David Rosenberg, the bank’s chief North American economist, argues that a weakening employment picture and declining retail sales signal the economy has tipped into its first month of recession.
Mr Rosenberg, who is well-respected on Wall Street, argues: “According to our analysis, this [recession] isn’t even a forecast any more but is a present day reality.”
His comments are the strongest sign yet that the gloom on Wall Street over the US economy is deepening as the sub-prime mortgage crisis and the credit rout show little sign of easing.
Mr Rosenberg points to a whole batch of negative data to support his analysis, including the four key barometers used by the National Bureau of Economic Research (NEBR) – employment, real personal income, industrial production, and real sales activity in retail and manufacturing.
The people at the bottom are making less and so they’re being forced to spend less, even though credit card debt is spiraling out of control and people are buying more than they can afford than any other time in our nation’s history. That alone speaks to how weak our economy is.
Or could it be that all that interest from the credit cards is finally forcing people to face the reality of cutting their spending or risk financial ruin? If that’s the case, this downturn could have a silver lining. Still, it doesn’t change the fact that the economy is crawling.
More on this story as trends emerge…