction event. However, as we have said before, we suspect that consumers are the "800 pound gorilla" in this recession, and their actions (or inactions) will ultimately be felt to a major extent in the GDP.

Join us on our Social Networks:

 

Share this page with your friends on your favorite social network: