Q4 GDP - "Prognosis Still Negative"

Last month we posted our analysis of Q3 GDP after the release of the final revision.  We stated then:  "It is important to remind you that a bounce in economic growth, as we will likely see in the coming Q4 GDP analysis beginning in January, does NOT in any way offset the probability of recession.  

As we stated during our initial analysis of Q3 GDP it is not uncommon for GDP to tick up just prior to a recession.  In fact, in almost every instance, as shown in the table, the economy has had a positive growth rate, and in some cases a very strong growth rate, just prior to recession.  

My point here is that looking at quarter over quarter numbers, particularly when they are presented at an annual rate, is very misleading.   As always it is the trend of the numbers which is much more important in determining future outcomes.  This is why we look for historical tendencies for future outcomes and in this particular case we note that sub-2% growth rates have always occurred just prior to or in a recession"

There has been a large debate as of late about the economy going into 2012.  Will it "muddle through" at a sub-2% rate, rebound sharply to more than 3% as currently estimated, or will we decline into a secondary recession?   Cases can clearly be made for all three scenarios and only time will tell who is correct.  However, this debate entirely ...

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