U.S. Job Report Suggests that Green Shoots are Mostly Yellow Weeds by Nouriel Roubini
It’s clear that even if the recession were to be over anytime soon – and it’s not going to be over before the end of the year – job losses are going to continue for at least another year and a half. Historically, during the last two recessions, job losses continued for at least a year and a half after the recession was over.
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The latest figures – published this week – on mortgage delinquencies and foreclosures suggest a spike not only in subprime and near-prime delinquencies, but now also on prime mortgages. So the problems of the economy are significantly affecting the banking system.
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So the outlook for the US and global economy remains extremely weak ahead. The recent rally in global equities, commodities and credit may soon fizzle out as an onslaught of worse- than-expected macro, earnings and financial news take a toll on this rally, which has gotten way ahead of improvement in actual macro data.
Certainly this is not a forecast that will make people happy. I agree that the expectations for a nice quick recovery have become too optimistic. I am far from certain what lies ahead but the second half of 2009 does not look to be very strong. It is still a time to be cautious.
Related: Jim Rogers on the Financial Market Mess (Oct 2008) – Beware of the Sucker’s Rally – USA Consumers Paying Down Debt – Investing quotations