Monday, October 12, 2009

Rosenberg on Economy: "String of lowercase Ws for the next five years"

by Calculated Risk on 10/12/2009 08:43:00 AM

We are starting to exhaust the keyboard for the shape of the recovery ... and reuse letters!

Two different views:

From Bloomberg: Rosenberg Sees Low-To-No-Growth as Kantor Vows Vigorous Economy (ht jb)

“Right now the economy is being held together by very strong tape and glue provided by the Fed, Treasury and Congress,” [said David Rosenberg, Gluskin Sheff + Associates Inc.] ... The current economy won’t resemble previous V-shaped recoveries, he says. “It’s going to look like this whole string of lowercase Ws for the next five years,” with periods of growth followed by periods of contraction.
And from Larry Kantor, head of research at Barclays Capital Inc. and former Fed economist:
“We think the recovery will be sustained,” ... “People talk about double-dips, the economy’s on life support and once it’s withdrawn everything is going to fall apart again. Business cycles typically don’t work that way.” ... Kantor ... says the parallel is closer to 1992, when the economy expanded 3.4 percent coming out of recession, or 1983, when it grew 4.5 percent.
Of course Rosenberg tends to be bearish, and I can't remember when Kantor wasn't bullish. He was worried about inflation in 2005 and bullish in June 2008.

But this does show the range of forecasts. My view is the recovery will be sluggish for some time.