Wow – just like that and everyone is pessimistic again – all it took was one bad employment number (June, -467,000 nationally).  All of a sudden, the green shoots are dying and people are sincerely talking about another year of recession – as of this writing, the Dow is slightly below 8,300, down more than 5 percent year-to-date.  Oil is down to $63/barrel, a reflection of growing pessimism throughout the world (notable exception:  China). 

Though we have been among the most pessimistic analysts of the economy, we still believe the economy will find its way out of recession very late this year or early next year.  There are a number of indicators that suggest this, but one can imagine how intense the pressure has become to start shoving stimulus dollars out the door.  The VP has indicated that the administration “misread” how weak the economy was when he and the President entered office, and though that’s probably a poor word choice, this is now Obama’s economy and presumably he will work to turn it around sooner rather than later. 

-AB

Category: Economic Commentary by Sage