Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Gold & the USDX: Correlations - 2nd Dec 20
How An Ancient Medicine Is Taking On The $16 Trillion Pharmaceutical Industry - 2nd Dec 20
Amazon Black Friday vs Prime Day vs Cyber Monday, Which are Real or Fake Sales - 1st Dec 20
The No.1 Biotech Stock for 2021 - 1st Dec 20
Stocks Bears Last Chance Before Market Rally To SPX 4200 In 2021 - 1st Dec 20
Globalists Poised for a “Great Reset” – Any Role for Gold? - 1st Dec 20
How to Get FREE REAL Christmas Tree 2020! Easy DIY Money Saving - 1st Dec 20
The Truth About “6G” - 30th Nov 20
Ancient Aztec Secret Could Lead To A $6.9 Billion Biotech Breakthrough - 30th Nov 20
AMD Ryzen Zen 3 NO UK MSRP Stock - 5600x, 5800x, 5900x 5950x Selling at DOUBLE FAKE MSRP Prices - 29th Nov 20
Stock Market Short-term Decision Time - 29th Nov 20
Look at These 2 Big Warning Signs for the U.S. Economy - 29th Nov 20
Dow Stock Market Short-term and Long-term Trend Analysis - 28th Nov 20
How To Spot The End Of An Excess Market Trend Phase – Part II - 28th Nov 20
BLOCKCHAIN INVESTMENT PRIMER - 28th Nov 20
The Gold Stocks Correction is Maturing - 28th Nov 20
Biden and Yellen Pushed Gold Price Down to $1,800 - 28th Nov 20
Sheffield Christmas Lights 2020 - Peace Gardens vs 2019 and 2018 - 28th Nov 20
MUST WATCH Before You Waste Money on Buying A New PC Computer System - 27th Nov 20
Gold: Insurance for Prudent Investors, Precious Metals Reduce Risk & Preserve Wealth - 27th Nov 20
How To Spot The End Of An Excess Market Trend Phase - 27th Nov 20
Snow Falling Effect Christmas Lights Outdoor Projector Amazon Review - 27th Nov 20
4 Reasons Why You Shouldn't Put off Your Roof Repairs - 27th Nov 20
Further Clues Reveal Gold’s Weakness - 26th Nov 20
Fun Things to Do this Christmas - 26th Nov 20
Industries that Require Secure Messaging Apps - 26th Nov 20
Dow Stock Market Trend Analysis - 25th Nov 20
Amazon Black Friday Dell 32 Inch S3220DGF VA Curved Screen Gaming Monitor Bargain Deal! - 25th Nov 20
Biden the Silver Bull - 25th Nov 20
Inflation Warning to the Fed: Be Careful What You Wish For - 25th Nov 20
Financial Stocks Sector ETF Shows Unique Island Setup – What Next? - 25th Nov 20
Herd Immunity or Herd Insolvency: Which Will Affect Gold More? - 25th Nov 20
Stock Market SEASONAL TREND and ELECTION CYCLE - 24th Nov 20
Amazon Black Friday - Karcher K7 FC Pressure Washer Assembly and 1st Use - Is it Any Good? - 24th Nov 20
I Dislike Shallow People And Shallow Market Pullbacks - 24th Nov 20
Small Traders vs. Large Traders vs. Commercials: Who Is Right Most Often? - 24th Nov 20
10 Reasons You Should Trade With a Regulated Broker In UK - 24th Nov 20
Stock Market Elliott Wave Analysis - 23rd Nov 20
Evolution of the Fed - 23rd Nov 20
Gold and Silver Now and Then - A Comparison - 23rd Nov 20
Nasdaq NQ Has Stalled Above a 1.382 Fibonacci Expansion Range Three Times - 23rd Nov 20
Learn How To Trade Forex Successfully - 23rd Nov 20
Market 2020 vs 2016 and 2012 - 22nd Nov 20
Gold & Silver - Adapting Dynamic Learning Shows Possible Upside Price Rally - 22nd Nov 20
Stock Market Short-term Correction - 22nd Nov 20
Stock Market SPY/SPX Island Setups Warn Of A Potential Reversal In This Uptrend - 21st Nov 20
Why Budgies Make Great Pets for Kids - 21st Nov 20
How To Find The Best Dry Dog Food For Your Furry Best Friend?  - 21st Nov 20
The Key to a Successful LGBT Relationship is Matching by Preferences - 21st Nov 20
Stock Market Dow Long-term Trend Analysis - 20th Nov 20
Margin: How Stock Market Investors Are "Reaching for the Stars" - 20th Nov 20
World’s Largest Free-Trade Pact Inspiration for Global Economic Recovery - 20th Nov 20
Dating Sites Break all the Stereotypes About Distance - 20th Nov 20

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

If the Recession Has Ended, Why Is the Fed So Worried?

