Friday, May 9, 2008

Facts show no recession

I just came across an article from yahoo news and I find it an interesting read. It gives me an added optimism about the market. According to the author, there is no evidence showing that US is in a bear market or a recession. A bear market is defined as a 20% drop in the major stock market and a recession is defined as two consecutive quarters of negative GDP growth.

According to the facts and truths he presented, US is not in a bear market or recession.
  1. From its closing peak at 14,164.53 last October the Dow fell 17% to its closing low on March 10th. The S&P 500 slid 18.4% from its October high to its March low. The broadest measure of the U.S. market, the Dow Jones Wilshire 5000 showed a 19% high-to-low decline.
  2. Despite the subprime mortgage crisis and a wave of home foreclosures, gross domestic product (GDP) growth was still in positive territory in the first quarter, albeit an anemic 0.6%.
  3. The Conference Board's index of Leading Economic Indicators, turned positive in March, after five consecutive negative months.
  4. Weekly jobless claims are considered a good reference point for the health of the economy. If they top 400,000 for a while, some economists say it indicates a recession. In fact weekly jobless claims remained comfortably below 400,000 and fell to 365,000 in the previous week. In contrast to 2001 recession, jobless claims moved above that level and stayed above that level for two years.
  5. Unemployment rate dropped to 5% in April. It averaged nearly 10% in 1982 and 1983, roughly 7% in 1991-1993 and 6% in 2002-2003 during real recessions.

You can read further Howard R. Gold article on What Bear Market? What recession? from the link.

1 comment:

Anonymous said...

Was a pretty stupid call, is it not ?