I’ve got two views that seem to be opposed to each other, both from blogs I frequent. The first comes from Todd Sullivan of ValuePlays. Sullivan does not seem to believe a recession is imminent or that we are even experiencing a recession at the moment. He argues that growth is just slowing and that we as a nation are simply spoiled:
It has been almost two decades since the last true recession in the US. I know we experienced slowdowns in the mid 1990’s and early 2001-2002 but if we are being honest, those were just simply bumps in the road. In Q4 1990, GDP fell 3% and Q1 1991 followed with a 2% drop from there. We have not had consecutive negative quarterly growth since then. In short, we are spoiled. Prior to the 1990-1991 recession, people had only go back 9 years in their memories to remember the last one. We are currently approaching year 19 which means there are a whole class of investors who have never actually experienced a recession in their investing lives…
The second view comes from Tim Iacono of The Mess That Greenspan Made. Tim looks at the same data as Sullivan, but seems to be much more cynical about the markets and the inevitable direction of GDP:
Earlier today, the Commerce Department reported that economic growth in the last quarter of 2007 was unchanged at 0.6 percent and growth slowed to 2.2 percent over the entire year, the slowest pace in five years.
The outlook is for zero real growth in the first quarter, which ends on Monday, and a contraction of one percent is now expected during the second quarter.
Those shrinking blue bars in the chart below will make all the difference in upcoming reports. The long-anticipated decline in personal spending may be at hand, though the demise of the American consumer has been oft-predicted, yet never realized before.
I am inclined to agree with the more negative outlook, but I would not mind if a recession does not manifest itself.
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