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TMFAleph1 (94.92)

A V-Shaped Fantasy: Some Historical Context

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February 07, 2010 – Comments (3) | RELATED TICKERS: BRK-B , XOM , JPM

Anyone who continues to believe in the cosy fantasy of a V-shaped recovery should take a look at these graphs from the St. Louis Fed which plot the four main economic indicators that the NBER data committee tracks [the NBER is the official arbiter of recessions in the U.S.]:

St. Louis Fed: Tracking the Recession

As far as I can see, these graphs contain no room for misinterpretation.

Best,

Alex Dumortier, CFA

3 Comments – Post Your Own

#1) On February 07, 2010 at 2:51 PM, russwest (< 20) wrote:

Thanks for the data Marathon Man.  I appreciate stuff like this that provides illustrative examples with real data.  Not just media hype.  Good job. 

Unfortunately, looking at the data it appears that the majority of the good news is from Government expenditures, and even that seems to be tracking an average.   Makes me wonder what will happen when the deficit spending party ends. 

The other 'posirtive economic indicators' appear to be at or near the lowest point ever. 

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#2) On February 07, 2010 at 3:36 PM, Teacherman1 (57.42) wrote:

How about a "leaning" V?

Or maybe an L.

The point is, just because the recovery has not come about, and may not for some time, doesn't mean it is going to be a straight line to the right forever, or an "upsidedown" V.

Maybe my time frame is longer and I have lived through a number of booms and busts, but I have hope for the future.

I remember in Texas in the 80's when 100% of the S&Ls and about 90% of the banks went bust. The realestate market went to H-ll in a "handbasket", the Oil and Gas industry sputtered to a stop, and most financial institutions were turned upside down by "disintermediation".

The world (at least the the local version of it) looked dark, but within a couple of years things started to really turn around, and within 5, almost nobody even remembered it. 

I managed to make money then by buying at distressed prices and selling when things turned. 

Just call me Pollyanna.

Have a nice weekend for what's left of it. 

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#3) On February 07, 2010 at 3:37 PM, ozzfan1317 (81.10) wrote:

they wont stop the blind spending until they know a recovery is here hopefully there will be a jobs bill and free cash for college students included ;)..lol

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