I am still on alert for a larger pullback in the market. The larger picture suggests the SPX will li...
Will the U.S. recession end on Thursday?
10/26/2009 11:57 am EST
With the economy growing again the recession will be over.
Well, not officially of course. That will have to wait for the call from the National Bureau of Economic Research. That group watches more than just GDP growth and is notorious for calling not calling the beginning or end of recessions until quarters after the event.
And not in the way that most of us care about most. Unemployment isn’t expected to peak until sometime in 2010 and until the economy starts creating jobs this is going to feel like a recession for most people.
But a number showing the economy grew by 3.2%--the consensus estimate from economists at the moment—in the third quarter would go a long way to supporting the argument that this stock market rally is built on the foundation of sustainable economic growth.
Of course, a disappointing number—not negative but one significantly below expectations—might b e enough to shake that faith. (Although I suspect that, in that case, Wall Street would simply argue that the recovery is still coming but just a little bit slower than expected.)
Here’s what the consensus is expecting on Thursday.
- 3.2% annual growth (after a -0.7% reported in the second quarter)
- 2.9% increase in consumer spending
- A lagging recovery in business spending. (That will be prefigured by U.S. durable goods orders due on Wednesday. Expectations there are for a 0.7% increase after a 2.4% decline in August.)
The GDP number is a big enough deal and the risk of being on the wrong side if the number is significantly higher or lower than expected should keep the stock market volatile but range bound until Thursday.
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