NYC Letter: The Obama Economy, Part II

Day 162 of CHOPE

I still hold out hope it will be a V-shaped recovery. It might not be the most likely scenario but it is not as unlikely as many people think.

Christina Romer,
Chair of the White House Council of Economic Advisers,
CHOPE-ing against hope
INTERVIEW
June 28, 2009 (FT)

The V recovery graphs as a decline that quickly rebounds once it hits bottom. The American economy is believed to have bottomed March 6, some three months ago.

Ms. Romer here clings to the same misplaced CHOPE that misinformed her earlier forecast of the magic of stimulus spending. What is the likelihood of Ms. Romer's fabulous V recovery? [Pause.] With few major indicators showing sustained rebounds, not very likely at all.

FORGET THE V-SHAPED RECOVERY: EXPERTS
May 15, 2009 (CNBC)

V-SHAPED RECOVERY IS OVERLY OPTIMISTIC
May 18, 2009 (CNBC)

V-SHAPED RECOVERY OUTLOOK IS IN VAIN
First Pacific Advisors: The Bulk Of The Economy's
Credit Problems Are Still To Come.
June 3, 2009 (Barron's)

KRUGMAN SAYS NO SIGNS
OF ‘V-SHAPED’ ECONOMIC RECOVERY

June 5, 2009 (Bloomberg) - Nobel Prize-winning economist Paul Krugman said the world’s economy is showing "not a hint" of a "V-shaped" recovery marked by a swift decline and revival.

The economy is "stabilizing, not recovering," Krugman, an economics professor at Princeton University in New Jersey, said today at a conference in Dublin. Mr. Krugman:

Things are getting worse more slowly.

... Service industries in the U.S. shrank at a slower pace in May while job losses mounted, indicating that any economic recovery will be slow to develop. Mr. Krugman:

The euro zone, like the United States, I fear, could be facing kind of a lost decade.

RECOVERY REALITY CHECK: NOT SO FAST...
Don't Cheer Fewer Job Losses

NEW YORK June 5, 2009 (CNNMoney.com) - The May jobs report, which showed the lowest level of cuts since September, sent stocks slightly higher Friday on more hopes that the economy may soon be on the upswing.

... Let's put things in perspective. Employers still cut 345,000 jobs last month.

In case that didn't sink in, I'll repeat it. Employers still cut 345,000 jobs last month. That's a big number. But in some of the media's coverage of the jobs report, journalists had the unmitigated gall to say that only 345,000 jobs were lost.

Only? It is downright insulting to the average American to use such a modifier.

Yes, the job market is a lagging indicator. That means it may be the last part of the economy to recover.

But with unemployment now at a 26-year high, it's hard to imagine how there can be a robust rebound until companies actually feel comfortable to start hiring again.

US: ISM* MANUFACTURING − NO "V" SHAPED RECOVERY
July 1, 2009 (FXstreet.com)

Ms. Romer tries to wish results into being, dutifully peddling Team Barry's cheery CHOPE. We will be lucky if this recession graphs as a U, where the economy trolls along the bottom before sloping up. [Pause] Or Team Barry may just spend-and-tax us into an L recovery with the bottom lingering for years.

CHOPE.

Cheery forecasts. Dreary results.

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* Institute for Supply Management