David Rosenberg is one of the few who considers the Federal Reserve Beige Book a page-turner. The publication, published eight times a year, is filled with anecdotes from business leaders and bankers from around the country that describe the state of the economy in a way that headlines can’t.
“It just shows that I’m a fun-loving person,” the founder and president of Toronto-based Rosenberg Research tells Forbes.
Curious about where the economy was headed next, Rosenberg decided to go all out. They reviewed the Beige Books published one month before each recession of the past 40 years. Their surprising conclusion: The previous versions were the most disappointing.
“There’s no way you can read that Beige Book and not come to the conclusion that the economy isn’t already entering a recession,” Rosenberg says.
A year ago, forecasting a recession was a popular call among tea leaves readers. But as a pleasant surprise emerged in the economic news, more and more forecasters disappeared. Last month, only 9% said a contraction was more likely, down from 18% in October. For economists still undecided, Friday’s announcement of positive job growth in January gave them 353,000 new reasons to cancel recession bets. Looking at the sample of market insights arriving in customers’ inboxes, we can assume that almost all of them have done so.
But Rosenberg and some other experts are not budging. He says most chart watchers are happy because they are looking at the wrong numbers, or the numbers they celebrate will be revised, or they are obsessed with the data and don’t listen to the words behind the numbers. Let’s describe the life of. Rosenberg isn’t above a little trash talk. He joked, “I wouldn’t be surprised if the economists who threw the towel over the recession used that towel to wipe the dirt off their faces.”
Rosenberg emphasizes that much of the country’s economy is shrinking or on the brink. Danielle DiMartino Booth, founder and CEO of QI Research, is certain that the national recession has already begun. Joseph Lavorgna, chief economist at SMBC Nikko Securities, says that although “confidence decreases with each job created”, they are still in recession. And billionaire bond king Jeffrey Gundlach, founder and CEO of DoubleLine, is spreading the word that storm clouds of an economic contraction are gathering.
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What comes out must come in
GDP (orange line) is what we spend. Gross domestic income (the purple line) is what we earn. They should be more or less the same. they are not. The gap between them may not seem like much, but it is the largest in recent memory.
An inverted yield curve is “never a good sign,” says optimist Richard Bernstein, founder and CEO of Richard Bernstein Advisors in New York. When the curve inverts, borrowing costs may become so high that banks will not lend, slowing the economy.
According to LaVorgna, who was an economic adviser in the Trump White House, the yield curve first inverted in July 2022, meaning that if it continues through March, it will set the record for the longest IYC in history.
The IYC has a perfect record of predicting recessions, at least so far, which presents Lavorgna with an existential dilemma. “The yield curve is an excellent historical metric, probably the best,” he told Forbes. “This (year) will show whether the yield curve still matters.”
dead man’s curve
Whenever the fever line goes below the horizontal line, recession occurs. Except this time. So far.
Here’s the really worrying part. This comes from Obama’s White House advisor Furman, who is seeing growth, not recession, this year. “Not everything the pessimists tell you is crazy,” he says. “Maybe.”
This article was originally published by Forbes US.
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(TagstoTranslate)David Rosenberg and Jeffrey Gundlach(T)Recession
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