 | What Happened to the Double-Dip? |
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| Posted Under: Data Watch • Double Dip • Employment • Retail Sales |
In the late summer and early fall, the media had no doubt about the inevitable double-dip recession that was either on its way or had already arrived. The chorus was loud and persistent. It scared many investors into liquidating assets and hiding from risk. But the economy has not dipped into recession at all, the media has moved on, and the dour forecasts have drifted into the past. The lesson: be careful when the media starts a drumbeat. It's often wrong, and it rarely goes back and answers questions about why it might have been wrong. One thing to realize about the past few months is that the data never showed that a recession was occurring or on its way. On almost a weekly basis, we have posted real, live, data about what people are actually doing.
This high frequency (weekly) data, through October 28th, show that the US is not close to recession, let alone a panic. In the table above, Steel production is booming, up 10.3% from last year's level, and railcar loadings are up 5.8% versus a year ago. Looking at the consumer, weekly chain store sales are up 2.7% year over year according to the International Council of Shopping Centers and up 3.1% according to Redbook Research. Also, hotel occupancy is up 6.8% from last year. Box office receipts, which are very volatile from week to week because of movie release dates, fell 27.4% YOY this past weekend. This is not out of the ordinary and could easily be up sharply next week. Finally, initial claims came in 397,000. The four week moving average for claims also fell to 404,500, down 10.3% from a year ago. The bottom line is the economy is not only growing, but accelerating. Real GDP grew 2.5% at an annual rate in the third quarter, an acceleration from the second quarter. Although this is not robust growth it is still growth, not a contraction.
It is obvious to us that based on the data, there is no recession in sight. The economy is doing fine, and should continue to do just fine in the months ahead.
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