The 4 week moving averages for both intial Jobless Claims and Continuing Claims hit fresh 26 year highs in the latest week. Note the shaded area that has been added to the right hand side of each graph since the NBER offically announced the start of the recession earlier in the week.
There has been little doubt about the fact that the US economy has been in recession for months (except for a few pollyannas on CNBC, more on that later). The question now is how bad it will be . There are increasing comparisons to the recessions of 1982 and 1974, I think that comparison is a valid one and talk of the new great depression is exaggerated.
There is increasing talk about how the stock market looks forward and will turn up before the end of the recession. Somehow when that platitude is repeated people conveniently omit the 2001 recession after which stock prices did not recover for more than 12 months. MY guess is that the recession will be longer than most think, probably lasting for the bulk of 2009 and that the stock market will have a few more false starts before a bottom is found.
Friday, 5 December 2008