Economics / Double Dip Recession Sep 29, 2010 - 07:26 AM GMT

By: Claus_Vogt

Economics

Best Financial Markets Analysis ArticleThe National Bureau of Economic Research (NBER) is the official arbiter of U.S. economic history. It sets the officially accepted dates for the beginning and the end of U.S. recessions. And on September 20, its Business Cycle Dating Committee published an important statement …

It finally declared the end of the recession that began in December 2007. Here is an excerpt from what it had to say:


“The committee determined that a trough in business activity occurred in the U.S. economy in June 2009. The trough marks the end of the recession that began in December 2007 and the beginning of an expansion.

“The recession lasted 18 months, which makes it the longest of any recession since World War II. Previously the longest postwar recessions were those of 1973-75 and 1981-82, both of which lasted 16 months.”

Does this mean everything is okay now? That the economy is expanding and the world is headed to prosperity?

Of course not. The NBER is not in the forecasting business. Its job is to monitor economic events. In fact, its members felt it necessary to clarify this point by adding the following lines to their recent statement:

“In determining that a trough occurred in June 2009, the committee did not conclude that economic conditions since that month have been favorable or that the economy has returned to operating at normal capacity.”

So there you have it … the Committee does not want to be misinterpreted as economic optimists. And I think they’re very wise to make that point at this stage of the current economic cycle, because …

Once Again, the Fed Seems Worried

The Fed has vowed to do whatever is necessary to revive the economy.
The Fed has vowed to do whatever is necessary to revive the economy.

The bleak economic picture and the dire message of leading economic indicators have obviously not escaped our central bankers. They have again decreased their growth projections in the most recent FOMC press statement:

“Information received since the Federal Open Market Committee met in August indicates that the pace of recovery in output and employment has slowed in recent months.

“Business spending on equipment and software is rising, though less rapidly than earlier in the year, while investment in nonresidential structures continues to be weak. Employers remain reluctant to add to payrolls. Housing starts are at a depressed level. Bank lending has continued to contract, but at a reduced rate in recent months.”

With the housing market in shambles, bank lending contracting, and consumers being tapped out, there is no base for a sustainable recovery. And now — according to the Fed — even the sole bright spot of the current rebound, capital expenditures, is slowing.

However, Quantitative Easing Round Two is in the offing. So the bulls are again betting on the Fed. The big question is …

Will QE2 Save the Day?

The Fed, in the following statement, has reassured the public it will do everything it can to fight another downturn:

“The Committee will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed.”

Well, that’s exactly the reassurance they offered and then implemented in spades in 2007/2008. But it didn’t help. The economy was headed for trouble, and it turned out the mighty Fed was not strong enough to stop the tide.

I can’t see a single reason why it should be any different now. If anything I expect the Fed’s efforts to prove even more ineffective this time around. That’s because interest rates are already close to zero. Consequently, there is no more leeway for additional lowering. All that’s left is quantitative easing.

Maybe Bernanke and Co. should ask the Japanese how they used this blunt tool to try to revive their economy — which led to years of economic stagnation, as shown in the chart below, and deflation. But I doubt they’ll bother …

chart If the Recession Has Ended, Why Is the Fed So Worried?

After all before QE1 the Fed didn’t consider Japan’s intervention experience with stock market and real estate bubbles. Instead, they insisted there was no bubble in the U.S.

Then when the bubble did burst, they used the exact policy as the Japanese did to fight the aftermath. And just like Japan, the Fed’s efforts failed.

Now by continuing to ignore Japan’s “lost decade” it looks like the Fed is about to do the same thing once again. And if they follow through on their promise, the weak U.S. economy could easily be headed for a further slowdown that amplifies the problems that already exist.

Best wishes,

Claus

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Len
29 Sep 10, 19:34
Concerning committees

Concerning the committee of The National Bureau of Economic Research (NBER)-

"What is a committee? A group of the unwilling, picked from the unfit, to do the unnecessary." Richard Harkness


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules