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Will the U.S. recession end on Thursday?

posted on October 26, 2009 at 11:57 am
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economic recovery

Thursday October 29 is the day when the U.S. Bureau of Economic Analysis is expected to report that the U.S. economy grew by 3.2% in the third quarter. That will put an end to a string of four straight quarters of economic contraction. The U.S. economy has gotten smaller every quarter from the third quarter of 2008 to the second quarter of 2009 (and in five of six quarters going back to the first quarter of 2008.)

With the economy growing again the recession will be over.

Well, not officially of course. That will have to wait for the call from the National Bureau of Economic Research. That group watches more than just GDP growth and is notorious for calling not calling the beginning or end of recessions until quarters after the event.

And not in the way that most of us care about most. Unemployment isn’t expected to peak until sometime in 2010 and until the economy starts creating jobs this is going to feel like a recession for most people.

But a number showing the economy grew by 3.2%–the consensus estimate from economists at the moment—in the third quarter would go a long way to supporting the argument that this stock market rally is built on the foundation of sustainable economic growth.

Of course, a disappointing number—not negative but one significantly below expectations—might b e enough to shake that faith. (Although I suspect that, in that case, Wall Street would simply argue that the recovery is still coming but just a little bit slower than expected.)

Here’s what the consensus is expecting on Thursday.

  • 3.2% annual growth (after a -0.7% reported in the second quarter)
  • 2.9% increase in consumer spending
  • A lagging recovery in business spending. (That will be prefigured by U.S. durable goods orders due on Wednesday. Expectations there are for a 0.7% increase after a 2.4% decline in August.)

The GDP number is a big enough deal and the risk of being on the wrong side if the number is significantly higher or lower than expected should keep the stock market volatile but range bound until Thursday.

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3 comments

  • bsorge on 26 October 2009

    Here in West Palm Beach it looks pretty anemic for any possible growth. Jobs, housing, and just about everything else is holding on for life. Frankly, I have a hard time believing anything is going to change very quickly.

  • amtrend10 on 26 October 2009

    Here in Tampa is a little different. Well kept hsng is doin ok….good workers are employed….well run businesses are still here. On the other hand neglected hsng is rotting at the street….dysfunctional workers have been weeded out and poorly run business are gone. Our Capitalistic system can not support so many people who do not know how to be productive. Everyone needs to take more resposnibility and help turn the economic wheel.

  • djortega on 20 March 2011

    Why does it seem that most of your content is outdated? Am I missing something?

    Dennis Ortega

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