Wall Street May Know ‘Within A Week’ If Recession

Posted In: Economy, Financial Sector, Investment Banks, Main Street, Recession, Surveys, U.S. Government, Wall Street

According to the Times Online (UK) today, Wall Street may know within a week if the United States has entered into an economic recession. Suzy Jagger wrote this morning that:

Wall Street, however, may decide by the end of this week whether the US is in a technical recession, with key data on payrolls, industrial production, business inventories and retail sales all due out in the next five days. Such a declaration would mark the first recession since 2001.

“Within a week, we could know if we are in a recession,” Kevin Logan, senior economist at Dresdner Kleinwort, the investment bank in New York, said.

In the wake of this data’s release, Wall Street may have a much clearer picture of where the U.S. economy stands. Jagger said:

This week’s data - something like a Super Tuesday for the economy - could draw to a close an economic chapter that has left economists, financiers, central bankers, homeowners and the media worrying about whether America is on the brink of a slowdown. Two months ago Merrill Lynch, the US investment bank, went as far as declaring that America was already in a recession. It was waiting only for the official data to prove it right.

Referring to the Business Cycle Dating Committee at the National Bureau of Economic Research, which makes the “official” call on a recession:

Mr. Logan said that the Dating Committee was “in the business of writing history. We have to wait a long time for their pronouncements. They look at all the revised data and then declare it. We [Wall Street] can’t wait that long.”

On February 7, the Dresdner Kleinwort economist also spoke to Reuters. Logan told columnist James Saft that:

They don’t ring a bell when a recession starts, but that tinkling sound seems to be getting louder… Some shift is taking place in January and February that wasn’t evident in 2007.

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Source: Rick Steves (yes, that one)

Main Street may have decided that a recession is already here. According to the Associated Press earlier today, the latest Associated Press-Ipsos poll shows 61% of the public believes the economy is now suffering through its first recession since 2001. The poll was based on the responses from 1,006 adults surveyed last Monday through Wednesday. Survey results had a margin of sampling error of plus or minus 3%.

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