For the umpteenth time, CNBC is declaring an end to the recession. That’s right, we’ve turned the corner again. For those following CNBC we’ve turned so many corners that some might say we’re going in circles. In the minds of the Wall Street cheerleaders, a few positive signs are enough to stand up and say “mission accomplished” and start promoting the next run. It’s really cute and the new varsity letter that CNBC will receive from Wall Street will surely look nice but there’s a lot more reason for concern than celebration these days.
This ongoing theory that the economy is can be magically improved with a few smiles is ridiculous. Absolutely, the market can be moved with sentiment but to cherry pick a few small positive points and overlook the fact that the banks were on life-support a few months ago is quite a stretch. They are only alive because of massive government intervention and the pumped up numbers by a few may not last. The market needs more than a smile to move forward in any meaningful way.
The global central bankers have delivered their updated report and there’s plenty to suggest a double dip recession is a likely outcome. We still have banks that aren’t lending and while consumers are feeling more confident, anyone who thinks they will return to the credit bubble days is deluding themselves. It is not going to happen anytime soon. For 2009 the best we can expect is a leveling off and no more surprises but with unemployment sniffing 10% in the autumn, that will be a challenging psychological barrier for everyone. Everyone except CNBC who failed to see the recession coming despite being the self-proclaimed experts.
Maybe, just maybe investor Wilbur Ross is more accurate when we pushes out the recovery until deep into 2010. Even that sounds like a best case scenario.