Econ Con: Sometimes You Win

I've had several folks remark that they thought I was out on a long, slender branch of a young sapling delicately clinging to the side of a steep cliff by striking a Contrarian course on my interpretation of the economy.

In fact, those proven to be possessed of far greater economic insight than I fully tossed their weight into the column of predicting recessions (Buffett, Buffett again and seemingly even more wrong, even eternal optimist Larry Kudlow)

Yet, surprise of all surprises, it looks like I was correct to wave a small flag of reason above the crowds of panicked analysts. Feast upon these headlines:

First-quarter growth stronger than forecast

By definition, a Recession is two (2) consecutive quarters of negative growth (shrinking) GDP. Thus, by definition, when the US economy GREW in the first quarter, we are NOT in a recession.

An economic contraction? Yes.

A tough patch? Yes.

A painful period for investors? Yes.

A time of economic realignment? Yes.

March retail sales unexpectedly rise 0.2 percent

A good hint that an economy is NOT in recession is when retail sales are expanding – no matter how slowly. Thus, when you see headlines of retail sales growth, you can discount any voices of recession. Again, note the appropriate gloom I outline above. The economy is NOT perfect. The economic environment is not a free money machine for everyone. But there is not some sort of massive mess-up.

Just to prove this point, notice that those retail sales continued to expand, yes expand (grow) in April: April retail sales barely budged: SpendingPulse

The reality is that I started accumulating a trove of positive economic indicators in March and April. Based upon my simple, daily clipping of headlines, I knew the weeping and gnashing of recession to be a bit overwrought. In following posts, I'll provide a few of the snippets of the data I've been tracking.

So, breathe a sigh of relief, hug your family and get out into the economy and spend some money! J

Requisite footnote on the "Econ Contrarian" series:

As with so many other complex issues in this modern world, I don't claim to know what tomorrow holds for the economy. There are just too many competing systems interacting in labyrinthine layers. But, since no one else seems to want to focus upon any of the positive indicators in this complex mix, I think I'll stand in the gap and shine a small, small light to illuminate a few contradictory indicators – indicators which make the more balanced point that while certain segments of the economy will certainly retract a bit after years of unprecedented growth, this doesn't exactly mean the expansion of the new era of Mordor.

On Principle,

CBass