Source: A Double Recovery? Dr. Ed’s Blog, January 17, 2012
Dr Ed Yardeni (who is an all around nice guy) points to the following bit of history, and concludes strong economic recovery is in the offing:
“Real GDP is up 5.5% from the recession trough during Q2-2009 through Q3-2011 to a record high of $13.3 trillion. That initial recovery was roughly half as strong as the average gain of 9.8% over the same period during the past seven recoveries. Since the official start of the latest recovery during July 2009, payroll employment is up only 1.1%, significantly lagging the average 5.1% gain of the previous seven recoveries over the same length of time–though it is on par with the last two “jobless” recoveries.
In the past, recessions were followed by one, not two recoveries. This time, key sectors of the economy haven’t participated in the initial economic rebound, but finally may be on the verge of doing so. The second recovery could take off as the pace of hiring quickens, housing activity finally picks up, auto sales head higher, and state and local governments stop retrenching. If so, then the US would finally enjoy the benefits of a broader-based recovery (emphasis added).
I have a somewhat different take: I see the weak recovery as typical of other post credit crisis recoveries. The anemic numbers reflect the inability of the Fed to jump start activity through making borrowing cheaper.
The risk from here is that activity is so soft that it wouldn’t take much to push us back into a recession. Hence, we are pretty aggressively invested, but I am looking for signs that this market is getting tired.
Employment chart after the jump