Are we in the middle of the W?

By Justin Fox | October 1, 2009 | +

UniCredit’s Harm Bandholz offers an interesting reading of one of the piles of economic releases that came out today:

The mild decline in the headline ISM and its most important subcomponents (production, new orders and employment) is so far the most clear-cut signal that the technical rebound of the US economy might have reached the middle of the “W”. That means that from now on the dynamic of the economic improvement will lose momentum again.

Bandholz was one of the first people to call the end of the recession—way back in April he said it was coming soon. Now he’s arguing that the bounceback from the economic near-catastrophe of the early part of this year has pretty much played itself out. We won’t necessarily fall back into a recession, but there will be lots of disappointing economic news in the months ahead. From the looks of today’s 203-point drop in the Dow, he’s not the only one who thinks that.

Related Topics: Economy & Policy, Wall Street & Markets

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pneogy

That’s interesting. The folks at ECRI, who have been processing reams of data (both past and current), seem to have ruled out a double dip. Isn’t Bandholz putting a lot of faith on just the latest mild decline in the headline ISM? As for today’s drop in the Dow, we’ll have to see if it is more than just October jitters.
http://plainview.wordpress.com ichabod

Being a layman in these matters, I have to depend on what I perceive to be true or not.

Shipping world wide is down, car sales are down, Saturn is closing it’s doors, banks are secure due to new accounting rules, defaults on credit cards are rising, unemployment is higher than what they report.

Those trillions gone since last year, what about the investors who suffered those losses? That has to be felt sooner or later by someone.

To me the future is not quite as bright as they would like us to think at times. One more major bankruptcy of a corporation or country would do us in.
artofquantumplanning

I think we need to introduce the concept of not a “W” but a revesed “N” in other words this temporary “green shoots” recovery is a lead in to another long term decline. Let’s face it, the banks are still in a lot of trouble and the truing up of their balance sheets will have a profound impact on credit availability. It is only a matter of time and accounting fictions will not change this. Unemployment will keep consumer demand low and housing prices in the tank. The Federal stimulus will be insufficient and deficit spending will not allow another big package. International demand growth may be the only bright spot.
http://curiouscapitalist.blogs.time.com/2009/10/02/nope-no-jobs-here/ BLS reports 263,000 job losses, 9.8% unemployment rate for September – The Curious Capitalist – TIME.com

[...] worth of preliminary data. But it definitely doesn't provide much in the way of encouragement. And the argument that we're in the middle of a recessionary W has probably just gained a few more [...]
tanboontee

By all measures, we do not seem to be at the middle of “W”; we are more likely nearer to the right of “M”.