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We cannot be in a recession this quarter. in macroeconomics, a recession is a decline in any country's Gross Domestic Product (GDP), or negative real economic growth, for two or more successive quarters of a year).
GDP jumped to 3.8% last quarter. Today they will release the Q3 numbers and expected is 3.1% (contraction). For us to be in a recession we'll need to wait for the Q4 numbers.
But all these macroeconomics definitions are really not worth much. I think people measure recession by looking at the things that matter most: behaviour of assets, access to credit, job prospects.
Recently we have had mixed signals from different asset classes. Take the stock mkt... it has recently posted new highs. Usually you do not see this happening in a recession. But this could actually signify a decorrelation between the US economy and the world's economy.
More pertinent to the US situation is the rapid decline of the housing mkt. This could well be a tough hurdle to pass, especially if it will be a prolonged decline.
The second variable (access to credit) is always working against the US economy. The era of free and easy credit for everybody is finished. Everybody (from powerful financial institutions to individuals) will face stiffer conditions for credit. This does not bode well for the economy.
Job prospects: if you look at a national level this has been quite stable. On Friday we'll see the national change in Non-farm payrolls for the month of October. Expected is an increase of 80k jobs (down from an increase of 110k last month). Even though this does not signal a roaring economy we are still creating jobs so the prospects are no so bleak.
I think it is still a very delicate situation. The Fed will announce today if they are going to cut the Fed Funds rates again (they cut 50bp last time) and will issue a statement on the economic outlook....
Today also we have the GDP release for Q3, tomorrow the PCE deflator (it basically tells us if there is inflation in the country) and Friday the job report....
Ask me again on Friday afternoon.... these 3 days are key to the next few months
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