Thursday, February 28, 2013

More bad news for recessionistas

- by New Deal democrat

Those people who've been claiming that a recession started "now" in September 2011, then probably in 1Q 2012, then by midyear 2012, and then in July 2012, got two more pieces of bad news this morning.

First, the first revision to 4Q 2012 GDP puts it - just barely - in positive territory. While the recessionistas touted that frequently recessions started in a quarter of positive GDP (which is true), in every single such recession the next quarter has always turned negative. No recession has started out with two quarters of positive GDP in a row.

Next, initial jobless claims came in at 344,000, confirming the new lower range of claims post-Sandy. No recession has ever started with initial claims making new lows.

It's probably uncharitable to add that only once in the last 100 years has the stock market made new highs 8 months into a recession.

With the sequester going into effect tomorrow, it's impossible to say if the blow to GDP, on top of the payroll tax increase, will do enough damage to actually push the economy into contraction. All we know is, left to its own devices, the economy as of the most recent monthly data is still growing.